How Does the Compensation of Federal Employees Compare with That of Workers in the Private Sector?

The federal government employs 2.3 million civilian workers, or 1.7 percent of the U.S. workforce, in over 700 occupations and spent about $200 billion in fiscal year 2011 to compensate them. Recently, concern about the federal budget and about equity between the public and private sectors has focused greater attention on the costs that the federal government incurs to compensate its employees.

Today CBO released a study—prepared at the request of the Ranking Member of the Senate Budget Committee—that addresses the question:  How does the compensation of federal employees compare with that of workers in the private sector?

CBO’s Key Findings

Differences between the average compensation of employees of the federal government and that of private-sector employees varied significantly by level of education. As shown in the table below:

• Among people with a high school diploma or less education, or whose education culminated in a bachelor’s degree, the total cost of compensation, on average, was higher for federal workers than for similar workers in the private sector, after accounting for differences in demographic factors and in certain characteristics of their jobs. 
• By contrast, among people with a professional degree or Ph.D., total compensation costs were lower for federal employees than for similar private-sector employees, on average.
• Differences between the government and the private sector in the average costs of benefits were much greater than the differences in the average wages.

However, even within groups of workers who have similar characteristics, the average differences in compensation between federal and private-sector employees do not indicate whether particular federal employees would receive more or less compensation in the private sector.