US Government Underpays Workers With Doctorates And Overpays High School Graduates

According to a recent CBO study, the Federal Government pays, on average, 48 percent more for benefits for its workers than the private sector. Worker productivity was not considered in the analysis so the implicit assumption is that a public worker and a private sector worker in similar jobs in similar time periods have equal outputs.

Employees with only a high school degree were the most overpaid in wages and benefits and workers with a professional degree or doctorate were the most underpaid in wages and benefits compared to equivalent workers in the private sector.

From CBO, "COMPARING THE COMPENSATION OF FEDERAL AND PRIVATE-SECTOR EMPLOYEES" January 2012:

Wages
Differences in wages between federal employees and similar private-sector employees in the 2005-2010 period varied widely depending on the employees' level of education.

• Federal civilian workers with no more than a high school education earned about 21 percent more, on average, than similar workers in the private sector.


• Workers whose highest level of education was a bachelor's degree earned roughly the same hourly wages, on average, in both the federal government and the private sector.


• Federal workers with a professional degree or doctorate earned about 23 percent less, on average, than their private-sector counterparts.

Overall, the federal government paid 2 percent more in total wages than it would have if average wages had been comparable with those in the private sector, after accounting for certain observable characteristics of workers.

Benefits
The cost of providing benefits—including health insurance, retirement benefits, and paid vacation—differed more for federal and private-sector employees than wages did, but measuring benefits was also more uncertain.

• Average benefits for federal workers with no more than a high school diploma were 72 percent higher than for their private-sector counterparts.


• Average benefits for federal workers whose education ended in a bachelor's degree were 46 percent higher than for similar workers in the private sector.


• Workers with a professional degree or doctorate received roughly the same level of average benefits in both sectors.

On average, the benefits earned by federal civilian employees cost 48 percent more than the benefits earned by private-sector employees with certain similar observable characteristics.

The complete CBO report follows:
Comparing the Compensation of Federal and Private Sector Employees