Employee Compensation: Federal vs. Private Sector

by Arkansas Business Staff  on Monday, May. 15, 2017 12:00 am   2 min read

Federal civilian workers earned, on average, 17 percent more in total compensation — wages and benefits — than their counterparts in the private sector during 2011-15, according to the Congressional Budget Office.

The CBO study, released last month, found that the differences in total compensation depended on employees’ education level.

• Total compensation for federal workers whose highest educational attainment was a bachelor’s degree averaged 21 percent more than for similar workers in the private sector.

• Among workers with a high school diploma or less, total compensation averaged 53 percent more for federal employees than for their private-sector counterparts.

• However, total compensation for workers with a professional degree or doctorate averaged 18 percent lower for federal employees than for similar private-sector employees.

“Overall, the federal government paid 17 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers,” the study said.

The biggest factor contributing to the difference between the two sectors regarding the benefits element of total compensation was “the defined benefit pension plan that is available to most federal employees,” the study said. Such pension plans are increasingly rare in the private sector.

The federal government employs 2.2 million civilian workers; in fiscal 2016, it spent about $215 billion to compensate them.

Differences in Average Hourly Compensation Between Federal and Private-Sector Workers, by Educational Attainment

Difference in 2015 Dollars
per Hour
Wages Benefits Total Compensationa Wages Benefits Total Compensation
High School Diploma or Less $8 $10 $18 34% 93% 53%
Bachelor’s Degree $2 $9 $12 5% 52% 21%
Professional Degree or Doctorate -$16 -$1 -$18 -24% -3% -18%

CBO compared average hourly compensation (wages, benefits, and total compensation converted to 2015 dollars) for federal civilian workers and for private-sector workers with certain similar observable characteristics that affect compensation—including occupation, years of experience, and size of employer—by the highest level of education that workers attained. Positive numbers indicate that, on average, wages, benefits, or total compensation was higher in the 2011–2015 period for federal employees than for similar private-sector employees. Negative numbers indicate the opposite.
a. The numbers shown for total compensation may not equal the sum of the numbers for wages and benefits because of rounding to the nearest dollar and because of the composition of the samples used by CBO.

Source: Congressional Budget Office



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