It has been said that if President Obama had a country, it would look like Detroit.
Amid the recent hubbub over municipal bankruptcies and rising public-employee pension costs, pay for state and local government employees has gotten a great deal of publicity. Lost in the press attention, however, is that federal-employee compensation remains a problem, too, and new data again indicate that Washington, D.C., may be overpaying for the two million workers it employs.
In a 2011 AEI paper with Jason Richwine, I concluded that federal workers receive salaries and benefits around 37 percent higher than do private-sector workers with similar levels of education and experience. This prompted congressional requests for the Congressional Budget Office to conduct its own analysis, which, the requesters hoped, would rebut ours. Using slightly different methods, the CBO showed a smaller wage premium for federal workers. They omitted a $2.3 billion per year federal subsidy to government workers’ accounts held by the Thrift Savings Plan, but still reached qualitatively similar conclusions: Federal workers receive pay and benefits 16 percent above private-sector levels.
You cannot incentivise working for the state in this way. Especially not at the lower levels. Government does not need “the best and the brightest” Clerk Typist II.
But when they’re dealing with your money and not their own, anything goes.