Debating over whether federal workers are paid too much is always met with scorn from public-sector unions, who have taken to President Obama's pay freeze as unnecessary scape goating. But Jason Richwine and Andrew Biggs take a look at the numbers and conclude that yes, they are overpaid.
The question of whether federal workers are overpaid is often portrayed in the media as unanswerable, with each side of the debate citing its own numbers. In fact, the academic evidence is much more one-sided: Generally speaking, federal workers do receive higher salaries than similar private employees; individuals changing jobs receive bigger pay increases when their new job is with the federal government; federal employees quit less than private workers; and private workers line up to get federal jobs.
Fundamental reform of federal compensation—not merely temporary pay freezes or furloughs—could offer significant benefits to taxpayers. At the same time, we must acknowledge that there is no perfect solution. No amount of “good government” reforms can ensure that federal workers are paid exactly the same way as their private sector counterparts, because the federal government can never be subject to market forces the way the private sector is.
Perhaps that's just one more reason why we should make sure government stays small -- to reduce the possibility we're not wasting money.