Government jobs have long enjoyed a reputation for being plum positions. But
it took Robert Rizzo to really make the case.
Rizzo is the man who became famous in July for the unbelievable salary he was
pulling down as city manager of Bell, Calif. — $787,000 a year, almost double
President Obama’s salary.
Who knew that running a city of 38,000 was so difficult? Voter outrage forced
Rizzo to tender his resignation. But the joke is on taxpayers. Rizzo can now
collect a pension of $650,000 a year. By the time he turns 65, his pension will
rise to more than $1 million annually.
Fortunately, government salaries this lavish are the exception, not the rule.
But, despite what John Berry, the government’s personnel chief, said in a recent
statement, government employees do make more on average than comparable
private-sector workers. Jobs with state and local governments are known for
their generous benefits. Fewer people know that federal employees also get
Federal workers perform more skilled work than most private-sector employers,
so they naturally earn higher wages. The unions representing federal employees
insist that their higher skills explain federal employees’ higher pay.
But it does not. Even accounting for their skills and education, the average
federal employee earns substantially higher wages — 22 percent higher — than
they would in the private sector. And that’s just cash earnings. The federal
government offers gold-plated benefits, too. The Federal Employees Health
Benefits Program offers excellent coverage without age, health or pre-existing
condition requirements. Federal employees also get a government pension and can
retire as young as 56 with full benefits.
How many workers in the private sector do that? Federal employees also get
fantastic leave benefits. After three years on the job they get four weeks of
vacation a year, all 10 federal holidays and 13 sick days — all paid. Few
Fortune 500 companies could afford to offer employees that much time off.
If you include the value of these benefits, the average federal employee’s
total compensation rises to 30 to 40 percent above that of comparable
private-sector workers. Federal employees enjoy another perk unheard of in the
private sector: near absolute job security. Federal employees rarely lose their
jobs for poor performance. Once they have put in a year on the job it becomes
almost impossible to fire a civil servant. Recessions do not put their jobs at
Unsurprisingly, federal employees quit only one-third as often as private
sector workers do. They seem to know they could not find a better job elsewhere.
Yes, a job with Uncle Sam is nice work, if you can get it.
This generosity, however, costs taxpayers a bundle. If the government reduced
federal compensation to private-sector rates, it would save $47 billion next
year — more than $400 per income-tax filer. The problem with overpaying federal
workers goes beyond simple unfairness. The taxes that fund this generous pay
hurt the economy.
Congress plans to significantly raise taxes on dividends and savings at the
end of the year, as well as the top tax rates paid on small-business income.
Small-business owners already rate taxes as their second-largest problem. These
new taxes would discourage entrepreneurs from taking the risk of starting new
ventures and investors from taking the risk of funding them. Thus tax increases
mean fewer jobs. Reducing federal pay to private-sector rates would allow
Congress to keep taxes lower and the economy stronger. That doesn’t mean
Congress should cut federal pay across the board.
These figures are only averages. Because the government largely bases raises
on seniority and not performance, many hardworking federal workers do not get
overpaid. These workers should not get their pay cut.
Congress should go to the root of the problem and completely reform how the
government pays its employees.
Uncle Sam should move to performance- based pay based on market rates — the
same system most private employers use. The government should also bring federal
benefits in line with the private sector and allow managers to fire poor
These reforms are common sense. Federal employees shouldn’t get more than
those whose taxes fund their salaries, especially when those taxes discourage
businesses from hiring. The government shouldn’t put federal workers’ premium
pay above jobs for the unemployed.
James Sherk is a senior policy analyst in labor economics at
The Heritage Foundation. Readers may write to him in care of The
Heritage Foundation, 214 Massachusetts Avenue NE, Washington,