Wages: Public vs PrivateJuly 3rd, 2010 by Lee Eldridge
It’s time for a new topic. I was poking around online the other day, and found an article that peeked my curiosity. It’s always interesting when perception meets reality, and they look nothing alike.
Would you be surprised to learn that government employees make more money than their private sector counterparts? I was.
Perception: I don’t remember when or where, but I know that at some point in my life I was told that government employees (public sector) make less than people who work for businesses (private sector). And maybe at the time I was told, this was true. My perception had been that people chose to work for the government despite lower wages for the benefits and for job security.
Today’s Reality: According to the Bureau of Labor Statistics, the typical federal worker is paid 20% more than a private sector worker in the same occupation. Here are just a few examples:
A chemist on average makes $98,060 working for the federal government, and $72,120 in the private sector. A graphic designer makes $70,820 working for the feds, while making $46,565 in the business world. Did you know that we employ dry-cleaning workers in the federal government? They make $33,100, where they make only $19,945 working in the private sector. These figures are all from 2008.
On average, the typical federal worker makes $66,591 compared to their private sector counterparts, who make $55,500. That’s 20% more money in wages alone. According to the USA Today (see the full article here):
Federal. The federal pay premium cut across all job categories — white-collar, blue-collar, management, professional, technical and low-skill. In all, 180 jobs paid better average salaries in the federal government; 36 paid better in the private sector.
Private. The private sector paid more on average in a select group of high-skill occupations, including lawyers, veterinarians and airline pilots. The government’s 5,200 computer research scientists made an average of $95,190, about $10,000 less than the average in the corporate world.
State and local. State government employees had an average salary of $47,231 in 2008, about 5% less than comparable jobs in the private sector. City and county workers earned an average of $43,589, about 2% more than private workers in similar jobs. State and local workers have higher total compensation than private workers when the value of benefits is included.
Benefits: Now let’s look at benefits. According to the same USA Today article, “These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.”
That brings total compensation to $107,376 for federal employees and $65,382 for their private sector counterparts. That’s a difference of $41,994 per year.
I don’t bring any of this up to disparage government employees. They’re just people like you and me trying the best they can to provide for themselves and their families. If you were a dry-cleaning worker, why wouldn’t you take a job with the feds if it paid $13,155 more and provided MUCH better benefits?
My question is, why are the salaries so out of whack with wages and benefits in the private sector? Officials attempt to explain it that these jobs aren’t direct comparisons. Again from the USA Today article: “National Treasury Employees Union President Colleen Kelley says the comparison is faulty because it “compares apples and oranges.” Federal accountants, for example, perform work that has more complexity and requires more skill than accounting work in the private sector, she says.”
This is nothing more than union speak and misdirection. Do you believe that nurses working for the Veterans Administration perform tasks that require more skills than their private sector counterparts? Yet on average, a nurse working for the VA makes $10,680 more than private sector nurses, plus the difference in benefits.
Conclusions: Simply put, government is inefficient and wasteful. Think of how much money we could save by paying government employees comparable salaries and benefits to their private sector counterparts. The government fails to understand simple economics. Supply and demand. They set wages and benefits artificially high. Why? I have a few theories, but they’ll have to wait for another day.