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Tuesday
Jan312012

Federal Government Pay Tops Businesses: CBO Report

Jupiterimages/Thinkstock(WASHINGTON) -- It pays to work for the government. Compared with private sector employees, federal workers are paid about 16 percent more when benefits including health insurance, retirement plans and paid vacation are taken into account, according to a new report from the Congressional Budget Office.

While wages are fairly equal, on average, between public and private employees, the benefit packages for government workers far outpace those of their counterparts in private businesses. Federal employee benefits cost about 48 percent more than benefits for private employees from 2005 to 2010, the CBO report shows.

“The differences in compensation, the issue is are you taking your compensation up front or are you taking it over your lifetime in terms of a better pension,” said Linda Barrington, managing director of our Institute for Compensation Studies at Cornell University.

The federal government spent about $200 billion on employee salaries and benefits in fiscal year 2011, according to the CBO. And at a time when the federal deficit is set to exceed $1 trillion for the fourth year running, that taxpayer-funded compensation is a prime target for many budget-cutters.

Two GOP presidential candidates -- Mitt Romney and Ron Paul -- have vowed to shrink the federal workforce by 10 percent.

“Public servants shouldn’t get a better deal than the taxpayers they work for,” Romney said at the Americans for Prosperity conference in November. “The American people are increasingly working to support the government. It ought to be the other way around.”

Paul calls for the immediate elimination of five entire departments: Interior (70,000 employees), Commerce (56,800 employees), Energy (16,000 employees), Education (4,400 employees) and Housing and Urban Development (9,500 employees). Together these departments employed about 156,700 people in 2010, according to Census data.

Romney said he will chop the public payrolls through attrition, not layoffs.

But the size of the federal workforce is already shrinking. Public sector employment has decreased in 18 of the past 24 months, according to the Bureau of Labor Statistics, while private sector employment has increased in all but two of those months.

“Shrinking federal government deficit by laying people off, that may be the right thing in long run but it is having a contractionary effect on the labor market,” Barrington said. “In the short run we need to acknowledge that it may be pushing the number in the wrong direction.”

From 2008 to 2010 the federal workforce, not counting postal employees, shrunk by 20,000 people, according to Census data.

Federal salaries, on the other hand, went up by nearly $4,000, on average, over the same time period, despite a federal pay freeze that’s been in place for the past two years.

One explanation for why federal workers are more expensive than their private sector counterparts is that they are often “older, more educated, and more concentrated in professional occupations,” CBO director Douglas Elmendorf wrote in a blog post explaining the study.

Government employees are, on average, about four years older than private employees. More than half of federal employees -- 51 percent -- have at least a bachelor’s degree compared with 31 percent of non-government workers.

People without a college degree are better off working for the government, while people with advanced degrees tend to make more in the private sector.

Public employees with at most a high school diploma earned, on average, $4 per hour more than comparable private sector employees.

Government workers with advanced degrees, like a graduate degree or Ph.D, on the other hand, earned about $15 per hour less working for the federal government than their counterparts in private businesses.

Copyright 2012 ABC News Radio

Friday
Feb182011

Working in America: Public vs. Private Sector

Photo Courtesy - Getty Images(WASHINGTON) -- As the protests in Wisconsin bring the issues of public sector workers' pay and benefits into the national spotlight, it’s important to understand the actual differences between what government worker and private sector workers actually get in return for their efforts.
 
WAGES
 
The latest data from the Bureau of Labor Statistics (2009) show that government workers make about 5 percent more than private sector workers on average.  But, as can be seen in the data listed below, the headline numbers hide some major disparities beyond the headlines.

Average Annual Wage

Federal Govt. Workers -- $67,756
State Police -- $61,000
Local Firefighters -- $60,572
State Govt. Workers -- $48,742
State Legislative Workers -- $48,129
Government (all types) -- $47,552
Private (total sector) -- $45,155
Local Govt. Workers -- $43,140
Local Schools -- $41,113
 
Average Annual Wage

Private Sector CPA -- $71,216
Federal Govt. CPA -- $67,531
Local Govt. CPA -- $64,050

Source: Bureau of Labor Statistics, 2009


Local teachers make 9 percent less than the average private sector worker. And federal employees are substantially better paid than the average state worker.

But working for the government doesn’t automatically mean a bigger paycheck. Take, for example, accountants. Government data shows that a certified public accountant who works in the private sector will have an annual salary of $71,000. That same certification and education will lead to a $68,000 average salary for the federal government and $64,000 if you work for a local government.

UNION MEMBERSHIP

Some of this headline pay disparity is likely attributable to the union representation many in government enjoy. In 2010, the Bureau of Labor Statistics data showed that 36.2 percent of public sector workers were unionized, compared to a 6.9 percent union membership rate for private sector workers.

Workers in education, training and library occupations had the highest unionization rate at 37.1 percent.
 
RETIREMENT BENEFITS
 
Public sector workers also are significantly more likely to have traditional pension plans -- called “defined benefit” plans. The latest data from BLS showed 20 percent of workers in the private sector have pension plans. In the public sector, defined benefit plan coverage is four times greater -- about 79 percent.
 
HEALTH CARE BENEFITS
 
The latest Kaiser Family Foundation survey on the costs of health insurance showed government workers are more likely to be offered health insurance while they work and in retirement.

In retail firms, for example, only 48 percent of workers were covered by health benefits offered by their firm (the worst industry for insurance coverage), compared to 80 percent of workers in state and local government (the best industry for insurance coverage).

And those state/local government employees are paying less for coverage than their private sector neighbors.
 
Data from Kaiser shows the average employee cost for “family” health coverage was around $3,700 in the latest year. Employees in the service sector pay about $4,200 for similar family coverage, mostly because their employers require a bigger contribution from the employee to get the benefit.

Copyright 2011 ABC News Radio







ABC News Radio