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The Privileged Public Sector

Mommas, don’t let your babies grow up to be ­anything but civil servants.

Sep 20, 2010, Vol. 16, No. 01 • By ANDREW FERGUSON
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President Obama’s former budget chief, Peter Orszag, acknowledged the apparent pay advantage, or pay premium, enjoyed by the feds. But he said the difference was inflated by the workers’ average education and skill levels, which are higher in the federal government than in the private labor force. So the conservative economists Andrew Biggs and Jason Richwine ran the numbers again, controlling for the higher educational attainment and skill level of federal employees. They discovered that federal workers still received a premium of 24 percent over similarly trained private workers. 

Others have argued that the difference between pay scales has been inflated by age and seniority: The federal workforce is older than the private workforce, and the average government worker has longer tenure in his job, and thus receives higher pay. Biggs and Richwine controlled for these factors too, as well as “race and gender, full- or part-time work, firm size, marital status,” and so on. The pay premium then stood at 12 percent, with no chance of falling further. As they pithily put it: “Private employees must work 13.5 months to earn what a comparable federal worker makes in 12.”

The arguments, all on their own, are revealing. The educational attainment of federal employees is higher in part because government has a built in ladder of incentives—subsidies, bonuses, and salary increases—designed to encourage workers into further education; this education is of course financed by taxpayers who are making less, on average, than the worker whose extra education they’re subsidizing. Most private businesses would love to offer their employees such a ladder—if they could afford it.

Moreover, the very long tenure of federal employees, which puts upward pressure on the pay scale, is by itself a testament to the government’s relatively lavish compensation and comfy work rules. Turnover in the federal workforce is infinitesimal. The “quit rate” in private industry last year was 19.1 percent—that is, one out of five private employees quit his job in 2009. In the federal government the quit rate was 2.3—that is, hardly anybody leaves Club Fed until they retire.

It is odd and unsettling when an employer, in this case the public, makes less money than his employee, the federal bureaucrat; if nothing else we can feel free to retire the phrase “public service” once and for all. 

Even so, we shouldn’t forget the demagoguery in the Republican campaign against federal pay, especially when it’s waged on grounds of frugality and budget discipline. While not quite as negligible as foreign aid and “earmarks”—two other targets of the phony deficit hawk—the federal payroll amounts to much less than 10 percent of the government’s budget, and firing every federal worker tomorrow would still leave a deficit next year of roughly $1 trillion, except nobody would be around to count it. 

There’s an irony to go along with the demagoguery. One reason the difference between federal and private pay widened at an accelerated pace in the last decade was the Bush administration’s decision to contract out many lower-paying government functions to private business. With fewer low salaries, the average federal salary rose. Another reason was the administration’s vast expansion of antiterror activities, giving the federal government an insatiable appetite for college graduates—raising the average federal salary again. The federal pay premium is in part a consequence of privatization and a strong national defense. 

If the issue of federal pay does take off, surely somebody, somewhere, sooner or later, will make the obvious point. Republican politicians were in charge of the entire federal workforce when compensation went into the stratosphere and federal employees began living a life beyond the reach of the average citizens who pay their salaries. Eric Cantor will want to explain that to all those “fed-up Americans.”


Andrew Ferguson is a senior editor at The Weekly Standard and the author of Crazy U: One Dad’s Crash Course in Getting His Kid Into College.

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