Over the last few years, several organizations have published studies comparing federal and private-sector compensation. The GAO recently summarized six of the studies--not to draw its own conclusions, but to give lawmakers a sense of how the methodologies differ.
I'm happy to report that my own study, coauthored for AEI with Andrew Biggs, was among the six that the GAO reviewed. The others were from Heritage (written by my colleague James Sherk), the Cato Institute, the Project on Government Oversight (POGO), the Congressional Budget Office (CBO), and the somewhat imposing-sounding "President's Pay Agent," which conducts the federal government's official wage comparison each year.
The Heritage Foundation has put together a nice table that summarizes the results of the five studies that controlled for worker skills and/or occupations when doing the comparisons. (This excludes Cato, which showed that federal compensation has been growing larger relative to private compensation but did not try to establish what the exact level should be.)
Note that the only study reviewed by the GAO that did not conclude that total federal compensation (wages plus benefits) is higher than private-sector compensation is the Pay Agent. The Pay Agent compares only wages--not benefits--between federal and nonfederal positions and therefore cannot come to a conclusion about total compensation.
The Federal Employees Pay Comparability Act of 1990 mandates that the Pay Agent conduct an annual wage comparison between federal and nonfederal jobs, but the law established no similar requirement for benefits. This is not exactly a minor omission! Fringe benefits are a part of employee compensation just as wages are, and federal benefits are highly generous. The CBO found that federal benefits are 48 percent greater than the benefits enjoyed by similar workers in the private sector. And this estimate is actually lower than the figure that Andrew and I found in our own study, which considers a more comprehensive list of benefits.
Even leaving the empirical findings aside, the general intuition that ordinary people have about public-sector compensation is that the benefits tend to be more generous than the wages. This sentiment alone should motivate governments to ensure that total compensation--not merely wages--is in line with private-sector levels.
In addition to being a waste of resources, overcompensation of public employees hurts a government's democratic legitimacy in the eyes of its citizens. People need to know that public employment is truly public service--not a gateway to special privileges. That's why it amazes me that the federal government's official position on the question of whether federal compensation is at appropriate market levels is... a helpless shrug of the shoulders.
Isn't it interesting (and informative) that the ONLY study to conclude that Federal Gov't wages are lower than Private Sector wages is the "pay Agent", undoubtedly complied by a group of ... Federal Employees.