Overall Public-Private Sector Compensation Gap Has Widened, CBO Finds

A report from the Congressional Budget Office released Tuesday said the compensation gap between workers in the federal government and those in the private sector has widened since it last studied the issue in 2012.

But analysts warned that the different demographic and educational make-up of each sector make any comparison complicated.

“Even within groups who have … similarities, the average differences in compensation between federal and private sector employees do not indicate whether particular federal employees would receive more or less compensation performing a similar job in the private sector,” the report said.

Overall, total compensation for federal workers was 17 percent higher, on average, than for comparable workers in the private sector during 2011-2015, CBO found. It was 16 percent higher for the period of 2005-2010, the budget office found in its earlier study.

The cost of providing benefits for federal civilian workers from 2011-2015 was estimated to be 47 percent higher on average than for comparable private sector employees. CBO said the biggest factor in the difference in the cost of benefits was that much of the federal workforce still falls under systems that include a defined benefit pension, a concept that has largely disappeared in the private sector. And due to the uncertain nature of future costs of pension plans, cost differences in the realm of benefits are “difficult to quantify,” analysts said in their latest report.

CBO broke out data into different categories of educational attainment. Federal employees with bachelor’s degrees as their highest level of education earned an average of 5 percent more in wages than their private sector counterparts, 52 percent more in benefits and 21 percent more in total compensation.

Federal workers with a high school diploma or less earned a 34 percent more in wages than those in the private sector, 93 percent more in benefits and 53 percent more in total compensation.

However, federal employees with a professional or doctorate degree earned 24 percent less in wages than their colleagues in the private sector, while the cost of benefits was about the same. Added together, total compensation for these workers with advanced degrees was about 18 percent less than those in the private sector.

The pay gap between federal and private sector employees grew between 2011 and 2015 for those with high school diplomas or less when compared with 2005 to 2010, while federal workers with a master’s degree saw less average total compensation from 2011 to 2015 compared with their counterparts in the private sector.