Federal pay called into question -- again

A panel of policy analysts on Tuesday delved into the pay debate, arguing that federal employees earn more than private sector workers, which could have a negative effect on the economic recovery and public perception of government.

During a panel discussion hosted by the right-leaning Heritage Foundation, analysts said federal workers' pay and benefits are more generous than those available in the private sector and should be brought in line with industry compensation. Government employees haven't felt the impact of the recession like the rest of the workforce, they said.

"Civil service shouldn't be something where you get a massive pay cut, but it also shouldn't be something where you go to get rich," said James Sherk, senior policy analyst in labor economics at Heritage. "We want government to be like any other job."

According to Sherk, the federal workforce on average is highly educated and more skilled than its private sector counterparts. After accounting for those factors, however, and adding benefits such as pension credits for unused sick leave, generous health care plans and job security, federal employees earn between 30 percent and 40 percent more in total compensation than those in the private sector, he said.

Panelists called into question the claim, made by Office of Personnel Management Director John Berry, that the pay debate is long-standing.

Federal workers likely weren't overpaid 20 years ago, said Chris Edwards, director of tax policy studies at the libertarian Cato Institute. Government always has employed lawyers, scientists and other highly paid professionals, yet trends show a dramatic rise in federal compensation in the last 10 years compared with the private sector, Edwards said. For example, federal pay has risen nearly 60 percent in the last decade, while private sector wages have increased 30 percent. It is unlikely government workers became so skilled so quickly to explain this trend, he said.

"You get what you reward," said Sherk. "The work of an entrepreneur is on balance, but would be far more important for the health of the economy than work of the average federal bureaucrat."

Lawmakers, union leaders and government officials have been quick to jump into the debate. National Treasury Employees Union President Colleen Kelley has expressed support for data showing federal workers earn 22 percent less than their private sector counterparts, and Berry last week said OPM is working with the Office of Management and Budget to determine if improvements to federal pay calculation are necessary. And during a Sept. 15 speech on the Senate floor, Sen. Ted Kaufman, D-Del., said private sector workers are paid more than their federal counterparts.

Kaufman cited Federal Salary Council data from October 2009 that civilian federal employees are making, on average, more than 26 percent less than private sector workers in comparable jobs. He argued recent media reports suggesting federal workers are paid nearly double their private sector counterparts are based on "deeply flawed" analyses. The Bureau of Economic Analysis data, upon which some news reports are based, does not take into account that the private sector workforce is 52 times larger than the federal workforce, he said.

Kaufman added the federal government is not like private industry. "Federal employees perform functions directly relating to public health, national security and financial stability," he said. "Jobs in the federal government routinely involve decision-making that affects millions of lives."

Participants at Tuesday's event criticized OPM's focus on a job-to-job comparison rather than an employee's skills and abilities when considering pay. The government promotes workers to positions more senior than those they would occupy in the private sector, they said.

Panelists suggested a number of ways to eliminate the pay gap. For example, a pay-for-performance system that uses market demand to set pay would be more appropriate than the seniority-based General Schedule, and government could outsource more jobs and bring vacation days in line with the private sector. They also called for a multiyear federal pay freeze while outside auditors review the methodology used to calculate compensation, though they cautioned such measures could have a negative effect because not all employees are overpaid by the same amount.

"Government is static, arthritic," said Edwards. "If you lowered pay and benefits, you'd get turnover -- young and fresh people, which would be a good thing."