Federal Employees Raking in Taxpayer Dollars

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CHICAGO—While those in the private sector are struggling to pay their bills and keep their jobs, federal government employees have become the aristocracy of the labor market, according to Jim Tobin, President of Taxpayers United of America (TUA).

“A new study by the Cato Institute in Washington shows that federal employees earn far more than their counterparts in the private sector,” said Tobin.

“According to the study authored by Chris Edwards, Director of Tax Policy Studies for the Cato Institute, federal employees’ pay and benefits were 78 percent higher than those in the private sector.”

“It is ironic that these so-called ‘public servants’ are not only making rules and regulations that interfere with our private lives and hurt private industry, but that our federal taxes are funding their lavish salaries and benefits.”

“Federal government employees earned an average of $84,153 in 2014, compared to the private sector’s average of $56,350. In addition, when adding benefits for federal employees, these federal employees made $119,934 in total compensation last year, while private sector workers earned $67,246, a difference of more than $52,000, or 78 percent.”

“According to Edwards, rising federal compensation stems from legislated increases in general pay, increases in locality pay, expansions in benefits, and growth in the number of high-paid jobs as bureaucracies become more top-heavy.”

“Edwards also points out that politics plays an important role: Federal employees are a powerful special-interest group, and are effective lobbyists. Federal unions actively oppose legislators who support restraining government employee pay.”

“It’s worth noting what federal government employment actually means: generous taxpayer-subsidized benefits and pay that far outpaces the private sector, not to mention near ironclad job security. Federal employment benefits skew far from the market norms, even in a booming economy, but then again, it’s easy to make promises with other peoples’ money.”

The Cato study also referred to a Washington Post analysis of lavish, gold-plated benefits received by federal government employees:

  • The Federal Employee Health Benefits Program offers the widest selection of health care plans of any U.S. employer. Federal employees also have access to vision and dental plans, life insurance, flexible spending accounts, and long-term care plans.
  • Federal employees enjoy liberal amounts of paid time off, including 13 days of sick leave per year, 10 paid federal holidays, and 13 to 26 days of paid vacation, depending on years of service.
  • Federal employees have access to retirement benefits through the Civil Service Retirement System or the Federal Employee Retirement System. Under both plans, retired employees receive an annuity, which is complemented by Social Security benefits and participation in the Thrift Savings Plan that offers 401(k)-type investment options.
  • Extremely high job security. Federal employees are supported by strong civil service protections, and about one-third of them are represented by unions. The rate of layoffs and discharges in the federal workforce is just one-quarter of the rate in the private sector. Federal employees are almost never fired.

Edwards concludes: “Policymakers should restrain spending in every federal department and activity. They should pursue further reforms to federal pay packages and better align wages and benefits with private-sector practices.”

“As this most recent Cato Institute report shows, federal employees’ benefits are set artificially high by the government so that compensation far surpasses their private sector counterparts,” reiterated Tobin. “Taxpayers are constantly harangued by bureaucrats to hand over more of their hard-earned dollars to fund a never ending list of government expenditures. This study points to one area where spending cuts can be made to bring federal employees’ compensation into line with the market average, and give taxpayers a break,” Tobin concluded.


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