Following through on a January proposal, President Obama has called for a salary increase of 0.5 percent for civilian federal workers in his fiscal 2013 federal budget.
Currently, civilian federal workers average about $123,000 per year in salary and benefits, double that of private-sector workers, who average about $60,000 per year, and about $53,000 more than their counterparts in state and local government, who average roughly $70,000 per year.
Those who question the compensation gap existing between federal workers and private-sector workers are criticized by defenders of the gap for making “apples-and-oranges” comparisons.
Perhaps then, when questioning the compensation level of civilian federal workers, the focus might rather be on the compensation gap existing between civilian government workers at the federal level and those at the state and local level — call this $53,000 compensation gap the “federal compensation premium.”
With the federal government employing approximately 2.1 million “full-time equivalent” civilian workers, that means the total cost of the federal compensation premium is about $110 billion per year.
Just how large is this premium we pay civilian federal workers? The $110 billion federal compensation premium is larger than the proposed budgets of 10 of the 15 Cabinet-level departments in the federal government (fiscal 2012):
» Department of Labor, $109 billion
» Department of Transportation, $89.6 billion
» Department of Education, $70.9 billion
Department of State, $62.6 billion
» Department of Housing and Urban Development, $49.4 billion
» Department of Homeland Security, $46.9 billion
» Department of Energy, $43.1 billion
» Department of Justice, $33.2 billion
» Department of the Interior, $13.9 billion
» Department of Commerce, $13.1 billion
It’s also larger than the spending proposals for a number of individual programs (fiscal 2012):
» Food Stamps, $106.9 billion
» Unemployment Compensation, $93.2 billion
» NASA, $18.2 billion
» Environmental Protection Agency, $10 billion
» Army Corps of Engineers, $8 billion
» National Science Foundation, $7.9 billion
» Small Business Administration, $1.2 billion
The $110 billion federal compensation premium is larger than the annual budgets of every state in the country other than California and New York. It is also larger than the entire economies of 20 U.S. states. Remarkably, almost 140 countries (out of 193) have gross domestic products smaller than this amount.
Additionally, there are only 15 U.S.-based corporations that have revenues exceeding the federal compensation premium. Worldwide, only 46 companies have market capitalizations larger than the total cost of this premium (only 22 U.S.-based companies have market caps that are larger).
Incredibly, the combined income of the six most valuable U.S. corporations is smaller than the federal compensation premium (ExxonMobil, Apple, Chevron, Microsoft, GE and Berkshire Hathaway combined for about $106.8 billion in reported earnings in 2011).
It has taken Apple, considered one of the most successful companies in world history, currently alternating as either the first- or second-most valuable U.S. corporation as measured by its market cap, more than 35 years to accumulate a cash balance of about $98 billion. Yet Apple’s current cash balance would only be enough to cover the federal compensation premium for less than 11 months.
Think about that: 35-plus years of incredible innovation and wealth creation, and the company’s cash balance, in effect its savings, would not be enough to cover just one year of this premium.
Putting aside the legitimate questions concerning vested political interests, patronage and fairness, is the size of the overall federal compensation premium relative to government spending in other areas and at other levels an effective use of the public purse?
Does reallocation every year of such an enormous sum of money from the wealth-creating private sector to the wealth-eating public sector make economic sense? What’s more, is it economically sustainable in the long term?
Tom Elia edits the New Editor website and is author of When Lobsters Take Flight: A skeptic parodies politicians, ‘progressives,’ potentates, and the press reporting on them all.
