Cato Study Shows that Federal Employees Make More than Private Sector; Government Unions Furious

Underlying the American Federation of Government Employee’s (AFGE) claims that their members deserve higher salaries and more lavish benefits is the assumption that private sector workers are better compensated than government workers. Many people buy into this assumption and figure that government employees make up for the compensation gap with increased job security and a more relaxed workload.

A new study from the Cato Institute shows that average federal compensation is nearly double average private sector compensation. Do you think AFGE took this study in stride?

“Bogus!” cries AFGE in a recent release. Rather than acknowledging the fact that, yes, federal employees are very well compensated and enjoy generous health and pension benefits, AFGE resorts to name-calling,  describing the study as “a shameful piece of propaganda.” Ouch.

AFGE argues that it can be misleading to compare the entire private sector to federal employees because there’s so much diversity across job classifications. True, you need to be careful about the conclusions you draw from an average that lumps physicians in with custodians. Especially if the private sector employs many more unskilled workers than the federal government.

AFGE makes this argument, but you have to get through a lot of angry rhetoric and name calling to get to it. And the Cato authors deal with this objection in the study:

Some people argue that the government has a unique high-end workforce that deserves to be paid handsomely. But you can flip through the federal budget and find mundane bureaus where workers are paid highly for normal bureaucratic jobs. For example, average compensation in the Department of Commerce's Economic Development Administration—an agency that hands out business subsidies—is about $140,000. And average compensation in the Department of Agriculture's Office of Chief Economist is about $174,000. So it is not just rocket scientists that earn high wages and benefits, it is also federal workers in regular white-collar jobs.

The bottom line here is that we’ve got to bust this myth of the underpaid government worker. Yes, we want government employees to be well paid, but compensation should be reasonable. The government does not need to be the highest paid industry in our economy.