No, federal workers aren’t underpaid

All five outside studies reviewed this year by the Government Accountability Office found that federal pay is equal to or higher than those of comparable private-sector workers. This is consistent with three decades of academic research. According to our analysis of Census Bureau data last year, the typical private-sector worker who shifts to a federal job receives a salary increase, while federal workers who leave for the private sector tend to get a salary cut.

So where does the government calculation go wrong? To begin, it compares pay for federal jobs to nonfederal positions at a similar “grade,” or level. Yet both the CBO and the GAO have documented “overgrading” in the federal workforce, meaning that federal jobs could be assigned higher grades on the General Salary Schedule than the pay agent assumes for their nonfederal equivalents. This can create the appearance of pay differences where none exist.

The pay agent also doesn’t consider the relative qualifications of federal employees. In a 2002 study, economist Melissa Famulari concluded: “Federal workers have significantly fewer years of education and experience than private sector workers in the same level of responsibility in an occupation.” For example, a senior accountant in the federal government may have the qualifications of a junior accountant in the private sector. Such skill differences are important determinants of pay.