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Comparing Federal and Private Sector Compensation

American Enterprise Institute Working Paper No. 2011-02

39 Pages Posted: 26 Jan 2012  

Andrew G. Biggs

American Enterprise Institute

Jason Richwine

Independent

Date Written: June 1, 2011

Abstract

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.

Keywords: Public Employees, Compensation

JEL Classification: J45

Suggested Citation

Biggs, Andrew G. and Richwine, Jason, Comparing Federal and Private Sector Compensation (June 1, 2011). American Enterprise Institute Working Paper No. 2011-02. Available at SSRN: https://ssrn.com/abstract=1991405 or http://dx.doi.org/10.2139/ssrn.1991405

Andrew G. Biggs (Contact Author)

American Enterprise Institute ( email )

1150 17th Street N.W.
Washington, DC 20036
United States
202-862-5841 (Phone)

HOME PAGE: http://www.aei.org

Jason Richwine

Independent ( email )

No Address Available

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