Are Federal Workers Overpaid?

Are Federal Workers Overpaid?

The average federal worker earns more than the average private-sector worker, but may be paid less to do the same work.

Chris McConnell | GovCentral

The Cato Institute, a libertarian leaning think tank, suggests that the average federal worker is paid more than the average private-sector employee, especially when fringe benefits like health insurance and pensions are factored in.

Nancy Folbre, Economics Professor at the University of Massachusetts, Amherst, in a recent New York Times article, wanted to explore if there was any merit to these claims.

Poll: Are Federal Workers Overpaid?

Poll: Are Federal Workers Overpaid?

With little details provided by organizations about what defines the average federal or private worker, Folbre decided to dig into the details of the Current Population Survey to see what defines the average worker. The Current Population Survey (CPS) is a monthly survey conducted by the U.S. Census Bureau and released every month. For her article, Folbre used calculations from the 2009 March CPS survey.

By her calculations, the average federal worker is older, more educated and works full-time compared to the private sector. While more likely to have employer-paid health care and a pension waiting for them upon retirement, the federal workforce is decidedly middle-class, with the majority earning $25,000 to $75,000 a year. The think tanks may be somewhat accurate, but comparing the average worker only tells half the story.

The Bureau of Economic Analysis explains that the federal workforce is concentrated in professional, administrative, and technical occupations while private-sector positions range from minimum wage to high paid CEO’s.

According to Folbre’s calculations, 43 percent of private-sector workers earn less than $25,000 a year, but the average compensation for Fortune 500 CEO’s in 2008 was $11.4 million each. In comparison, President Obama will earn $400,000 in 2009, though he does get to live rent-free in the White House.

If we compare similar professional occupations, some people may take a pay-cut to work for the federal government.

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