It’s bad enough that the average federal worker is paid more than the average private-sector worker, especially taking into account the value of benefits like health insurance and pensions. But what’s really shocking is that the gulf between the total compensation (wages plus benefits) enjoyed by federal workers and private-sector workers has increased since 1990. þþSo argues Chris Edwards, the tax director at the Cato Institute, a libertarian research organization. þþSimilar arguments were featured in a full-page ad sponsored by The Free Enterprise Nation in The Wall Street Journal on Sept. 22.þþThey were dramatized by Ilana Mercer in World Net Daily in a feature entitled “Life in the Oink Sector” and echoed by the conservative columnist Jeff Jacoby in The Boston Globe. þþNone of the sources provided any details about the characteristics of federal workers or their jobs. But such details (easily extracted from the regular Current Population Survey) explain why federal workers are paid more and why their average compensation has risen higher. They also show that federal employment creates proportionately far more middle-class jobs than the private sector. þþIn 2008, only 14 percent of federal workers were on part-time schedules, compared to 26 percent in the private sector. Federal workers were far older on average: 55 percent were between the ages of 45 and 64, compared to 36 percent of private-sector workers. Furthermore, 45 percent of federal workers held a college degree or higher educational credential, compared to 29 percent of private-sector workers. þþFederal workers are more likely to receive employer-paid health benefits than private sector workers — 77 percent compared to 56 percent. This is one reason our highest-paid federal employee, the president of the United States, is fighting for universal health insurance coverage. þþFederal workers are also more likely than private sector workers to garner pension benefits (81 percent compared to 53 percent). Keep in mind, however, that for some federal employees, pension benefits come in lieu of Social Security payments. þþBoth health insurance and pension benefits are more expensive for older than for younger workers, and health insurance costs, in particular, have escalated rapidly since 1990. Also, age and educational attainment differences have widened considerably since 1991, when 20 percent of private sector and 31 percent of federal workers had a college degree or higher. þþThe biggest difference between private and federal employment, illustrated in the graph above, lies in the proportion of jobs paying less than $25,000 a year. In 2008 more than 43 percent of private-sector workers earned less than $25,000 a year. Most federal employees fell squarely in the middle earnings brackets, making $25,000 to $75,000 a year. þþA larger share of federal than private-sector workers earned $75,000 to $150,000 a year. Beyond that level, private employees were overrepresented. The percentage earning more than $250,000 in 2008 (not shown in the graph above) was twice as high as the percentage of federal employees (1 percent compared to 0.5 percent). þþIn order to protect the confidentiality of its respondents, the Current Population Survey assigns all extremely high levels of earnings the same value or “topcode.” As a result, it’s impossible to accurately compare all private sector and federal workers in the long right-hand tail of the earnings distributionþþBut not all earnings are confidential. We, know, for instance, that the president of the United States earned $400,000 in 2008. He also enjoyed a $50,000 annual expense account and rent-free accomodations for himself and his family at the White House.þþBy comparison, the compensation of the chief executive officers of the 500 biggest companies of the United States in 2008 came out to an average of $11.4 million each. þþConsistent with the overall picture described above, statistical analysis of the impact of individual education and experience on earnings in the United States by the Harvard economist George Borjas showed that federal employees are paid considerably less than comparable private workers at the top end. þþAs the conservative columnist Ross Douthat points out, earnings inequality is generally lower in public-sector employment, and countries with a larger public sector therefore experience less overall income inequality.þþSome oinking can definitely be heard out there in the labor market, but anyone willing to follow the numbers can tell that the biggest piggies are not those employed by the federal government.þ
Source: NY Times
