Washington Matters
Are Federal Workers Overpaid?
Republicans are building the case for a government pay freeze -- and eventually a cut -- as a way to reduce the deficit.
By Mark Willen, Senior Political Editor, The Kiplinger Letter
July 19, 2010
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Government workers have never been the most popular people -- even when they’re sending out Social Security checks or coming to the rescue in a national disaster. But the anger this year is reaching a peak, spurred in part by concerns over big government and whipped up by GOP leaders. On their Web site proposing solutions to the deficit and debt problem, House Republicans featured a freeze on civil service salaries as an option and millions enthusiastically jumped on it.
Then came a report from the Heritage Foundation that added fuel to the fire. It found that government salaries are, on average, 22% higher than in the private sector, and when benefits are added in, the difference rises to 30%. The disparity has gotten worse in recent years, as private sector pay has been frozen or cut while government workers continue to get pay raises -- 2% last year.
Unions and government workers immediately cried foul over the Heritage study, saying lower-level jobs are contracted out, leaving a much higher concentration of white collar and highly educated government workers than in the private work force. That’s true -- 33% of federal workers have a college degree vs. 22% in the private world, and 7% have a PhD vs. 2.7% in the private sector. But the Heritage folks say they adjusted for that, and the 22% pay discrepancy they came up with is from comparing people with similar degrees, though not necessarily with similar experience (federal workers tend to be older and have more time on the job).
So is this an argument for cutting pay? Not across the board. At the top end, government workers make far less than their private-sector contemporaries. Federal civil service pay is capped at about $180,000, far less than a top money manager or CEO makes. So an across-the-board cut would be unfair and counterproductive. Organizations and people who specialize in studying the federal government, including the Partnership for Public Service and Paul C. Light of New York University, agree that a scalpel rather than a meat cleaver is needed in approaching the issue. It probably makes no sense, for example, to cut the pay of nursing aide at a VA hospital in Kansas. And they warn that pay cuts and freezes can and have been easily circumvented with promotions.
Though government workers often feel underappreciated and lack the autonomy and job satisfaction many in the private sector have, they do have a lot more job security and much better benefits, especially after they retire (with generous health care and pension plans). Enough are willing to make the trade-off, especially today when jobs are so scarce. But there is a brain drain under way -- many experienced workers in the 55- to 65-year-old range are retiring and being replaced by younger and less experienced workers.
Heritage argues the solution is a pay-for-performance system that would reward the best and take away from weaker performers or those who could be easily replaced. Heritage says that would save $47 billion a year. That’s probably an overstatement, but it would clearly be a significant amount at a time when the country needs to find as many ways as possible to cut spending.
So what should Congress do? For starters, the freeze seems to be a no-brainer. Congress should reject the 1.4% pay raise for next year that President Obama proposed in his budget. Unions and government workers will lobby hard against it, but it’s the right thing to do. Federal workers need to share some of the pain being felt by the private sector, and this is a start.
A whole new pay system requires a lot more study, but there’s a strong case for arguing that the retirement benefits of federal workers are too generous. Those costs add to the structural deficit in ways that are hard to justify and even harder to afford. Still, changes need to be imposed carefully. We want a government that is more competent, not less, and if you take away too many of the advantages of government work, there’s a real risk that the workforce will deteriorate.
Hopefully, some of these changes will be part of the president’s debt commission recommendations, and we’ll have an intelligent debate about them. That’s not possible during the campaign, although that won’t keep the grandstanders from using federal workers as a foil.
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Reader Comments (18)
Posted by: John at 07/19/2010 03:32:23 PM
I do not believe that cutting the benefits will deteoriate the workforce. The majority of government employees can only work for the government. Most of them would not make it in the private sector. I think that it is a good idea to cut salaries. You cannot compare a CEO from a private company and one from the gvernment. The gov't employee does not have to worry about profit ( they don't even know what it means ) and a budget. ( take a look at our President )
Posted by: mark at 07/20/2010 10:15:25 AM
Funny that our Congress, and even more funny coming from the great GOP, that we need to cut salaries, are they going to cut their salaries? And on a pay-for-perfomance basis! They would owe us money, based on their current perfomance, and the great job they have done for the last 10 years.
Posted by: John Berseth at 07/20/2010 10:38:14 AM
Thanks for giving such a clear analysis of the federal government's payroll. It's typical of the information I get from Kiplinger--as Jack Webb used to say, 'Just the facts, ma'am.' I must say that I'm sorry Kiplinger did not take as your motto the "fair and balanced" logo that Fox has been using. In any case, keep up the good work. I'd also like to read your analysis of the Post's story on the proliferation of the US Intelligence bureaucracy.
Posted by: K9USAFRet at 07/20/2010 11:07:02 AM
The first requirement prior to cutting pay and benefits is to start with the Congress... Implementing a constitutional amendment to a 12 year term limit is a good start. The second requirement is to stop the overt corruption of senior executives and top level departmental managers. This ranges from illegal hiring practices, unwarrented bonuses for doing less than your job standards, to arbitrary and illegal use of position. Federal employees (all of them) should be held accountable for their decisions and actions, they should be stripped of their Fairness Doctrine and tort liability protections. That's just a start.
Posted by: K9USAFRet at 07/20/2010 11:29:05 AM
John, your comment displays (a) lack of understanding of the federal system. First, you put forth two "observations" which are not valid, one that they can only work for the government and that they wouldn't make it in the private sector. Then you continue to show your...lack of knowledge by indicating they don't have to worry about profit (they don't even know what it means) and a budger. As a former financial management officer and budget analyst, I can verify that while many managers don't understand the concept that every tax dollar well-spent provides an efficiency in a non-profit scenario. The government manager's profit is to stretch the services, the timeliness and quality of services, in serving external and internal customers. Every dime I spent in a $53M budget was spent with the consideration that these were taxpayer dollars and my obligation to see they were well spent was paramount.
Posted by: JD at 07/20/2010 11:42:14 AM
The fact that government workers get paid less at the high end is an argument FOR the meat cleaver approach instead of the scalpel. It proves that all government workers fit into a similar salary band. If there were a few making millions while the rest made a small fraction of that, then you might consider more nuanced cuts.
Posted by: Rich at 07/20/2010 01:49:06 PM
No question they are overpaid. Applies heavily to military also. They must streamline and make cuts just like the private sector has had to make changes to survive. Why should military recriuters make over $100K plus excellent benefits when the private sector would be paying less than $60K with far less benefits if they would privatize.
Posted by: Chris at 07/20/2010 04:08:07 PM
Can't disagree more, Public Administrators provide services that are taken for granted by a large amount of Americans. The pay is regulated and bonuses are not an option unlike the private sector. Public Administrator's understand this and accept the pay scale based on the satisfaction of giving back to their community. John, your statement of "not making it in the private sector" is off base. Every one has the choice who and where they work, if your goal is to make millions of dollars running a business more power to you, but don't look down on those that live to make the US a better place.
Posted by: jack at 07/20/2010 06:56:53 PM
Absolutely yes! The reason government needs all those contractors is because 99.9999% of the federal government employee are incompetent. Who is going to do the real work if not for the contractors? The current government employee system, where incompetent employees cannot be fired for incompetence (theoretically they can, but in practice they cant), breeds more incompetence and laziness. The few star employees that the Government was lucky to have gotten are dejected because they are paid and get the same raises the same as the incompetent. In fact, they get pay less than the incompetent that have been there a long time and cannot be fired. I have several family members (some high level managers, some low level employees), who came from the private sector that now work for the government, said the same thing. What I wrote above are paraphrases of their comments. The current government hiring system blocks most skilled employees from becoming government employees, unless they were ex-military or are married to military. Think about that, skilled employees are prevented from working for the government!
Posted by: Jack at 07/20/2010 07:49:42 PM
There's no question that government workers have better pay and benefits on average, but the truth is we need to bring the private sector up to the government standard, not bring the government worker down to the lowest common denominator. Why shouldn't we all have a good health plan and pension. Private business is too geared to pay the very top eschelon millions and make the little guy go without. It makes no sense.
Posted by: Mia at 07/20/2010 09:37:13 PM
I think we would be better served if we cut the pay of Congress and made it impossible for them to vote themselves pay raises every year, made them use the same healthcare the rest of us have to use, and take away the many perks they enjoy. Since they want to share the pain equally across the board they should also lose money and not be above the other government workers.
Posted by: bob at 07/21/2010 07:35:51 AM
High compensation public sector jobs put a tremendous burden on the private sector who must pay for them. No "skin" in the game for public sector as they can become so far buried in the bureaucracy that no one knows what they do and they can't be found even if they were to be fired. The joke about "government work" is no laughing matter. As far as the administration and congress goes true leaders lead by example, need I say more?
Posted by: zarnicki at 07/21/2010 08:45:27 AM
This is hilarious! Over the last ten years if Congress were on a Pay for Performance schedule, they would end up owing the taxpayers money! Besides, Republicans are now trying to find a way to raid the government workers pension plans to pay for their ill conceived programs. You make a BIG deal out of a 1.4% pay raise for government employees? When corporate America is rewarding themselves with huge bonus's and golden parachutes. Get REAL! When the Senate and Congress are put on the same pay system as government employees and they pay into social security like we all do, go back to your think tank and dream up some other scheme you mental midgets.
Posted by: Jay at 07/21/2010 01:23:46 PM
I hope the Heritage Foundation is recommending a pay-for-performance system in the private sector too. Pays seems disproportionate to performance when bankrupt companies like AIG, Washington Mutual, Bear Stearns, and Merrill Lynch give parting gifts in the tens of millions of dollars (or more) to their top executives but leave those on the lower rungs empty handed.
Posted by: jag76 at 07/22/2010 07:42:04 AM
I love reading comments from un-educated people that read headlines only. As a 20 year Government employee, I find the Heritage Foundation Study to be biased and political. As a Republican, I find my parties attacks against my livelihood giving me pause to consider leaving the party. The deficit was caused by elected officials who decided that the debt is not something they would have to deal with during their terms...let the next guy worry about it. It's basically living beyond your means. The Federal Govt makes the states balance their budget, but they don't have to worry about theirs. The economy is screwed up because politicians got rich on the same real estate and ponzi schemes as a good percentage of the population. Cutting Federal salaries is one of the stupidest "lets look under a rock" ways of cutting costs. The idiot that says military are over payed has obviously never served..so go enlist and find out why so many service members get food stamps. For the rest of you that have nothing to do but complain about other people's lives..Jerry Springer is on soon so enjoy.
Posted by: Rod at 07/23/2010 10:36:16 PM
If you roll back the pay of a gov't worker, by 50% they would be stupid to quit, where else are they going to go ? Other than Wal-Mart work, there is not much else out here in the free enterprize zone. An even bigger question needs to be asked at this time, which is: Why do we even need most of the Federal Agencies that we have at all, like: 1. Dept of Ag(get rid of it) -->give it back to the states, & let them decide if they even need it 2. Dept of Ed(get rid of it) same as above 3. NASA: I like NASA, but we can't afford it now. New products from NASA are no longer built here for the consumer market, but even first products come from China. 4. Dept of Trans(get rid of it) same as above: 1700 employees make $170k+ here. 5. EPA: Get rid of this agency for at least 10 years. Biggest agency job killer ever. 6. The Cabinet: Cut the cabinet down to 2 people,Sec of Def, & the guy that handles the rest. Create the CCC camps, where anyone, former wallstreet, or gov't workers, homeless, can get $10 to $15k subsitance doing small projects until things get better. Require that ALL importers produce at least 50% of their product here, or their stuff can't come in. These are DIRE times, and Dire times call for immediate & drastic action on cuts, to save our country.
Posted by: Jim at 07/30/2010 01:01:09 AM
I am 21 and work for the government. While most people my age work hard jobs with no benefits, I make 3 to 4 dollars more per hour than most of them, have far more flexible hours, get paid vacations and sick days, paid holidays and more. Plus, I really don't do much. Good for me, bad for America.
Posted by: Jeff at 08/10/2010 09:17:51 PM
Funny, I didn't hear anyone complaining when the private sector was making more money then the Gov't sector was for all those years. Now that so many good paying private sector jobs have gone overseas or faded away, suddenly it's the Gov't worker's fault for getting decent pay & benefits. Republicans would rather give taxpayer money to the banksters then see the average citizen get it. Greedy Capitalists created unions, not the other way around.