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 claims that federal workers are underpaid.
CBO found that federal employees receive average salaries that are about 2 percent higher than those for similar private sector employees and benefits that by 48 percent exceed private sector levels. Total average federal compensation is 16 percent above private sector levels. With federal employee compensation totaling $200 billion per year, a 16 percent pay premium is big money.
CBO’s methods are broadly consistent with the 2011 AEI study, although 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 of somewhat different economic assumptions. Nevertheless, the CBO report serves as a valuable contrast to figures generated by the federal Office of Personnel Management claiming that federal employees are underpaid by 26 percent relative to private sector jobs.