CBO: Federal workers overcompensated

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Article Highlights

  • CBO released study showing federal-government employees receive higher compensation than private-sector workers

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  • CBO report helps rebut union claims that federal workers are underpaid

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  • Total average federal compensation is at 16 percent above private-sector levels

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The Congressional Budget Office has released a new study showing that federal-government employees receive significantly higher compensation than private-sector workers with the same levels of education and experience. The CBO report confirms many of the findings of a 2011 study I wrote with Jason Richwine of the Heritage Foundation and helps rebut union claims that federal workers are underpaid.

"While I have my quibbles with some of CBO’s methods and assumptions, it’s very good work and broadly consistent with the 2011 AEI study." -- Andrew Biggs

CBO found that federal employees’ average salaries are about 2 percent higher than those for similar private-sector employees and their benefits exceed by 48 percent private-sector levels, putting total average federal compensation at 16 percent above private-sector levels. With federal-employee compensation totaling $200 billion per year, a 16 percent pay premium is big money — almost $390 billion over ten years.

While I have my quibbles with some of CBO’s methods and assumptions, it’s very good work and broadly consistent with the 2011 AEI study. We found a larger federal pay premium because we sought to capture a broader range of federal compensation — including the implicit value of federal workers’ near-total job security — and because we used somewhat different economic assumptions. Nevertheless, the CBO report serves as a valuable contrast to the claims coming out of the federal Office of Personnel Management, which says that federal employees are underpaid by 26 percent relative to private-sector jobs.

Andrew G. Biggs is a resident scholar at the AEI.

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About the Author

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

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