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Officials Debate Implications of CBO Pay Report

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Tuesday’s report from the Congressional Budget Office comparing the compensation of federal employees with their counterparts in the private sector is provoking mixed reactions from lawmakers and union officials.

The study concluded that while federal employees with bachelor’s degrees and less earned significantly more in total compensation than their counterparts in the private sector, those with advanced degrees have lagged behind their peers outside of government. What’s driving the gap between public and private sector workers with high school and undergraduate degrees is primarily attributable to the value of federal employees’ defined benefit pension plan and a decrease in federal hiring—older federal workers tend to earn more because they’ve been on the job longer, the report said.

Rep. Jason Chaffetz, R-Utah, who chairs the House Oversight and Government Reform Committee and commissioned the study, said the gap between public sector and private sector pay demonstrates the need to change how the government compensates employees.

“CBO’s report underscores the urgent need for comprehensive civil service reform,” he said in a statement. “We need a system that values and rewards performance over longevity. The committee is embarking on various reforms to bring accountability and modernization to the federal civilian workforce.”

But union officials argue the CBO’s methodology is flawed and does not accurately compare public sector and private industry jobs. Tony Reardon, president of the National Treasury Employees Union, said simply comparing compensation based on employees’ educational attainment is not sufficient. Instead, Reardon said the better rubric should be comparison of pay across similar job duties, as measured by the Bureau of Labor Statistics.

“While the CBO is an expert on budget scoring, the Bureau of Labor Statistics—which finds a consistent pay gap in comparable public and private sector jobs in favor of the private sector—is the expert in wage and compensation comparisons,” Reardon said.

J. David Cox, president of the American Federation of Government Employees, went a step further in his critique: “This report is designed to justify the elimination of a pay system that does an excellent job of avoiding pay discrimination in the federal government,” he said. “According to scientific studies by the government’s own wage experts at the Office of Personnel Management and the Bureau of Labor Statistics, federal employees on average earn 34 percent less today than employees performing comparable jobs in the private sector.”

The CBO report notes that a number of factors have contributed to the higher compensation earned by feds with bachelor’s degrees or less.

Congress’ elimination of across-the-board salary increases for federal workers from 2011 to 2013 meant employees saw only a 2 percent pay hike from 2010 to 2015. Meanwhile, the private sector saw an average 10 percent increase in wages over that time. However, the private sector pay boost was offset by the age advantage federal workers have—new hires (of which there were comparatively few in the federal workforce) tend to earn less than longer-term employees.

Reardon argued that on top of the issues cited in the report, many companies pared back benefits in the wake of the Great Recession, which contributes to the perception federal workers earn more than their private sector counterparts.

“While many private sector employers have eliminated or slashed health insurance and retirement benefits, especially for lower-paid employees, there is no justification for the federal government to join this race to the economic bottom,” Reardon said. “The government, as any responsible business should, must continue to provide basic benefits such as paid sick leave, health insurance coverage and retirement benefits to all its workers.”

Erich Wagner is a staff correspondent covering pay, benefits and other federal workforce issues. He joined Government Executive in the spring of 2017 after extensive experience writing about state and local issues in Maryland and Virginia, most recently as editor-in-chief of the Alexandria Times. He holds a bachelor's degree in journalism from the University of Maryland.

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