[PDF Document]

Government employee compensation is low hanging fruit for politicians looking to rein in government’s overspending problem. Unaffected by market forces, government agencies need not abide by traditional business practices. This problematic arrangement manifests itself when one compares state and federal worker compensation to similar private sector compensation.   

State and local employee overpayment [1]                                                                          

State and local government employee compensation


Comparable private sector Compensation


Amount state and local gov employees are overpaid


Number of state employees

19.5 million

Total overpayment


Federal employee overpayment

Federal employee compensation


Private sector employee compensation


Amount federal employees are overpaid


Number of federal employees sans postal

2.2 million

Total overpayment

$136 billion

When controlling for factors such as education, age, experience, intangible benefits (job security) federal premium is: [2]

  • Federal employees' hourly wages are 22% more than workers in the private sector
  • Aligning federal workers' compensation with market rates would save taxpayers $47 billion a year
  • When combining wages and total benefits, federal employees earn 30% to 40% more than private-sector workers
  • Full-time federal employees can take 13 paid sick days a year along with all 10 days of national holidays
  • The average federal civilian employee earns on average $32,115 a year in non-cash compensation compared to a private sector employee who earns three times less, $9,882 annually
  • Federal employees receive 22% more in employer payments toward their health care than their private sector counterparts.
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[1] Cato: Employee Compensation in State and Local Governments. January 2010

[2] Heritage: Federal Pay Still Inflated After Accounting for Skills. September 2010