Damn it feels good to be a federal employee…
By: John Gray | August 04, 2016
In late July, the Heritage Foundation released a study on federal employment entitled, “ Why It Is Time to Reform Compensation for Federal Employees.” That report confirms what we all expect: damn it feels good to be a federal employee.
In total, there are more than 2 million civilian (non-military and non-Postal Service) federal employees. Those federal employees are living well; or, at least, much better than if they had the same job in the private sector.
Crunching data from the White House and Congressional Budget Office, Heritage finds that federal employees receive a wage premium of 22 percent compared to similar jobs in the private sector. Add in the government’s platinum-plated healthcare benefits and generous retirement system, and the total compensation premium jumps to anywhere from 30 to 40 percent more.
Federal pay is mostly based on a General Schedule (GS). There are 15 different pay grades, and 10 different steps. Pay grades are based on skill levels and experience, whereas the steps represent seniority. These schedules apply to the different regions around the United States. Take Washington, D.C., for example, home of one-sixth of all federal employees.
In the chart provided by Heritage, you may notice that D.C.-area federal pay ranges from $22,888 per year (grade 1, step 1) all of the way up to $160,330 per year (grade 15, step 10). Yet, perhaps most funny (um, not really) about this chart is the column to the furthest right. As you can see, no one in the federal government is paid at the lowest levels, while nearly 20 percent of Washington-area federal employees make between $77,490 and $100,736.
However, recall that these figures don’t include benefits. Add those into the mix, and things get much better (or much worse, if you’re a taxpayer) – and significantly widen the gap between government employees and the private sector. As Heritage analysts James Sherk and Rachel Greszler write, “Generous retirement benefits account for the largest difference between public-sector and private-sector compensation.”
In the private sector, if an employee is even lucky enough to receive a retirement plan, the average contribution by an employer is between three to five percent of an employee’s salary. But government employees? Heritage believes their contribution is about 15 to 18 percent – about five times more than what private sector employees receive. The next chart, also provided by Heritage, says it all:
To top it all off, the Feds also have a ridiculous vacation and leave policy. According to Heritage, federal employees with at least five years of experience are granted “20 vacation days, 13 paid sick days and all 10 federal holidays.” That’s far more than the private average of 13 vacation days and eight paid sick days. That basically boils down to 22 paid days off in the private sector versus 33 for those who you generously support with your hard earned tax dollars.
So what, you might say, those hard working bureaucrats get paid well – why should I care? Well, you pay for those “hard” working bureaucrats. Collectively, the federal government’s budget for compensation is larger than the entire economies of Israel, or Denmark, or Singapore, as just a few examples. In fact, that budget dwarfs the combined economies of Luxembourg, Oman, Costa Rica, Bulgaria, Uruguay, and Panama.
The government operates in its own world, without the signals of the market place.
That’s right, the government is expected to spend $337 billion in 2017 on those bureaucrats’ salaries. If federal employees were paid wages similar to the private sector, however, that figure would be nearly $50 billion less (per year)!
Based on figures from the Heritage Foundation, one could conclude that if we paid private sector wages to all federal employees, we would save nearly half a trillion dollars over the next decade – or $517 billion. In fact, Heritage outlines a number of reforms the government should consider, including smaller pay bumps, implementing a defined benefit retirement system, and reforming federal health insurance benefits, among others. If the government implemented these reforms, they could easily save $333 billion over the decade.
As Sherk and Greszler point out, the inefficiencies of the federal government are one big reason that federal employees are paid more than in the private sector. The true beauty of market forces are not apparent in government; that is, productivity is not essential in government, like it is in the private sector. The government operates in its own world, without the signals of the market place. Its revenues are not dependent upon appeasing a customer base, but instead, are fulfilled by coercing citizens into paying taxes.
Still, America is the home of the freest markets in the world, and it would behoove us to combat the bureaucratic stasis that separates the public and private sectors. The Heritage Foundation report makes a strong contribution to this argument.
- See more at: https://www.conservativereview.com/commentary/2016/08/damn-it-feels-good-to-be-a-federal-employee#sthash.DOZMyIWX.dpuf |
