Arnold Kling and Megan McArdle on government pay.
These studies all miss the point badly.
There are two defining characteristics of federal government pay: 1) the pay structure is very flat compared to the private sector and 2) lots of the compensation is deferred or tied up in benefits.
Talking about the pay of the “average” government worker doesn’t mean anything. When Tim Geithner gets a new job after leaving Treasury, he’ll undoubtedly make a lot more money. On the other hand, the federal government is filled with secretaries that make 10 times more than they could make in the private sector.
(We got a new secretary a few months ago. She wasn’t new to the job, she was just new to our group. I asked her to schedule a meeting with three people. After failing miserably, she started crying. As far as I know, no one in the office has asked her to do anything since. She couldn’t even if they did. I’m pretty sure she makes infinitely more than she’d make in the private sector. Really, her job is best understood as welfare).
Federal agencies are also required to have tons of make-work jobs. For example, HR departments don’t really do traditional HR work – they mostly enforce hiring regulations. If I want to hire someone, I generally have to perform most of the traditional HR functions (write the job description, review resumes, interview candidates, etc.). The HR department just makes sure I give appropriate preferences to veterans and other groups, but mostly veterans these days.
There are entire departments devoted to diversity and inclusion. I have no idea what they do other than provide “jobs” to diverse people.
Because the pay structure is relatively flat, these people make good money. Secretaries with (at most) a high school education can make $60,000. The highest paid employees never make much more than $200,000, and everyone else fits in between. It therefore follows that lots of people can leave and make more money, while others are way overpaid.
It’s very difficult to compare government salaries to private sector ones. What’s it worth to have near total job security, for example? Government employees still get pensions, so what’s it worth to get so much back-end compensation? For some people that’s worth a lot, for others’ not so much. Most numbers I’ve seen put the value of government benefits at about 30% of the total compensation, but lots of people have no interest in deferring that much compensation.
My guess is that about 2/3 of government employees would make much, much less in the private sector (frankly, even in government, their jobs could be eliminated without much – if any – loss), while the other 1/3 could more – in some cases a lot more.
In the last 18 months, I’ve turned down two jobs offers that would have significantly raised my salary, because the other benefits of government employment are too appealing (what’s it worth to sit down with your family at dinner every night, for example?).
