Comparing Federal and Private Sector Compensation
Andrew G. Biggs
American Enterprise Institute
The Heritage Foundation
June 1, 2011
American Enterprise Institute Working Paper No. 2011-02
Public sector compensation has come under increased scrutiny from politicians and the media, but comprehensive technical comparisons of federal and private compensation have been largely absent from the discussion. Drawing from the academic literature and using the most recent government data, this report measures the generosity of federal salaries, benefits, and job security. Compared to similar private sector workers, we estimate that federal workers receive a salary premium of 14 percent, a benefits premium of 63 percent, and extra job security worth 17 percent of pay. Together, these generate an overall federal compensation premium of approximately 61 percent. Reducing federal employee compensation to market levels could save taxpayers roughly $77 billion per year.
Number of Pages in PDF File: 39
Keywords: Public Employees, Compensation
JEL Classification: J45
Date posted: January 26, 2012
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