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By Tom Elia
July 29,2002
The New Editor
In FY 2001 the federal government paid about $269.5 billion in salary and benefits to 4.06
million government workers. That works out to an average salary, with benefits, of around
$66,000 a year per full-time equivalent federal employee.
Compare that to the private sector's average salary of about $43,000 per year, with benefits.
Nationwide, municipal government workers average about $56,000 per year, with benefits.
All state workers average about the same, $56,000 a year, including benefits.
By any comparison, federal workers measure up very well in the aggregate. Private sector
workers make about $23,000 less, annually, than federal workers, municipal and state
workers are around $10,000 a year behind their federal brothers and sisters.
Suppose for a moment that the federal average was more in line with the average municipal
and state compensation of $56,000 (still about 30% more than that of the private sector),
thus saving $10,000 per federal employee, or about $40 billion in total (the ‘salary premium’).
Exactly how big is $40 billion?
So large that in FY 2001 only seven cabinet-level departments had entire budgets that were
larger than the salary premium that is paid federal workers: Agriculture, Defense, Health and
Human Services, Social Security, Transportation, Treasury, and Veteran’s Affairs. No other
cabinet-level department had a budget in excess of the $40 billion extra that was paid to
federal workers.
How does the $40 billion stack up in comparison to some of the other areas of the federal
budget?
Big enough that the salary premium was larger than FY 2001 federal spending on
administering justice (with a budget of about $30 billion); food stamps (about $35 billion);
general science, space & technology (about $20 billion); higher education (about $10 billion);
housing assistance (about $31 billion); international affairs (about $20 billion); natural
resources & environment (about $28 billion); and unemployment compensation (about $28
billion).
What could the federal government do with the extra money if the funds were redirected?
Instead of paying the salary premium, the federal government could quadruple funding for
the space program or quintuple it for higher education. Or it could give almost $1 billion a
year in block grants to every state for primary and secondary education. Rather than
spending $40 billion on the salary premium, the federal government could more than double
federal spending on preserving the environment and our national parks. Maybe the federal
government would like to increase funding for general science and basic research by more
than five times its current amount. How about diverting these funds toward shoring up Social
Security (its current unsecured future obligations have a present value of about $3 trillion) or
Medicare?
$40 billion is the approximate size of President Bush’s tax cut for this year and some contend
that it is responsible for this year’s deficit!
Why is the average pay for federal employees so much more relative to these other broad
sectors of the federal budget? Many people point to the $3 billion spent in the last election
cycle as evidence that our democracy is being bought, and their case has some merit. But in
that same period of time about $80 billion was paid out in a salary premium to federal
workers.
Is it unfair to ask what is being bought with this money? Is it unfair to point out that 26% of
all voters in the 2000 elections came from union households (a number all out of proportion
to the 15% of the labor force that is unionized) -- and that one of the only areas of growth in
union membership is coming from organizing government workers?
If it is legitimate to question the overall affect of political campaign contributions on
democracy in the last election cycle, is it not also legitimate to question the extra $80 billion
in salary premium paid out to federal workers during the same period?
However, without questioning the wisdom of such largesse with these public funds, the
federal government will increase overall spending for federal workers to an estimated $287
billion for FY 2002 and $333 billion for FY 2003.
Are federal workers worth an extra $40 billion a year (and counting)?
Tom Elia is a contributing editor for The New Editor.
Paul Geary
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