Federal Pay Rises Faster than Private Pay

Chris Edwards
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Posted: Dec 29, 2011 12:01 AM

Even with a “freeze” in effect, federal pay rose faster than private-sector pay in fiscal 2011, according to the USA Today’s Dennis Cauchon. Crunching Bureau of Labor Statistic’s data, Cauchon found that average federal worker wages rose 1.3 percent in 2011, or slightly more than the 1.2 percent increase in average private wages. The federal increase—while modest—occurred despite the freeze Congress and the president put into effect because increases from “longevity, merit, and promotions” were not covered, according to Cauchon.

Federal workers made an average $75,296 in pay last year, plus $28,323 in medical, pension and other benefits, the USA TODAY analysis found. That's about 60% more than the average private wage, a difference explained largely by higher education levels and more professional jobs in the federal workforce.

Federal compensation has soared in the past decade, especially in the past five years, at a time when private wages and employment have sputtered.

The federal government in recent years has hired several hundred thousand new employees, including many well-paid lawyers and doctors.

The Department of Veterans Affairs started paying physicians market rates in 2006. VA doctor pay doubled to an average $200,604 in 2011. The raises reduced spending on bonuses and outside contracts, helping the VA add more than 5,000 doctors, the VA's Brian McVeigh says.

I’ve argued that federal pay and benefits are excessive and should be cut as one of many needed reforms to rein in federal deficits. Lawmakers should extend the wage freeze, but they should also reduce overly generous federal worker benefits. For example, lawmakers should repeal the defined-benefit pension plan received by federal workers because it comes on top of the 401(k)-style retirement plan that workers already receive.

The good news is that increases in federal pay have slowed from the torrid pace of the early George W. Bush years, as shown in this chart. But we will need more reforms to start reversing-out the large federal pay advantage that has been built up over the last two decades.