Are Government Workers Overpaid?

(originally published at )

The Cato Institute, a libertarian leaning think tank, suggests that the average federal worker is paid more than the average private-sector employee, especially when fringe benefits like health insurance and pensions are factored in.

Nancy Folbre, Economics Professor at the University of Massachusetts, Amherst, in a recent New York Times article, wanted to explore if there was any merit to these claims.

With little details provided by organizations about what defines the average federal or private worker, Folbre decided to dig into the details of the Current Population Survey to see what defines the average worker. The Current Population Survey (CPS) is a monthly survey conducted by the U.S. Census Bureau and released every month. For her article, Folbre used calculations from the 2009 March CPS survey.

By to her calculations, the average federal worker is older, more educated and works full-time compared to the private sector. While more likely to have employer-paid health care and a pension waiting for them upon retirement, the federal workforce is decidedly middle-class, with the majority earning $25,000 to $75,000 a year. The think tanks may be somewhat accurate, but comparing the average worker only tells half the story.

The Bureau of Economic Analysis explains that the federal workforce is concentrated in professional, administrative, and technical occupations while private-sector positions range from minimum wage to high paid CEO’s.

According to Folbre’s calculations, 43 percent of private-sector workers earn less than $25,000 a year, but the average compensation for Fortune 500 CEO’s in 2008 was $11.4 million each. In comparison, President Obama will earn $400,000 in 2009, though he does get to live rent-free in the White House.

If we compare similar professional occupations, some people may take a pay-cut to work for the federal government.

A law-school graduate starting at a Washington, DC law firm can expect to earn around $140,000 in their first year. That same graduate starting at the Department of Justice down the street will start at $60,000. While the DOJ lawyer can get up to $10,000 a year to repay student loans, the private sector lawyer should probably pick up the tab at Chef Geoff’s.

Likewise, a mid-career IT Project Manager can expect to earn $80,000 at the Department of Veterans Affairs, but that same position in for a company like AT&T can earn you double that.

Starting a career in federal government is more than just a salary though. Many people choose public service to contribute to the greater good of society or for a greater work-life balance. In many cases, a federal worker may have more responsibility than their private-sector counterpart. For example, a laboratory technician at the Centers for Disease Control is researching the cure for HIV and a Federal Agent with the Federal Bureau of Investigations is undercover right now, rooting out the next corruption scandal.

In the federal government, there may be a cap on your earning potential, but not in your potential to affect change for the greater good.

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In Arizona? State government workers are the lowest paid (the state has been trying to catch up for five years). Our people usually leave for City/county/fed. jobs and that’s IF they stick with Government work….many leave for the private sector.

Mary Davie

I’ve been a career civil servant for 20+ years (my entire career). Not exactly underpaid, know I could make more money in the private sector, but not the primary driver for me.

Mike Herrmann

I concur with Mary. Additionally, I read both studies. To stay they were statistically biased is to understate how flawed they actually were. Case in point: how many of the 45% of private sector workers who make less than 25K a year work part time, in retail, for hourly wages, without higher education? How many government positions offer that level of salary, flexibility, or waive education requirements?

Personally, I accepted a 30K per year pay cut when my position was converted from private to government. Yes, I make a nice living. Overpaid is a stretch.

Jennifer D. Johnson

I’ve seen both extremes. I know many people who took substantial pay cuts to work for the federal government; most of them did so willingly in order to support a mission they believed in. On the other hand, I’ve also seen some federal employees who were truly overpaid for the duties they performed.

In my case, I make more with the federal government than I did in the non-profit sector. However, I don’t feel overpaid considering the responsibility I have as a newly appointed contracting officer.

Kevin Lanahan

In Missouri, I like to joke that the state pays 2/3 of retail. That goes for pencils, computers and employees.

On the other hand, I’ve been able to make several significant contributions to the benefit of the citizens of the state, and I’d never get to do that in the private sector.

Philippe Vermeulen

Define “paid too much”? Compared to what or to whom? It is an never ending discussion and you’ll find irrefutable arguments on both sides. The only thing I can say is that all HR-handbooks tell the same story: if you want talented people, you’ll have to pay market wages or you loose them. The question therefore is not the height of the wages but if the employee performs up to the expectations and goals. And that’s a more difficult task…

Barbara Ann Smolko

I agree that we should be sure we’re comparing apples to apples. Most government positions have much higher education requirements that your typical retail or hospitality industry position. And, let’s not forget that some government jobs are less appealing that private sector positions. I suspect that the nurses at our County jail deal with some working conditions and clients that are much more challenging than what they would find in the private sector.

Arthur C. Brown

Between the military active duty and reserves plus local governlment as both an employee and elected I have a total of 76 years of government employment. I have two pensions and take home about $3,250.00 a month. I pay all my bills and even have some left over for fun. I loved all my government jobs and believed that I was doing something for the other guy. Some of which they would never do for themselves. I never expected to get rich.

Martha L. Ayerdis, MBA

I agree with Tricia that State Workers are the lowest paid. From my personal experience the low salary force employees to leave the state (government jobs) for the private sector. You can have the passion, dedication, loyalty, and love for helping others but how you can pay your bills and your students loans? I believe Arthur has a good point but how many state/federal employees have the opportunity he had? Only few of them.

Janet W. Curry

Compared to federal workers, local government employees have a much lower level of retirment benefits and salary yet the high level of education (Master’s degree) is required. It is frustrating when statistics lump all government workers in the same group and use the federal statistics to compare to private sector. Compensation on the state and local government level is substantially less despite the fact that similiar knowledge, skills, and abilities are required. As an HR Manager, I compare the numbers!

Lizette Molina

I find it disappointing that the pervasive image of the federal worker is lazy, retired-in-place, and just there for the paycheck – as if feds could never be fired. Yes, there is a lot of dead weight everywhere, not just in the fed gov. But most feds I’ve known don’t fit that stereo-type – they work hard, often wearing more than 1 hat (particularly in underfunded agencies), and are frequently drawn to gov work because they believe in the mission of the agency and in being a civil servant. Many state and local gov employees I’ve met also fall into the category of hard-worker. So what if an additional motivation to stay in the gov is that there is some sense of stability and decent benefits? When did it become shameful to want stability, health insurance, and paid leave?

And let’s talk about stability . . . how is the constant threat of outsourcing, unpaid furloughs when an agency’s budget isn’t passed, RIFs, etc. – how is it that working for the gov anymore is actually “stable”? Anymore, there might be a perception of stability more than a reality of stability. It’s certainly not stable or even safe for many of our brothers and sisters in the gov when they’re keeping our borders secure, fighting forest fires, infiltrating drug cartels and gangs, or even just working in a gov building that could be a target for some crazed zealot.

The best thing that could ever happen to these rather biased studies is that world simply ignore them. Any good statistician can make numbers appear to provide a “truth”, when in fact that truth is missing context.

Well, I’m done w/my sandwich and it’s time to get back to work. I got here yesterday at 5:40 AM and worked until 7:30 PM w/only a short break around 6:00 AM to work-out in the gym that is thankfully in the same building – no coffee breaks, no lunch break, and not even remotely interested in asking my boss for comp-time or compensation for the extra hours worked. Today, it’s my off day; but I’m here working. Why? Because I’m in charge of something I believe in and will work until I drop to get it done, get it done right, and get it done on time. And you know what? Around here, I’m not the only one that does that. I’m proud to work in a place where many (if not all) people are committed and dedicated to the agency and what it stands for, in a place where people are willing to do the job, no matter what. Tell THAT to the folks that keep hollerin’ about over-paid gov workers.