Average federal pay matches Microsoft

The average federal government employee receives a salary of around $75,000 per year. With present and future fringe benefits equal to about 76 percent of salaries, that makes for total annual compensation of around $133,000. How does this match up to the private sector?

CNN Money has a nice survey of the 25 highest-paying companies in the country, outlining the average total compensation per employee in each one. According to CNN, the closest match to federal employment is Microsoft, whose average employee compensation is $132,023 per year, making it the 17th highest-paying company in the country.

When high federal pay is pointed out, public employee unions counter that federal employees are more productive than the average private sector worker, due to their greater education and experience. But do you think that the average federal employee is more productive than the average Microsoft employee? Or Intel, or Qualcomm, both of which pay around the same?

82 thoughts on “Average federal pay matches Microsoft

  1. I sent this to Congressman Paul:

    Dear Representative Paul,

    Although I agree with a lot of your plan (I’ve only read synopses), it is with extreme dismay that I have heard of plans to freeze federal salaries for X# years and/or cut their pay. Yet federal contractors will get raises even though their pay already exceeds federal pay for equivalent jobs in the same area. Freezing pay for X# yrs even though property & state taxes, food, gas, and all other expenses are increasing at an ever faster rate is an abominable way to treat employees. Eliminate Departments and Agencies to save the money but then treat your remaining employees decently!!! Congress needs to do an “Undercover Boss” episode. I am a retired (conservative, Tea Party member) federal employee whose 42 yr career was in test and evaluation of Navy aircraft and weapons systems. Believe me, DoD Feds are NOT OVERPAID!!!!

    Comparing average federal salaries to the average US salary is comparing apples to oranges. The Navy organization I worked for has virtually no government public works personnel (gardeners, janitors, building maintenance, etc.) except for contract administrators. Most government technicians are gone. Government supply department personnel (warehouse workers, etc.) are mostly gone. There are no government fast food or cafeteria workers. They have eliminated virtually all government secretarial and administrative support positions – like the aforementioned jobs, almost all have been contracted out. I also believe that studies have proved contracting out to be a false savings as after the initial low-bid contact that beat out civil service costs the new contracts rise faster than civil service costs would have. We also have no salesmen or sales clerks like the rest of the US. We’ve necked down to almost all highly specialized, technically degreed personnel and a high percentage of those personnel have advanced degrees. This greatly exceeds the “average US” education, experience, and ease of replacement. I have a feeling those agencies whose salaries fall outside the “standard” civil service pay schedule (such as Fannie May, Freddy Mac, the SEC, and the Federal Reserve) are a major contributor to the perceived pay imbalance. Their similar jobs in the “average US” pay as much or more only as they’re a much smaller percentage of the “average US” they don’t impact the “average US” as much. Your Heritage numbers are extremely biased, they’re presenting the data so as to draw a false conclusion in a manner similar to the way Al Gore treats “global warming” data (and I have an email response from Heritage admitting such).

    Again, I am a retired federal employee whose career was in test and evaluation of Navy aircraft and weapons systems. A large number of my co-workers left over the years for industry at a 20-30% pay raise (for less responsibility) or more. One left for a 25% raise, I got his job (lead engineer for an aircraft T&E program), and he became a contractor on the program with a fraction of the responsibilities (data analyst). In 2009 I (as a program manager) had to pay $10,000/week/person (their approved rates which I couldn’t change) for support from a prime contractor to fix the mistakes they made in their product (which incensed me). The contract was written before I got the job (and their contracts people always seem to outsmart ours). How much is that per year (when our people developed as many fixes as they did)? The company got/gets paid that $520K per manyear fixing something that never should have been delivered in the first place! And by the way, we found (find) lots of major mistakes in the aircraft and weapons systems the contractors sell us which supposedly are ready for the fleet.

    Federal Civil Service employees and retirees pay 25% of their health insurance costs and most plans carry considerable copays for visits, hospital care, and medicine. Due to Obamacare, I’m paying 10% more per month for my HMO insurance and 20%+ for copays in 2011. I also paid 7% of my salary towards my pension (old plan). I am not eligible for Social Security (I only had 8 quarters) nor do I get spousal Social Security (which I could get had I not worked for the US but laid around the house). I paid for my life insurance (although it was a group policy which helped costs) while major companies gave it to their employees for free. I’m not complaining about Federal benefits (which I believe are reasonable for an employee of a major organization), but most non-federal union employees contribute much less for the same or better benefits – except for leave. And my retirement plan – CSRS – is in excellent fiscal shape as opposed to those other plans.

    I will admit some of the reasons I stayed included job security (which no longer exists), the pension (I worked till over age 63 with just short of 42 years in although I could have retired at 55) (and which has been changed for new employees), but most of all the job(s) that I had over the years (the test pilots and the future astronauts I worked with, the technology (unbelievable!), etc.). So I stayed and willingly and knowingly accepted LESS pay than the contractors got. I felt that what I was doing was vital to the security of the US, was constitutionally valid, and was personally rewarding on many levels (not including pay). There are many, many things wrong with federal service, but the pay for technically degreed DoD personnel is not one of them.

    So why do so many people want to cut or freeze DoD salaries (among others)? Conservatives that are fixated on federal salaries need to stop the class warfare and demagoguery – we complain when the Democrats do it. Please think – don’t just blindly accept numbers from people who know the results they want (on both sides) without researching the facts and methodology.

    You want to save federal costs? Eliminate the EPA and DoE (really the Department of Non-Energy). That’d give both a major savings in federal costs and a major boost to the economy. Eliminate the Education, Labor, and Housing and Urban Development Departments. Go to a flat tax or, preferably, the Fairtax and eliminate 90% of the IRS. Cain’s 9-9-9 plan has good ideas (although the FairTax is the best).

    Any proposed across the board federal pay cut or freeze is poorly conceived and wrong.

  2. As others have stated, you cannot simply compare averages. The Federal Government contracts almost all of its lower paid positions, including janitorial and data analyst employees. The pay for these employees is not included in government worker pay and would bring the “average” down significantly were it included in this number. I assume Microsoft outsources their janitorial staff, but I doubt they do the same for those doing the mass-number crunching at the lower end of their pay scale. These are not the only two positions contracted out by the government, and they account for an extremely large percentage of the government workplace. The ‘higher paid’ government jobs are all a B.A., Masters, or PhD in a pertinent field. As someone else stated, your comparison is useless until you are comparing apples to apples.

    This comparison is flawed on so many levels, but since others have mentioned most of them, I will stop now.

    This article would be more useful as an example of how not to let public perception shape the outcome of a ‘study’.

  3. As a federal employee in law enforcement, I’d say that compensation is in line with education and experience in my agency. There are feds who put their lives on the line everyday, and are proud to serve their country. This author, and others like him, like to use gross generalizations and flawed comparisons to serve a general narrative. That is, that Government is bloated and all Federal employees are overpaid and lazy. Rather than focus in on the specific inefficiencies of Government, and eliminate the unnecessarily or undesired programs to cut costs, the author chooses to throw out “red meat” to tea partiers and Fox News viewers. It serves as a tried and true sermon in the Church of the Permanent Rage.

    Federal employees are entering the second year of no pay raises, which is effectively a pay cut with inflation. With retirements and hiring freezes, we’ll see the average compensation drop over the next several years. For years becoming a Federal employee was undesirable because of lower pay in comparison to private sector jobs. Now that we have a permanent 25% underemployment in prolonged recessionary environment, it’s become popular to go after civil servants who gave up higher compensation for many years in exchange for perceived stability. Seems that some don’t really like the vagaries of the private enterprise after all.

    If you want to reduce the cost of bloated Government, do it by cutting programs, not by demonizing the people who happen to work (and pay taxes) in the service of their country. The entire discretionary budget for civilian federal programs represents only 12% of the overall budget for our Government. That means you could completely eliminate all non-defense and entitlement programs and we’d still be running huge deficits. If you want to stop bankrupting the Government you need to reduce defense and entitlements, not attempt to demonize civil servants. But, then that doesn’t serve the narrative, does it?

    • Since 1992 a total of 2,956 federal workers have died in the line of duty, with the overwhelming majority of them being in iraq and afghanistan. This is an old number. It does not include the firefighters who died fighting fires since or the ranger who fell 1000 feet to his death while trying to rescue some stranded climbers in the Pacific Northwest.

  4. So in the end what is the point of this? Why is it wrong for government workers to be compared to Microsoft workers as far as pay? Why shouldn’t educated and experienced federal employees be paid a comparable salary? I would still like to know where they are getting these figures for the average federal salary. And where were our advocates when the private sector workers where making 5 times what we were and receiving bonuses, stock options, and quarterly raises? Is it because we are paid with tax payer money?

  5. As a federal employee at the GS 9 level my base annual pay is 45,718.00. GS pay scale is a matter of public record and can be found running a simple search. How that translates into 133,000 I have yet to see and I have been in government service for 30 years. Most government employess are not as high as GS 9. A large group are GS 5 or 6. even alot less. You should get your facts straight if you want to make this kind of comment….

  6. Did the author even read the white paper he is referencing? It states a 17% fringe benefit of “extra job security” on page 1. What kind of BS financial benefit is that?

    On page 2 of the white paper the author states the following:
    “Federal salaries are significantly higher on average than private sector salaries, but this comparison is simplistic and misleading. Since federal workers have more skills and experience on average than private workers, we would expect federal salaries to be higher. The relevant question is whether federal workers earn more than comparable private sector workers.”

    Yet the author of this blog post ignores this pertenant fact.

    The meat of the “complaint” against federal salaries is the statement on page 3 that federal workers earn 1.1 – 1.2 times what a comparable private employedd makes. This was cite #4 the Handbook of Labor Economics. I have no reason to believe this has bias behind it or not so I will agree with it for the sake of argument. Now factor in the cost of living in the areas where the majority of government workers are located is almost certainly GREATER than 1.1-1.2 times the national average and the entire point of this blog post is nullified.

    Other variables considered in the white paper that cause the statistics to be skewed further:
    “In addition to dummy variables for federal, state, and local government employment, we used the following controls: usual hours worked per week, experience,6 experience-squared to account for non-linear effects, years of education, firm size (6 categories), broad occupation (10 categories), immigration status, state of residence, race, gender, marital status, and year dummies to account for inflation. We also included interaction terms: experience x education, experience-squared x education, marital status x gender, and gender x race.”

    Basically they weighted all of these variables regardless of their quantitativeness. Sounds scientific to me.

    On page 6 of the white paper, there is a table identifying education and experience to compensation. A high school education gave a 22.3% increase according to the skewed data. Where a college/graduate degree earned only a 7.7-3.9% difference respectively. That is SIGNIFICANTLY lower. You want to take money away from the high school educated person earning probably around 30-40k a year?

    Finally, further down in the article, (page 9) it lists a “fringe benefit” particularly in DC of being promoted faster and to a higher level of responsibility in the federal work force than in the private work force. Maybe that is b/c they pay you next to nothing in skilled positions when you first start, so they have to promote you fast to get you to stay. The article also states that for the same type of responsibility the federal worker makes LESS than the private counterpart but is underqualified by comparison. So how is that a benefit to the federal worker? They have to do the same amount of work and struggle with the tasks and are paid less. Souds awesome to me…

    After that starts the “Benefits” part of the article and I couldn’t stand reading any more of it. These beneifts are almost entirely non-quantitative by nature and yet they are factored in to government compensation. In short, statistics are used to prove whatever point you set your mind to. Maybe we should focus on the other 98% of the federal budget b/c federal employee salaries and expenses account for roughly 2% of our budget.

    • Oh and don’t miss the part of the article that tries to quantify the $$ amount you can associate with “Job Security”. What the heck is that? That isn’t worth money. Another perceived benefit: being able to contribute to a 401k (TSP in government) that is based on savings bond rates and security. Are you kidding me?? WOW it is really great I can invest my 401k in a 0.5% rate of return option. Every american can invest their money in different ways in preparation for retirement. On this same subject, this data includes $$ value of being in FERS (Pension for Civil Servants). Except this system is no longer available to employees, but is grandfathered in to those that entered into it over 15-20 years ago. Seeing as how almost all of these individuals are nearing retirement and not coincidentally earn a higher salary, it is a VERY poor predicator on the trend in salaries of the Government vs Private sector employees.

    • Two recent government/private worker total compensation studies, one just released by the CBO (federal workers) and and earlier one by the Dept. of Labor (state workers) clearly show that the premium for government employees is independent of comparable job catgegories. That is, it does NOT go away when you control for job category. These studies compare total compensation (salaries and beiefits) and also compare its components. The evidence is clear that government workers are compensated at a level significantly higher than private sector workers, on average in the US. While there are undoubtably some local and state variations, the main finding stands.

      • The AEI study (June 2011) of federal and private sector compensation is also very complete and very informative on this issue. To see it, click on “… about 76 percent of salaries” in red the first paragraph above.

      • Are you talking federal pay and pensions? I made $7200 as a beginning graduate nuclear engineer while the average grad from my school was making “$12000 a year. I topped out at $60,927. My son also an engineer in the private sector started at $70K. Now if you are talking local pay and pension l- not federal you might have something. My takehome pension after taxes, health insurance and life insurance are taken out is $1756 a month. My shipyard got closed and I retired early. The local police chief’s pension in the 60,000 person town in which I live is $130K a year and 4 police sergeants in my town made more money than a federal employee, the chief justice of the U.S. Supreme Court. Yet feds are overpaid? I don’t think so. I think the Chief Justice of the U.S. Supreme Court should make more money that 4 police sergeants in this town.

  7. As a followup, I feel obligated to say that I am an federal employee with a BS in Accounting and a BS in Information Technology and work in the DC metro area. I am also a conservative and believe in a limited government and reducing our federal spending. Federal employee salaries/expenses is NOT the problem. Why are we focusing on roughly 2% of the total spending of our government when we have 80% of the budget wrapped up in 4-5 programs. (SS, Medicare, Defense, and Interest on the Debt. I can’t remember the 5th one.) Why aren’t we complaining about the theft of the SS trust fund by it’s inclusion in the US General Fund? What benefits do people perceive governement workers receive? The only benefit I receive from my employment is my salary. It pays for every high cost commodity in DC including higher costs in housing, transportation, food, utilities, taxes (Montgomery Co, MD) and everything else. The starting salary today in the DC area with our cost of living for IT Professionals and Accountants is 42,209. That is a GS-07 with the DC locality rate. The average starting salary in the same fields in the DC Metro area are between 50 and 80k in the private sector. So I find “statistics” used by bloggers highly suspect and believe them to be a gross generalization of the facts used to ignore the real problem, to shift blame and to demonize a group of people trying to do the same as the rest of the working middle class…which is provide as best we can for our families. Lord knows it isn’t cheap to do that around here.

    • Jonathan,

      You’re right that this stuff isn’t straightforward, and a comparison to Microsoft employees is really just an example that doesn’t prove anything. However, the CBO report that came out yesterday confirms a lot of what was in the AEI paper I did with Jason Richwine. It’s worth checking out.

  8. As has been mentioned before, the CBO & Labor Dept comparisons are based on actual job positions, not averages, and they still found a premium paid for govt jobs (although it’s not flat for all positions).

    With regards to microsoft/intel, they don’t have any (or hardly any) lowly positions, almost everyone at the company has a ba/ms/phd and they still get paid less. Why don’t those defending the pay scale try pointing to their studies so we can pick those apart.

      • You claim thousands of heads-down developers without college degrees at Microsoft. This is the kind of comment that you can find everyone on the Internet. It is FALSE. Microsoft recruits heavily from Carnegie Mellon, MIT and Georgia Tech plus a few other top-tier technical universities. You might have been correct in the 1980s but I worked there in the 1990s and interviewed/recruited more than 150 people and only a couple of administrative assistants had less than a bachelors degree. If only there were a penalty for false information on the Internet…

  9. government workers are actually earning almost double in most cases when you count their paid holidays, overtime pay, family healthcare, defined benefit contribution plans, etc. etc.

    instant millionaire status upon retiring….

    sweet gig if you can get it while it lasts….

    • instant millionaire….yeah right….paid holidays, overtime pay, healthcare….most companies pay this also….i will give you matching retirement pay up to 3%….but seriously, millionaire status….not even close….

      want to talk about government salaries….hmmm, lets talk about congress, are they included in this study? Lets look at their health benefits, i bet theirs is better than anyone in the country..retirement? lets look at what their retirement is…better than anyone in the country….vote to give themselves a pay raise….dont know any company in the world that does that….

      sure, millionaire status, maybe for congress, maybe upper management, and maybe air traffic controllers…..people want to keep bashing on the government employee…lets get specific….as far as statistics go….what do you want to prove….i can make a statistic say whatever i want to prove…

      Over the years most government employees have seen their benefits shrink, less choices for healthcare….so a sweet gig….maybe in the past or maybe for the upper management….not so much for lower tiered workers…which is a bigger portion than the latter…….want to hold someone accountable….lets start with congress….then work our way out….average salary for senator….150,000 plus, lets add the healthcare they get….might as well tack on another 80-100 thousand dollars… most senators salary and benefits is reaching the quarter million dollar status….now multiply that by 100 that is what the people are paying for just in senators a year…we havent looked at the representatives….and how much is cost the people to pay their salaries……

      want to get real…lets get real….

    • TommyJ, all of the things you mentioned are *ALREADY INCLUDED* in the supposed $133k figure. And there are so many problems with that it’s ridiculous. For example, it lumps in about $26 billion in payments to retirees as part of compensation for *CURRENT* employees. The real number is closer to $110k.

      Also, the figure for Microsoft doesn’t include *EXECUTIVE* pay, and the Federal compensation number *DOES*. For example–do you *really* think the $199k that a Cabinet member earns is similar to what the CFO or COO of Microsoft gets paid???

      Your attack on Federal compensation is a paper tiger.

    • Overtime pay? 10 years in as an engineer in DC and I’ve never seen such a thing. I pay nearly $6K/year in insurance premiums to cover myself and my spouse, too. And I defy you to find me ten feds rendered millionaires upon retirement. I’ve not met them. Where exactly are YOU meeting them?

    • I’m a retired federal nuclear engineer with a take home pension of $1756 a month for which I contributed 7+%. My brother-in-law grocer brings home $2150 a month from Social Security plus a union pension. I started working for the government in 1972 at $7200 a year as a GS-5. The average graduate from my school, the University of Missouri at Rolla, an engineering school was $12000 a year. I made $4800 a year less than that. I told my engineer son to not go to work for the federal government. So if it was such a sweet gig, why did I give him that advice. He started in the private sector whose contracts are 100% with the U.S. government at $70K. My top pay was $60,927 a year. On top of that you have all these idiots who constantly complain about federal employees. When was the last time you heard people griping about Boeing employees. For that alone, fed employees should be paid putting up with a hole pay.

  10. never heard so much horse puckey in my life as this cry me a river fed employee below…..

    Federal employees are entering the second year of no pay raises, which is effectively a pay cut with inflation. With retirements and hiring freezes, we’ll see the average compensation drop over the next several years. For years becoming a Federal employee was undesirable because of lower pay in comparison to private sector jobs. Now that we have a permanent 25% underemployment in prolonged recessionary environment, it’s become popular to go after civil servants who gave up higher compensation for many years in exchange for perceived stability. Seems that some don’t really like the vagaries of the private enterprise after all.

    • This is class warfare started by Obama against 1%. Now that it has started look out because you worry that no raise is a cut. No, no job is a cut. Some employees in the private sector took a cut in pay to keep other employees employed. Capitalism works (not crony capitalism) everyone needs to relax and not let our country become divided. We are Americans. Remember when we judge other people’s success we know that other people somewhere are making less and judging anyone that makes more than them as the 1%. That is what is happening to our Fedral Workers. Past decisions have created have and have nots in comparing wages. We look at Greece and go who ever thought that would work. Well it is the same here. We need to create an atmosphere where we are the country with the cheapest energy, best conditions to start a business, and the path of least resistance to build. We can do this in a safe and fair way. We created more government since 1970′s and have cut so many deals that it ruined the middle class. The 1% and Unions cut the deals and government participated. Now with EPA, DOEnergy, DOEducation. Way to big and we need to start over. Just get it over with and give vouchers. ( look at New Orleans)

  11. This is crazy. A lot of the people I work with in the DoD are retired military or prior service military veterans. This means that they bring the skill they acquired while being a war fighter to the position they have as a Civilian working for the Government. Most of us don’t do it for the money, we do it because we enjoy the feeling of serving our country still after serving in the Military. My position in the Bay Area of California paid me in the range of 70K annually, where my counterparts working as Government Contractors made easily twice as much. The civilian sector was much the same, my friends and family always would say I should go work outside, for Yahoo, Google, or any private company to make more money – But its about more than that.

    In the government we take hits all the time. We loose raises, increases everything else to save the tax payers dollar. When we deploy as Civilians into combat zones we still pay taxes where Contractor Employees that are paid in most cases twice as much as us and the soldiers are not. We work hard to be stewards of tax money and not be wasteful where Civilian companies don’t have that problem.

    Working for the Government I know I can never get a huge cash award, stock, anything else that would be a perk in any private company. I’m curious if the problem isn’t that the Government is over paying its people, but if maybe the private sector is underpaying now. Years ago this wasn’t even an issue as everyone was making money hand over fist and laughing at the low pay offered by the Government.

    And to add to this – My wife’s medical insurance from a private company cost less to cover our entire family then it does under my government benefits, so whenever I see posts like this it makes me crazy…

    • I understand your points. But also consider that the CBO report found that federal employees retirement package is worth around 3.5 times more than what a similarly educated worker in a large private sector firm receives. And I think that figure probably understates the true federal advantage. That more than makes up for the fact that federal health insurance is less generous than many private sector firms, as well as the many other legitimate issues you raise.

    • I know of what you speak. I’m a retired federal Nuclear Engineer GS-840-12 whose shipyard was closed. My take home pension is $1756 a month after taxes, health insurance, life insurance and a survivor benefit which will let my wife bring home about $1000 a month when I die. I pay about $400 a month for insurance. The most money I made working as an engineer was $60,927 a month. My son, also an engineer, started with a private sector contractor who gets 100% of its work from the federal government. He started at $70K and is now up to $80K. His pension plan sucks but as for as health insurance goes his plan tops mine. I pay about $400 a month. He pays about $12 a month he says. My plan does not include dental or eyeglasses. His plan includes dental and I’m not sure if it includes eyeglasses or not. The first private sector company he worked with had a 401K plan whose stock was doing very well and they pretty much said if you work for this company for life, you’ll end up a millionaire. Of course he didn’t stay with them as they wanted him to move constantly and he just bought a condo that’s under water.

  12. You guys realize that Microsoft (and other private employers) also give benefits to their employees, right?

    Maybe not as much, proportionally speaking, as public sector, but you can’t just take the public sector’s average wage, add in their average benefits, and then compare it to private companies’ average wages.

    Plus, income is one of those things that doesn’t do well with an average statistic, because it’s so variable. You should be comparing median incomes, not mean incomes.

    But you weren’t interested in a useful comparison, were you? Just rhetoric.

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