Orszag: Bureaucrats Get Paid More Because they’re Better Workers

As a lengthy economic slowdown has taken its toll on private sector workers, there’s still one ‘industry’ that’s flush: government. In good times and bad, government keeps growing. And in recent years, government employment has become even more attractive, as the gap between private sector and public sector compensation grows wider.

So why do federal workers earn so much more than their private sector counterparts? According to Budget Director Peter Orszag, it’s not because of government unions, or because of poor decisions by Congress – it’s because government workers are better educated and more experienced:

“I think the key thing to remember about that is the federal workforce is more highly educated than the private workforce,” Orszag said. “Roughly a third of the private workforce has a college degree, for example, [while] well over 50 percent of the federal workforce [does].”

Orszag also noted that “as people gain more experience, pay tends to increase,” and the federal government has a highly experienced workforce. “Basically the entire delta between private sector and public sector federal government average pay can be explained by education and experience,” he said.

“While there may be some remaining disparities,” Orszag added, “I think some of the more dramatic newspaper stories I’ve seen about that disparity are somewhat misleading.”

Orszag said Obama administration officials considered freezing federal pay in the fiscal 2011 budget proposal, but ultimately decided against the idea.

Orszag may wish to do more reading. The Heritage Foundation recently considered this question, and determined that:

…even after controlling for education and experience, federal employees get paid 22% more per hour on average than private-sector workers. And that does not include the significant non-cash benefits government workers receive. Federal employees not only can enroll in a Thrift Savings Plan that works like a 401(k), but they also get a “defined contribution” plan, which lets a worker with 30 years of experience retire at 56 with full benefits. And don’t forget the Federal Employees Health Benefits Program, paid leave, group life insurance and on-site child care. To be sure, many private employers offer similar benefits but not all of these at the same time. All told, while the average private-sector employee gets $9,882 in annual benefits, federal government employees get $32,115 on average. Adding cash and non-cash compensation together, federal employees earn approximately 30 to 40 percent more in total compensation than comparable private-sector workers.

Why is it that government and government employees are the only part of our economy not being affected by the slow economy? Our leaders in Washington speak often about ‘shared sacrifice,’ but that seems only to cover private sector workers. Indeed, when the economy is strong, government expands as tax revenues increase. As the economy slows down, government seems to expand even more as policymakers find reasons to borrow and spend. When will Congress ask Uncle Sam to go on a diet?