Thursday, April 27, 2017

Without The Inclusion Of Average Hours Worked And Worker Output, CBO's Comparison Of Public Vs Private Sector Compensation Is Meaningless

My posted comment to the Wall Street Journal opinion, "The Permanent Boomtown For federal workers, the deal keeps getting sweeter." by James Freeman about the recent CBO report, "Comparing the Compensation of Federal and Private-Sector Employees, 2011 to 2015:"

From The Wall Street Journal opinion:
Not only are America’s 2.2 million civilian federal employees making more than their counterparts in the private market; the compensation gap is widening between the feds and the taxpaying public they allegedly serve. A new report from the Congressional Budget Office released this week finds that “the federal government paid 17 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector.” At every level of education from a high school diploma or less through a master’s degree, workers made more off the taxpayers than similar workers made while toiling away in the real economy. The one exception: private-sector workers with a professional degree or doctorate have managed to achieve higher compensation than the government gang.
My posted WSJ comment:
Comparing public versus private compensation without comparing worker output is meaningless. In the private sector, the concern for profitability pushes workers to be more productive. Public workers are rarely under any deadlines. The 17 percent number is probably lower than reality. If it takes three government workers to do the work of two private sector workers, then it is costing the government an additional 33 percent in extra pay and benefits in addition to the average 17 percent CBO found. It makes sense that CBO found that private professional and doctorate degree workers are paid more than public workers. This group probably has the highest percentage of no overtime pay. These private workers are likely producing more by working later, taking work home, working on weekends and delaying vacations more than government workers and are paid a premium for their extra productivity. CBO should include average weekly hours worked and output next time to have a meaningful comparison.