Federal benefits outweigh private sector's


Federal employees' benefits are more generous than those of the average large private company, a new study has found. But federal health and life insurance lags behind coverage in the private sector, the study said.

In a report comparing benefits for workers in the private and federal sectors, the Congressional Budget Office said retirement, vacation, holiday, disability and retiree health benefits offered by the federal government are more generous than those in the private sector. Considering factors like length of service, age and income level, the dollar value of federal benefits is up to seven percent higher than the value of private benefits.

In terms of total compensation, however, federal employees get the short end of the stick, CBO said. A CBO report last year found an average salary gap--particularly in higher-ranking professional jobs--of 22 percent between private and federal jobs.

"For the large number of federal jobs with pay gaps above the national average of 22 percent, federal pay and benefits would still be well below the compensation offered for similar jobs by large firms," CBO said.

CBO compared benefits data from the Office of Personnel Management with information from 800 large firms in a database maintained by Watson Wyatt & Co, a Bethesda, Md.-based firm that tracks private-sector benefits packages. CBO noted that small businesses, which tend to offer fewer benefits to employees, were not included in their study. In addition, benefits in both the public and private sectors vary based on how long people have been in their jobs, their salary and their age.

Overall, civil servants enrolled in either the Federal Employees Retirement System or the Civil Service Retirement System have more generous pension plans than do private-sector employees. For example, only eight percent of large companies' benefits packages include automatic cost-of-living adjustments after retirement, while both FERS and CSRS do. Only about 15 percent of private companies give their employees full pensions if they retire at age 55 with 30 years of service. In contrast, early retirements are common in the public sector; 40 percent of all CSRS enrollees who retired in 1997 were ages 55 to 59 with 30 or more years of service.

Federal retirees also benefit from a generous health insurance program, which allows them to continue paying the same premiums for health insurance they paid as employees. Only 65 percent of private companies offer health insurance of any kind to retirees, and that number is going down. In 1991, 74 percent of private employers offered retirees health coverage. A change in accounting standards now requires companies to mark the cost of retirees' future medical benefits as a liability on their balance sheets, discouraging companies from offering the benefit.

However, the CBO study found that federal employees must pay a larger share of their health insurance premiums than do private employees. The federal government pays about 70 percent of its employees' health insurance premiums, while private companies typically pay more. In fact, 25 percent of large private firms cover employees' entire health insurance premiums.

"The trend among private firms has been toward asking employees to pay an increasingly large share of costs," CBO cautioned. "Thus, the federal disadvantage estimated here may narrow in the future."

CBO also gave lower marks to federal life insurance benefits in comparison with the private sector. About 90 percent of large firms offer life insurance completely at the employer's expense, while the government offers to pay for only one-third of employees' life insurance premiums.

For sick leave, disability benefits, holidays and vacations, CBO found the federal government to be the hands-down winner. Few private sector companies can match federal employees' 13 sick days, 10 paid holidays and up to 26 days of vacation. The federal government also grants time off for organ and bone-marrow donation, court appearances as a government witness and National Guard service.

Despite the federal government's superior benefits in a number of areas, CBO found that some employees still ended up with less generous benefits than their private-sector counterparts by up to two percent.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care


When you download a report, your information may be shared with the underwriters of that document.