Federal Paychecks Are Outsized

Jason Richwine / November 17, 2010

In an article titled “Scapegoating Federal Pay,” Paul Waldman of The American Prospect predicts that we will hear much more in the coming months about “outsized federal paychecks.” I hope he is right.

The labor economics literature, going back more than two decades, is clear that federal workers enjoy a substantial pay premium over comparably skilled private workers. Two separate Heritage analyses have updated that literature for recent years and come to the same conclusion. President Obama’s deficit commission seems to agree, as it has suggested freezing federal pay.

Despite the overwhelming evidence, Waldman says that criticizing excessive federal pay amounts to “scapegoating.” His first argument is that federal employees possess more skills and work in more specialized occupations than typical private sector employees, which justifies their higher pay. This argument is tiresome, because our analyses have always controlled for worker characteristics, as do all of the academic studies referenced above. Federal workers are more skilled than private workers, but their superior skills are not nearly enough to justify their higher salaries. We have explicitly made this point here, here, here, here, here, and here. (more…)