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August 27 2013

Public Sector Beats Private Sector in Salaries

Vicki E. Alger

A few years ago the American Enterprise Institute created a stir when it released a report that found that found federal employees are paid more than private sector employees. The Congressional Budget Service re-ran the numbers a slightly different way, but reached a similar conclusion.

  • Overall, the federal government paid 2 percent more in total wages than it would have if average wages had been comparable with those in the private sector, after accounting for certain observable characteristics of workers.
  • Average benefits for federal workers whose education ended in a bachelor's degree were 46 percent higher than for similar workers in the private sector.
  • Federal workers whose education culminated in a bachelor's degree averaged 15 percent higher total compensation than their private-sector counterparts.

Earlier this month the Organization for Economic Cooperation and Development compared government compensation and benefits in 18 developed countries and the United States. At more than $60,000, American secretarial staff compensation in the federal government is among the highest globally. Compensation is even higher for executive secretaries at more than $80,000.

AEI scholar and compensation study co-author Andy Biggs explains that federal employees not only largely out-earn their global counterparts, they also have much more generous benefits packages amounting to as much as 37 percent of their annual compensation.

Back here at home, Biggs argues that we are overpaying federal employees, who on average have less experience and education than their private-sector counterparts.

The average American household median income is around $50,000 (just over $51,000 as of 2013, p. 2; and $50,000 as of 2011, p. 5). With the federal government growing by leaps and bounds, such generous compensation for public “servants” won’t be sustainable for long.

 

 

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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