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Hearing Hearing Date: March 9, 2011 12:00 am

Are Federal Workers Underpaid?

Are Federal Workers Underpaid?
March 9, 2011
12:00 am

Subcommittee Chairman Dennis Ross Opening Statement

We are here today to discuss whether federal employees are compensated fairly.

According to the Office of Personnel Management the average salary for federal employees was $74,311 in 2010. The average private sector worker earned $50,462, according to an August 10, 2010 analysis conducted by the Cato Institute. The federal government also pays an average of 36 percent of employees’ base pay health insurance and pension benefits, in addition to generous paid leave. Taken together, federal employees on average earned $101,628 in total compensation in 2010, nearly four times more than the average private sector worker.

The Members of this Subcommittee recognize that our talented federal workforce performs critically essential missions throughout the government, on behalf of our nation. We appreciate their service. Federal employees should be compensated fairly. Yet, current federal salaries and benefits are not in line with the marketplace when compared to private workforce compensation.

In a time when our economy is in a recession, the contrast between government and private sector pay is troubling. The federal government has no incentive or obligation to reduce salaries in order to be competitive to stay in business. It can simply borrow money or raise taxes.

With federal spending and unemployment at or near record highs, this hearing presents an opportunity for lawmakers of this committee to hear important testimony from our distinguished witnesses on how best to address the growing pay disparity between the federal civilian and private sector workforce.

Over the past decade, compensation of private sector employees has not kept pace with that of federal employees. Moreover, federal workers receive generous benefits – vacation, health insurance, pension plans, retirement savings, and disability pay. These benefits greatly exceed those that are normally provided to the private sector workforce.

Last November, President Obama announced a 2-year pay freeze for federal employees. Unfortunately, the pay freeze did not impact salary increases driven primarily by the passage of time or bonuses, meaning President Obama’s pay freeze wasn’t really a freeze. Additionally, according to the President’s Budget, the federal workforce grew by 325,000 since President Obama took office, with an additional 15,000 new federal workers requested for fiscal year 2012. At the same time, our economy has lost over 4 million jobs and the unemployment rate hovers around 9%.

Our taxpayers can no longer be asked to foot the bill for these federal employees while watching their own salaries remain flat and their benefits erode. Congress has an obligation to consider all policy reforms that overhaul federal compensation, reduce costs and better align with the private sector.

I thank the witnesses for appearing here today and I look forward to their testimony.

Witnesses and testimonies: The Honorable John Berry

U.S. Office of Personnel Management
Panel 1

James Sherk

Senior Policy Analyst in Labor Economics
Heritage Foundation
Panel 2

Andrew Biggs, Ph.D.

Resident Scholar
American Enterprise Institute


Max Stier

President and CEO
Partnership for Public Service


Colleen Kelley

National President
National Treasury Employees Union