Frequently Asked Questions
Guidelines for Citing BEA Information | ID: 320 | Created: Aug-30-2006
There are a number of factors that explain why average compensation for federal government non-postal civilian employees is higher than average compensation for private-sector employees.
- The mix of occupations held by federal government civilian employees is different from that of occupations held by the entire private-sector workforce. The private-sector workforce ranges from jobs that pay a minimum wage to highly paid CEOs. According to studies conducted by the Congressional Budget Office (CBO), jobs in the federal government civilian workforce are concentrated in professional (e.g., lawyers, accountants, and economists), administrative, and technical occupations.1 In addition, skill levels and educational attainment tend to be higher, on average, for federal government civilian employees than for private-sector employees because of the occupational requirements in the federal government.2
- Over the past several years, there has been a shift in federal employment toward higher-skilled, higher-paid positions as lower-skilled (and lower-paid) positions in the federal government have been contracted out to private industries.1 This trend has contributed to higher average pay for federal government civilian employees than for private-sector employees.
- On average, federal government employees receive higher benefits in the form of pensions and health insurance contributions than private-sector employees, with certain private-sector employees receiving no benefits. This is highlighted by comparing the difference between the average compensation and the average wage of federal government civilian employees ($37,774 in 2006) with the difference between the average compensation and average wage of private-sector employees ($9,544 in 2006).
- Moreover, federal compensation estimates include sizable payments for unfunded liabilities that distort comparisons with private-sector compensation. For 2006, for example, the value of these payments for unfunded liability were $28.6 billion or 10.7 percent of total federal civilian compensation. Please see the FAQ "How does BEA treat federal payments to the Military and Civil Service Retirement Funds?” for more information on payments for unfunded liabilities.
For more information on civilian compensation, please see the FAQ “What is included in federal government employee compensation?” Please see, “Defined Benefit Pensions and Household Income and Wealth,” for information on BEA’s research on the accrual approach to measuring defined-benefit pension plans.
1 See the CBO paper, “Characteristics and Pay of Federal Civilian Employees,” March 2007, at http://www.cbo.gov/ftpdocs/78xx/doc7874/03-15-Federal_Personnel.pdf.
2 Statistics on the percentage of college educated employees in the federal government civilian workforce are found in the CBO study, “Characteristics and Pay of Federal Civilian Employees” at http://www.cbo.gov/ftpdocs/78xx/doc7874/03-15-Federal_Personnel.pdf. The data required to calculate the percentages of college educated private-sector workers are found in the Bureau of Labor Statistics’ Current Population Survey at http://www.bls.gov/cps/home.htm. See also a study conducted by the National Science Foundation, “2003 College Graduates in the U.S. Workforce: A Profile,” December 2005, at http://www.nsf.gov/statistics/infbrief/nsf06304/.
Note: For more information on comparing federal government and private-sector employees’ compensation,, see BLS’ National Compensation Survey at http://www.bls.gov/ncs/home.htm; BLS’ Current Population Survey at http://www.bls.gov/cps/home.htm; Office of Personnel Management’s Federal employment statistics at http://www.opm.gov/feddata/; and the Congressional Budget Office’s “Measuring Difference Between Federal and Private Pay,” November 2002, at http://www.cbo.gov/showdoc.cfm?index=3992&sequence=0.
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