Government Employees

On November 29, 2010 the Obama Administration enacted a two year federal worker pay freeze. The pay freeze was said to save $2 billion for the rest of the 2011 fiscal year.

In March, House Republicans looked to extend the pay freeze until 2015 in their FY2013 Budget Resolution. In addition to extending the pay freeze, the Republican Budget would cut the federal workforce by 10 percent through attrition and increase employee contributions to benefits. Overall, the budget would cut an additional $368 billion in workforce spending over the next decade.

In 2010, the Americans for Tax Reform Foundation calculated the cost of hiring new GS-11 federal employees, the median federal salary level.16 On average, each newly-hired GS-11 employee costs taxpayers $7 million dollars over the course of a 40 year career.

In 2011, the federal government hired 53,933 new employees. The most significant cabinet expansions include:

A widely cited 2010 USA Today study found that average federal salaries exceeded private sector salaries across 83 percent of industries. These federal workers are less educated and less experienced than private sector workers in the same level of occupational responsibility. These findings suggest that federal workers receive a premium compensation package while taxpayers pick up the tab.

In January 2012, a Congressional Budget Office (CBO) study compared the wages and benefits of federal and private sector employees. CBO found that overall, federal government employees received 2 percent more in total wages than they would have if the average wages were comparable to that of private-sector employees. The study takes into consideration observable characteristics of the workers, such as educational attainment. The only level of education that is more prosperous in the private sector are those with a doctorate or PhD. In addition to comparing wages of federal and private sector employees, CBO also considers their benefit packages. The benefits included in the study are health insurance, retirement benefits and paid vacation. On average, the study finds that the benefits earned by federal civilian employees cost 48 percent more than the benefits received by their private-sector counterparts.

Finally, the CBO study looks at total compensation. The study concludes that overall, federal government employees receive 16 percent more in total compensation than they would have if average compensation was comparable with their private sector counterparts.

One of the most illustrative examples of federal employee costs is the United States Postal Service’s payroll. The exorbitant labor costs that make up over 80 percent of the Post Office’s budget stand to cost taxpayers dearly absent serious reform. In 2010, the USPS lost $8.5 billion. Even after cooking the books and postponing $5.5 billion in retirement payments, the USPS still lost $5.1 billion in 2011. The Council for Citizens Against Government Waste points out that in 2010, former Postmaster General John Potter predicted that the USPS would lose $238 billion over ten years should nothing be done to address its unsustainable overhead costs.

The problem of overpaid public workers bleeds into state and local government budgets. The Bureau of Labor Statistics found that “Private industry employers spent an average of $28.57 per hour worked for total employee compensation in December 2011.” Conversely, compensation for their counterparts, working for state and local governments, averaged $40.90 per hour worked in December 2011. While federal spending continues to increase, state and local governments have cut employment. In accordance with a slight decline in state and local spending, state and local government employees have decreased by 1.4 percent.

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