Report claims US civil servants earn more than private sector

By on 07/10/2015 | Updated on 24/09/2020

Average civil service wages in the United States are 78% higher than in the private sector, a US think tank has claimed. The libertarian Cato Institute is calling for a reduction in officials’ pay to increase turnover “in the static federal workforce.”

In his article Reducing the Costs of Federal Worker Pay and Benefits, Cato’s Chris Edwards wrote that federal civilian workers’ average annual wage was $84,153, according to 2014 data from the US Bureau of Economic Analysis (BEA) – compared to an average private sector salary of $56,350. This represents a 49% difference.

When including benefits such as health care and pensions, he said, “the federal compensation advantage over private workers is even larger, according to the BEA data: In 2014, the total federal compensation averaged at $119,934, or 78% more than the private-sector average of $67,246.”

Edwards, who leads on Cato’s project ‘Downsizing the federal government’, also said that, among 22 major sectors in the U.S. economy, “the federal government has the fourth-highest paid workers after only utilities, mining, and management of companies”, adding that federal compensation is on average higher than compensation in the information industry, finance, insurance, and scientific industries.

However, the report appears to take little account of the fact that many lower-paid government jobs have been outsourced, leaving a workforce with high numbers of managers and technical specialists. And Cato risks making a category error when it compares federal government with industrial sectors: federal government is an over-arching national structure concentrating on policymaking, strategy, defence and regulation, with many delivery functions outsourced or managed by US states, whilst industrial sectors include every level of staff from national management to local delivery.

Edwards attempted to handle such objections by arguing that “you can flip through the federal budget and find mundane bureaus where workers are paid highly for normal bureaucratic jobs. For example, average compensation in the Department of Commerce’s Economic Development Administration — an agency that hands out business subsidies — is about $140,000. And average compensation in the Department of Agriculture’s Office of Chief Economist is about $174,000. So it is not just rocket scientists that earn high wages and benefits, it is also federal workers in regular white-collar jobs.”

The report argued that the government should “overhaul the overly generous federal benefits package to reduce costs” and “privatise federal jobs where possible”.

Similar arguments have been heard in other countries – including the UK, where a set of 2014 pay figures from the Office of National Statistics appeared to show that public sector staff earned 14.5% more than private sector workers.

When analysts compared pay levels for similar jobs in the public and private sectors, however, and compensated for the fact that public bodies tend to be large organisations – which typically pay more than smaller ones – they found that people in the private sector earned 1.3-2.4% more than public sector workers.

A spokesman for the Office of National Statistics explained: “Average pay levels vary between the public and private sectors because of the different jobs and characteristics of the people within each sector.”

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

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