Public and private jobs
Lifted from comments at Economix on the distorted comparisons of public versus private wages:
These BLS data have been frequently cited to support the claim that public sector workers are paid more than private sector workers. However, as described at a February 2009 conference sponsored by the Federal Reserve Bank of Chicago, the wage differentials shown above do not adjust for differences in the types of jobs in private and public sectors. According to an analysis of the 2008 BLS data presented at the Fed conference, the main reason for the wage discrepancy is that private sector jobs are generally lower-skilled and thus lower-paid retail jobs, while public sector jobs are generally higher-skilled and higher-paid professional positions, although lower-skilled positions pay more in the public than in the private sector due to higher levels of public sector unionization. Representatives of the BLS pointed out that “..roughly two thirds of public sector jobs are professional and administrative, while 51% of private sector jobs are; and retail sales and food service jobs, relatively low-paid and often part-time positions, represent 20% of private sector jobs, but only 2% of public sector jobs.”
According to the conference summary, “in low-skill jobs, public sector wages exceed private sector wages, but in high-skill jobs, public sector wages significantly lag private sector wages (benefits are not in this analysis). This is what some academics call the ‘double imbalance’…the public sector is overpaying low-skill workers while underpaying high-skill workers.” He also showed that when gender, race, education, union membership, age, occupation, and state of residence are *not* controlled for, “public sector employees appear to receive an 18.6% wage premium over private sector employees…” But in controlling for those factors, “public sector workers have a 4.5% wage discount as compared with private sector workers.”
The benefits gap between the public and private sectors shown in the data is due not so much to an increase in public sector benefits, but to an erosion of benefits in the private sector over the past 20 years, although public sector benefits are sure to follow.
As anyone who has worked in a skilled professional position in both the public and private sectors can attest, most private sector professional jobs at similar skill levels pay significantly more, which is why the public sector is continuously losing highly-skilled employees to the private sector. (I should know, I’m an economist who quit a public sector job for a higher-paying private sector one.)
The link to the Federal Reserve conference summary is here.
And of course benefits make the disparity at the lower wage scales even greater. My question is the extant to which the flatter pay in the public sector more closely resembles the flatter pay of 40-50 years ago in the private sector.
Dan–Are lower skilled public sector jobs overcompensated or are comparable private sector jobs undercompensated through a combination of no or poor benefits and/or artificially deflated wages? NancyO
The wife and I used to work retail for the California State Parks. If our pay, zero, was included in the study it would make only a small difference. Most government retail is unpaid volunteer work.
I think it is a waste of time to try to out shout the mighty fox megaphone on this issue.
I took a pay cut to join NASA 40 years ago for the best of reasons: Stability and fun work.
I’m going to assume that you are begging an answer that you already know. The private sector has been screwing its lower level employees for the past several decades, if not forever. Public sector employees have modest pay and health plans that are not plush. Public sector professionals at the G11 level are at best mid $60s. Not horrible, but an advanced degree (PhD, LLD, etc) are required for many of those jobs. Compare these to similar educational backgrounds in the financial industry. Chump change by that comparison.
Why is it that the only pay scales that seem to be “problematic” in the media and political agendas are those of modestly compensated workers? It certainly draws attention away from the multi-million dollar compensation pkgs that the corporate executive corps enjoys. The financial industry has been sharing the cream of the income distribution for little more than moving funds and financial instruments from here to there. That “small” vig on each move adds up.
from the comment at Economix – “The benefits gap between the public and private sectors shown in the data is due not so much to an increase in public sector benefits, but to an erosion of benefits in the private sector over the past 20 years, although public sector benefits are sure to follow.”
Representatives of the Federal OPM have stated that they don’t even bother to make a comparison of Federal to private benefits.
ditto – “As anyone who has worked in a skilled professional position in both the public and private sectors can attest, most private sector professional jobs at similar skill levels pay significantly more, which is why the public sector is continuously losing highly-skilled employees to the private sector. (I should know, I’m an economist who quit a public sector job for a higher-paying private sector one.)”
That is not the case with Federal civilian employment as recorded by OPM. The turnover rate is extremely low.
I read that summary. Color me unimpressed. Standard paper mill stuff.
Here are most of the links previously posted which question Federal wage and benefit levels.
Benefits widen public, private workers’ pay gap
By Dennis Cauchon, USA TODAY
Federal Pay Continues Rapid Ascent
Posted by Chris Edwards
August 24, 2009
Wall Street, Big Oil, and Federal Workers
Posted by Chris Edwards
August 31, 2009
For feds, more get 6-figure salaries
By Dennis Cauchon, USA TODAY
Federal pay ahead of private industry
By Dennis Cauchon, USA TODAY
March 8, 2010
Feds, on average, earn more than their private sector counterparts
March 5, 2010
Gov’t workers feel no economic pain
March 11, 2010
Federal bonus bonanza
March 12, 2010
Independent analysis of federal and private salary data needed
By Dorothy Ramienski
March 16, 2010
Overpaid Federal Workers
by Chris Edwards
Senate deals another blow to efforts to freeze federal pay
By Elizabeth Newell firstname.lastname@example.org
June 17, 2010
OPM wants to settle the fed salary debate
June 17, 2010
Study rekindles debate over federal pay and benefits
By Elizabeth Newell email@example.com
July 7, 2010
Inflated Federal Pay: How Americans Are Overtaxed to Overpay the Civil Service
July 7, 2010 by James Sherk
Obama considers leaving government jobs unfilled
October 16, 2010
New Post poll finds negativity toward federal workers
By Lisa Reinand Ed O’Keefe Washington Post Staff Writers
October 17, 2010; 11:57 PM
Washington Post Poll on Federal workers conducted Sep 30-Oct 3, 2010
John Gage shoots off his mouth
But John Gage, president of the American Federation of Government Employees and one of the federal sector’s biggest defenders, said blanket comparisons between federal workers and the private sector are unfair.
“How the hell do they know what federal employees are paid?” Gage said of the poll’s respondents.
What an arrogant SOB.
Here is some info from the Federal Government that I would like to discuss later on.
The matter of locality pay isn’t touched in many discussions pushing for more Federal pay increases. Yet, it’s a prime source of additional pay for many Federal employees.
President’s Pay Agent
President’s Pay Agent – reports
Federal Salary Council – locality pay program
Pay Disparities And Comparability Payments
2009 Pay Agent Report
2010 BIWEEKLY CAPS ON PREMIUM PAY
Locality Pay Area Definitions
LOCALITY PAY AREAS – Fact Sheet
Office of Personnel Management – Subject Index
Try justifying this crap. The push is still on right now to push up locality pay. One would think that D.C. and Federal employees are guaranteed immunity from a deep recession.
Pay Disparities And Comparability Payments
Table 3, below, lists the pay disparity for each pay locality. Table 3 also derives the recommended local comparability payments under 5 U.S.C. 5304(a)(3)(I) for 2011 based on the pay disparities, and it shows the disparities that would remain if the recommended payments were adopted.
The law requires comparability payments only in localities where the pay disparity exceeds 5 percent; the goal was to reduce local pay disparities to no more than 5 percent over a 9-year period (5 U.S.C. 5304(a)(3)(I)). The “Disparity to Close” shown in Table 3 represents the pay disparity to be closed in each area based on the 5 percent remaining disparity threshold. The “Locality Payment” shown in the table represents 100 percent of the disparity to close. The last column shows the pay disparity that would remain in each area if the indicated payments were made. For example, in Atlanta, the 48.08 percent pay disparity would be reduced to 5.00 percent if the locality rate were increased to 41.03 percent (148.08/141.03-1) X 100 = 5.00 percent).
The table does not include Alaska, Hawaii, and the other non-foreign areas because these areas have not yet been established by the Council and the Pay Agent. Based on the data provided by BLS, the Anchorage pay gap of 54.98 percent would yield a target pay gap and locality rate of 47.60 percent, and the Honolulu pay gap of 38.41 percent would yield a target pay gap and locality rate of 31.82 percent for 2011.
The actual remaining pay disparity as of January 2011 may differ from the calculations for two reasons. First, Federal pay will have increased by the amount of the across-the-board increases that become effective in January 2010 and January 2011. Second, non-Federal pay will have increased by some amount from March 2009 to January 2011. For the purpose of this report, we assume that future changes in Federal and non-Federal pay will effectively cancel each other out and the pay disparities will remain about the same.
Average Locality Rate
The average locality comparability rate in 2011, using the basic GS payroll as of March 2009 to weight the individual rates, would be 38.88 percent under the methodology used for this report (based on the disparity to close). The average rate authorized in 2009 was 19.40 percent. At this time, we do not know what locality rates will be approved for 2010. The locality rates included in this report would represent a 16.3 percent average pay increase over 2009 locality rates. Note these calculations do not consider Alaska, Hawaii, or the other non-foreign areas.
The full pay disparities contained in this report average 45.82 percent using the basic GS payroll to weight the local pay disparities. However, this calculation excludes existing locality payments. When the existing locality payments (i.e., those paid in 2009) are included in the comparison, the overall remaining pay disparity as of March 2009 was (145.82/119.40-1) X 100, or 22.13 percent. Table 4, below, shows the overall remaining pay disparity in each of the 32 approved locality pay areas as of March 2009. Note this calculation does not consider Alaska, Hawaii, or the other non-foreign areas.
Table 3. Local Pay Disparities and 2011 Comparability Payments
Locality 1 – Pay Disparity (percent) 2 – Disparity to Close and Locality Payment (percent) 3 – Remaining Disparity […]
There are plenty of issues worth discussing on Federal wage and benefits. The standard OPM (Office of Personnel Management) response isn’t going to cut it anymore. OPM is already behind on proposing its latest study effort and participants to get a handle on the pay formulas. Who knows what will be recommended for normal pay and the additional locality payments, which by the way include Washington, D.C. employment.
Well worth the read if anyone wants to seriously discuss Federal pay:
2009 Pay Agent Report
Lots of time on Cato, eh?
While you are at it might as well discuss: grade inflation, aborted return to spoils system in National Security Personnel System, decimated position ratings/rankings, revolving door, whistleblower retaliation, failing to police the political appointees, etc, etc.
And then the new growing cohorts of contractors doing personal services without congressional authorty, something called anti deficiency (spending money for that which coingress did not appropriate the funds) also could be demanding voluntary services (both anti deficiency and demanding voluntary service can be criminal) here.
The EEOC has ruled that contractors are a form of employee when a contractor is harrassed.
The federal work force has evolved from the bunch of “little old ladies in tennis shoes” that Reagan took to fixing.
Would you like to return it to pre Reagan? As well as the military go back to draftee level pay scales?
Good points to debate.
All good points.
Let’s not overlook getting a pay raise for converting oxygen just because a person is still showing up for work two years later.
Military pay scales can be reduced as well.
I think the whole Federal pay system including grade inflation is broken.
I can remember, not long ago, that it was rare to fall over a GS-15. Now, you bump into them everywhere. D.C. is one big FUBAR mess.
No pity from me. Not now.
MG, I’m not sure what your point is here. Meeting more GS/M-15s is syptomatic of: 1) your dealings with Fed agencies have reached a level appropriate with your own pay/responsibility level, 2) there are just more high grades as the hiring has been suppressed for decades, 3) the system is broken?
RE: your references to the Pay Agent Report, are you saying you have a better method? Do you have complaints over the current method? Do you disagree that the disparity exists?
Fed employees are always under attack in good and bad times. Claims of not being worthy (…getting a pay raise for converting oxygen just because a person is still showing up for work two years later.) is commonplace, but when it comes time to actually make improvements there are few real world recommendations provided.
For the first time I can agree with CoRev. I don’t understand your point in posting so many references. You start off with the quotes from Economix which suggest that public employees have not yet been as severely exploited as their private counter parts. Though the fact is that the public/private comparisons are subject to error. You then proceed to list a long series of references that seem little more than ideological diatribes from a variety of right wing sources be they nonobjective tanks or media outlets. Then that is followed by a long list of references to pay grade charts. What’s up? What are you trying to say? Yes, the government has a responsibility to carry out many tasks in order to keep the country running and that requires lots of skillful and intelligent employees. Are you saying that they shouldn’t be compensated for their work? What do all those references boiled down to? Or, are you just trying to impress with your library skills?
Did you miss this recommendation in the Report: “Given the current national emergency, however, we believe it would be unwise to allow the locality pay increases shown in this report to take effect in January 2011.”
For those who do not know, IIRC this is normal wording in this report. If you assume the disparity existed from the beginning, and this is normal wording for their recommendation, then what has happened to the original locality pay disparity?
“the main reason for the wage discrepancy is that private sector jobs are generally lower-skilled and thus lower-paid retail jobs, while public sector jobs are generally higher-skilled and higher-paid professional positions,”
So, why do you think you need a post graduate qualification in order to teach in a public secotr school?
So that the unions can claim that everyone doing so has a post graduate education, are more highly skilled and thus should be more highly paid.
Come on peeps, unless you’re willing to look at the way that public sector jobs require huge credentials then you’ll not understand why this comparison is false.
If 3) then let’s talk about how to fix it. BTW, this will not be the first rodeo for the Govt to have this discussion.
a) What part(s) is/are broken?
b) Answer my earlier question re: locality pay. Did it exist? Was it ever fixed?
c) If job categories are no longer needed, then which functions will be eliminated?
d) If it is a matter solely of over payment in today’s economic world, then how do you fix that without hampering future hiring?
e) If there is truly a disparity in equal pay for equal jobs by locale, what method do you propose that is better than the existing method?
f) Define the method for determining/defining equal jobs with emphasis on defining the actual work performed, the education levels, the experience levels (a proxy for age), the level of actual impacts on communities. Careful here, do not compare public to public jobs, as this will get us into comparing balanced budget issues.
Once we can agree on these simple items then we can start discussions into actually fixing the broken sytem.
Your comment is so disingenuous as to qualify for asinine. You would recommend less educational preparation for public employees in professional positions? Teachers in public schools should not be required to have graduate training? Maybe the educational sector should revert back to one room multi-grade classrooms. A pot bellied stove for heat would have a nice nostalgic touch. It may surprise you to know that teacher requirements are determined by the public agencies that administer the public, and to a large extent the private, school systems. You’ve got the cart way out in front of the horse, but if educational requirements were truly a device by which public unions support their demands for higher pay at least the result is to improve the knowledge base of the educators. More than we can say for the blogger community.
Tim, the discussion is about federal pay grades, but the federal government hires very few teachers.
The overwhelming bulk of the public sectors teachers work for local governments.
Care to provide some data on how many federal teachers there are what they are paid.
The only large scale Federal government employment of teachers that I know of are the teachers for the military dependent schools overseas and they are hired as a GS 7 and stay a GS 7 as long as they are teachers. They have to be promoted to a principal/administrative to get a higher GS pay. That is one reason why the bulk of those teachers are young teachers that only remain with the system for 2-3 years.
From my experience the bulk of those teachers are wives of military officers/enlisted and drop out when the first or second child comes around. That’s why they are so young.
As for Tim’s bigger issue. Sorry, but there should be no requirement or even mention of graduate degrees for hiring anyone to teach K-8th grade. If not higher. ANY college graduate should have the mastery of ANY topic taught in these grades – except a foriegn language. Requiring teachers to have higher levels of education and all the other barriers to entry are just credentialing. I have to masters degrees in engineering, have taught people from 13 countries how to fly airplanes, yet I would not be “qualified” to teach basic Algebra to a bundle of 10th graders. All becuase I don’t meet the credentialing requirments. Sorry I have corrected way to many teachers in grade school on basic math and science to count. (And don’t get me started on their lack of knowledge of geography, astronomy, or history).
As for the real point of the post (which your correct Tim did not address). A lot of the GS-14/15 explosion from my time in DC was cuased by the need to actually hiring people who wouldn’t take a job with a pay any lower. DC is VERY expensive to live. I tried for my two years their as a PM to hire and not one person I interveiw was excited about the job, lasted 10 minutes after they got online and looked at housing prices. I moved from Shreveport, LA to DC with a 10% pay raise and my standard of living dropped (plus tripled my commute time) like a rock. So the need for higher pay in the Fed sector is needed to bring people into DC – its all about quality of life. And DC is where the bulk of your Feds live. I thank my stars everyday for moving away from that hell-hole.
Islam will change
“Teachers in public schools should not be required to have graduate training?”
Nope. If you college educated you, you should easily be able to teach ANY Math course below Calculous (i.s Geometry and Algebra and below), Any English course, Any History course, Any non-AP science course, and obviously everything taught to anyone in 8th grade or below. Only foreign languages would need specialized training.
If not you come under what I call the college educated illiterates. A perfect example of this would be Matthew Yglesious. Harvard graduate with a Philosophy Major. Managed to graduate from the suppossed best school in the land with only 1 Math class – Intro to stats. My oldest son will be better science and math educated upon graduating from High School than a graduate from Harvard. Failure of the first degree…
Islam will change
So when are you turning over your stuff? When do we get to see all the corruption get aired??
How is it out there in the cold?
Islam will change, but ilsm will still be a party of one…
Ah well….I will address the issue of teachers after the election, and credentialing. But then, you will be entering a part of my world….anecdotes are useful only so much…and bring your thought on how teaching and learning happen, and for whom, and how you actually were creative in your own bureacracy with what consequences.
I am cool with that.
Thanks for the response, do you or anyone on this blog recommend a RICO attorney?
The research a couple of options on USC violations, Anti Deficiency : Making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law. 31 U.S.C. § 1341(a)(1)(A). Accepting voluntary servcies: for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property. 31 U.S.C. § 1342. The draft is being chiseled, reworded as I have time. Case in chief outlined. 31 USC 1350 Criminal Penalty: An officer or employee of the United States Government or of the District of Columbia government knowingly and willfully violating section 1341 (a) or 1342 of this title shall be fined not more than $5,000, imprisoned for not more than 2 years, or both.
Actually it is a warm autumn here, and I am enjoying my self reliance. I have a new wool hunting vest too for extra warmth should I need it.
What identity group are you a groupie of? Are you cool with your flock of lemming?
ilsm, [a party of one (enough for me)] will not change
I worked for a living doing honest/real logistics before getting into system acquisition. I was a GS 12, became a GS 15 eventually and did not have as much pressure as a GS 12 in real world outside acquisition.
I will answer for MG since I have recent and direct DoD experience. See my response to buff this evening.
a. In DoD and DHS they skewed rating and ranking; grade inflation and too much blither in defining work in too high pay band, that is fixed but too many over graded slots remained!!! The OPM PD evaluation is messed up, too much divergence between the PD and the actual work!!! See RICO!
b. Locality pay with grade inflation double the fraud and waste. Started in what 1990? Catch GS raises up to Reagan’s 20 odd % raised for military pay scales.
c. Fix rating and ranking take it all back to OPM like happens when a command proves itself unable to do correct ranking of positions and registers. I worked a place where they were so bad OPM did all the recruiting in the 90’s.
d. OPM can do this they had been okay from 1888 to 1981. Coincident with Reagan taking out the ‘little old ladies in tennis shoes’ for all those high paid suits.
f. I sort of like the wage grade system where they survey BLS categorized pay rates, then take the proffies and fix them to BLS rates standards for white collar (for the criminals the FBI should help)
Easy Button at what store?
My argument isn’t specific to teaching I’m afraid. But to a multitude of public sector jobs (whether financed by the Feds, States or more locally).
There has been for decades an insistence that you have to be “highly trained” (for which read “highly credentialed”) in order to get an ever increasing percentage of the public sector jobs on offer. We see it in the UK as much as you do in the US.
If you increase the qualifications that public sector employees must have then you can then point to “look, see how highly qualified we are!” as a reason why public sector employees should not have their incomes compared with just the general run of the mill private sector employee but with the highly qualified professionals in the private sector.
ILSM, more blather tinged by your abolute hatred of the DOD procurement system. RICO?????
Most of what you provided is at best bad anecdotes, but worse just plain opinion.
Your answer to my “e) If there is truly a disparity in equal pay for equal jobs by locale, what method do you propose that is better than the existing method? “
Your answer: “e. Yes!!” completely negates the totality of your response. Even if you believe that the local Fed employees are overpaid compared to the private sector, you have failed to answer: “…what method do you propose that is better than the existing method? “
You answer to f) is intersting in that it appears to be essentially the same system used for all locality pay comparisons, with the exception that job comparisons are on a “bread basket” set instead of one to one. What also interests me is that the WG system has for years kept US Fed journeymen tradesmen at wage rates lower than that available in their locality. So, not really different than the GS system. (Yes, that last was from personal anecdotal evidence.)
Tim, cause and effect? How does an organization respond to the following claims regarding its employees: lazy, under qualified, poorly credentialed, less than (pick your subject here) private sector workers?
d. answered e. Your list a but redundant.
Enough anecdotes and you build evidence.
f. is irony. I work with logistics people in the supplier side who do, as badly as they can to get the scrap and rework profits, work similar to mine (when I was an over rated GS). The thing that makes wage grade work is that there are BLS standards in the real world.
Most GS labor is is inflated, fiction and anti deficient make work. The counter part industry mirrors that corrput organization dogma.
A new Pendalton Act is needed, but Teddy Roosevelt is no where to be seen.
In war the moral is to the material as three is to one. Just perpetual occupation………………
Would your son know a syllogism? Aside from debating Pythagorus did Plato know calculus?
Oops, Newton was not due on the scene for anotehr 1900 years.
The emperor Nero would certainly like this statement:
“[to Spencer] As for the real point of the post (which your correct Tim did not address). A lot of the GS-14/15 explosion from my time in DC was cuased by the need to actually hiring people who wouldn’t take a job with a pay any lower. DC is VERY expensive to live. “
Lies is lies no matter how good the reason, especially if you are an ignorant useless p[erson running the US into the ground inside the beltway.
As Cicero observed: O Tempores O Mores!
The reek of bullshit is not moderated by massing it in huge quantities. Best always,
I asked him, and yes he does. It was on his last SAT…
You can easily teach engineers to write well. I have yet to see any English majors able to handle High School Calculous…
Yglesious is exhibit #1
Islam will change
The jury is still out.
ilsm will not change
Bureacracies encourage certain kinds of behavior, yes, but have different incentives at different points in their development. And the point Corev aims at.