Are federal employees overpaid?
The quick conservative answer is: Obviously, yes! considering that average federal wages are slightly higher than average private-sector wages, while federal benefits are way more expansive than private-sector benefits.
The quick liberal response: That’s comparing apples to oranges! Federal employees have much higher educational attainment than private-sector workers, which is why they earn more.
But the Congressional Budget Office has a re-response: Sorry, liberals, but federal workers really are paid more than private-sector workers of comparable educational attainment. And once you count the lucrative nature of the revolving door available to high-level federal employees, the case is a slam dunk.
Some specifics from the CBO study: If your highest level of educational attainment is high school, you will earn more working for the federal government. If your started college, but didn’t finish, you make more working for Uncle Sam. If you graduated college, but never went to grad school, you make more working for Uncle Sam. And even if you have a Masters degree, you make more working for Uncle Sam — unless you have a PhD, in which case you will make more in the private sector.
The net difference: Federal workers are compensated 16 percent more than their equally educated counterparts.
Kevin Drum at the liberal Mother Jones draws this conclusion:
But Drum ignores another factor: high-level federal employees take lower pay not just out of public-spiritedness or risk-aversion, but because few things make you more valuable to regulated or subsidized private companies than working for the agency regulating and subsidizing that agency. The Washington Post’s Suzy Khimm walks through that thought process here:
As I wrote after Orszag went to Citi, “Trent Lott is a millionaire. So is his lobbying partner John Breaux. And Tony Podesta. Now Peter Orszag, at age 41, has a salary reportedly around $2 million or $3 million. Imagine these men never got into government: Would their wealth, income, and income potential be less or more? It’s hard to answer, but it at least raises this concern: some people enter government in order to cash out.”
How many PhDs cash out to those they were supposed to be regulating? Do the added long-term earnings from a stint in government service make up for the short-term sacrifice? The CBO study doesn’t address that, but the broad picture is this: Government is nice work if you can get it.
