New CBO report on total compensation for federal employees
In April 2024, CBO published a new report titled: Compare federal and private sector employee compensation in 2022.
The FSC concluded that the wage gap between the federal and private sectors in 2022 is 22.47%. In its latest report, the Federal Payroll Council (FSC) reported that federal employees were underpaid by 27.54% as of March 2023.
The CBO report digs deeper and reveals significant differences in total compensation for federal employees and the private sector. The differences varied widely depending on the employee's education level. Overall, federal employees had an advantage in total compensation, with compensation levels 5 percent higher than comparable positions in the private sector.
Here is a breakdown of the number of federal employees as of September 2023 by several education levels.
- High school and above: 603,221
- From high school to university: 365,367
- Bachelor's degree: 599,799
- Master's degree: 383,901
- PhD: 85,140
CBO concluded the total federal compensation for this range of federal employees by level of education.
- High school students and below: +40%
- Some universities: +38%
- Bachelor's degree: +5%
- Master's degree: -4%
- PhD: -22%
- All education levels: +5%
Differences between FSC and CBO conclusions
Members of the Federal Pay Council are primarily comprised of labor unions representing federal employees. The goal of federal employee unions is to support federal employees, including increasing pay levels for their members. However, there is no membership structure to objectively evaluate the compensation level of federal employees.
The FSC annual report addresses this issue as follows:
For too long, the Council has relied on annual estimates of the so-called “pay gap” (that single number we present every year) to help the federal government compete in today's competitive talent markets in every region. There has been no discussion as to whether or not it truly represents the capabilities of grade and occupation. And the same “suspect” approach is used to estimate regional “pay disparities” that may or may not be real…but that have very real consequences for potentially affected federal employees. brings about.
Many federal employees read each year that their pay is significantly underpaid once FSC recommendations are issued, and report double-digit differences between federal and private sector pay levels. .
CBO: Federal employees have good benefits but low pay
CBO addresses total compensation levels, including government-provided benefits such as retirement, health insurance, and paid time off. Small private companies generally have less generous health insurance and other benefits than larger companies.
To compare federal and private sector compensation, the CBO compares the cost of benefits provided to federal and private sector employees and accounts for the same differences in worker characteristics used to analyze wages. Considering.
According to CBO, benefit costs for workers at all levels of education were 43 percent higher for federal civilian employees than for private sector employees. But when it comes to wages, the CBO noted that the federal government would have spent about 10% more on salaries if it had adjusted employee pay to match private sector pay.
CBO Report on Total Compensation: 2011-2015
The Congressional Budget Office (CBO) compared federal and private sector compensation from 2011 to 2015. Their report was published in 2017. In contrast to the Federal Payroll Council's reports, which consistently report that federal employees are underpaid, the bipartisan CBO released the following findings:
- Federal employees whose highest educational attainment was a bachelor's degree had average benefits 52 percent higher than similar private sector employees.
- Federal employees with only a high school education had average benefits that were 93 percent higher than private sector employees.
- Average benefits for employees with a doctoral or professional degree were similar in the two sectors.
- After accounting for workforce differences such as education, total compensation for federal employees overall is about 17 percent higher than for similar employees in the private sector.
© 2024 Ralph R. Smith. All rights reserved. This article may not be reproduced without the express written consent of Ralph R. Smith.