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You’re Paid TOO Much – Not ENOUGH – The RIGHT Amount? What’s the real figure?

Depending on which stats you look at and depending on which group you talk to, federal employees are either WAY underpaid or WAY overpaid.

How can those divergent numbers exits? “You can pretty much pick whatever numbers you want and you can’t be disproven,” said Eric Yoder a staff writer for the Washington Post.

The lastest numbers which show federal employees earn on average 34% less than their private sector counterparts use figures from the Bureau of Labor and Statistics and are culled together by the Federal Salary Council.

Yoder told Chris Dorobek on the DorobekINSIDER program how the Federal Salary Council operates.

Yoder Explains the Figures:

Formation

The council was created by law in 1990. It was designed to take politics out of the process of setting federal pay raises. The law set up a system of ordering the Bureau of Labor Statistics to do these annual studies to find the average pay gap in 30 metropolitan zones plus other areas. The idea was to put pay on auto-pilot. But it’s important that these are not cost of living numbers but cost of labor numbers.

2012 Numbers

The average nation-wide pay gap between federal workers and the private sector is 34.6%. Within that average there is a range from about 50% in Washington, DC and San Francisco and down to about 23% of the areas are outside the major cities. The simple fact is that labor is more expensive in urban areas and therefore as an employer you have to pay more for similar skills within areas like DC.

What Happen’s Next?

The number and pay raise recommendations are sent o a higher-level group which in turn reports to the president. These numbers are supposed to be used in the budget recommendations due in February. But since the law was enacted no president has recommend raises anywhere near what the levels indicate they should be in the report.

Side By Side Comparison

It’s almost impossible to do a side-by-side comparison between the private and public sector jobs. It’s hard to make the private sector fit into the little boxes the government has created for the way it determines the level of compensation for a job. Take a forklift operator for example. A private sector forklifter might be hulling boxes filled with tools. A forklift operator for the government might be hulling materials for nuclear weapons. It’s hard to compare.

Agreement

There are very few things that the Heritage Foundation and the BLS figures can agree on. But sides agree that the federal government does underpay for highly qualified and highly educated workers. And both agree the government might overpay the less educated and the less skilled positions.

Benefits Factor

The BLS figures do not factor in benefits. The law doesn’t take benefits into account because when it was created public sector benefits and private sector benefits were more on par. But now private sector jobs are taking away insurance and retirement packages. Feds have gotten ahead in benefits.

GAO’s Take on the Numbers

Government Accountability Office recently said that none of the comparison approaches is definitive. That’s doesn’t bode well for the government.

Divergent View Points

You can pretty much pick whatever numbers you want and you can’t be disproven. The real question is the government a competitive employer? Is there a higher than normal turnover rate? Is there a retirement tsunami?

Republican presidential candidate Mitt Romney argues that federal workers are overcompensated by 30 to 40 percent on average. That assertion is based on a study by the conservative Heritage Foundation that included the value of benefits; based on salary alone, that study found an average advantage to federal workers of 22 percent.

Future?

No matter what feds are looking at very small increases we are talking 1, 2 maybe 3 percent in the next few years. They will have to rely on incentives to motivate and attract the workforce. Moving more towards a job specific type of pay systems. We won’t see a big movement on federal pay no matter who wins the election.

Here’s A Washington Post Graph of the Stats:

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Profile Photo Terrence Hill

Instead of trying to compare the whole public sector to the whole private sector, I have found that the best comparisons are based on specific occupations. For instance, an accountant or a computer programer. Instead of trying to work with averages of entire sectors, it is more effective to compare occupations one-by-one using salary survey information for various levels, for entry-level, through jouney-level, to management level.

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Profile Photo Dale M. Posthumus

Terry, absolutely right. It still is not easy, but generalizations are worth liitle. Another difficult characteristic is stability. Federal employment is far more stable than private sector at the individual level. How do you put a dollar sign on stability? But, we must try.

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