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8 Responses to “The Annual Cost of US Federal Government Civilian Employees”
- Posted in University Of Maine Farmington
March 6, 2010 at 1:57 pm | Reply
Great number-crunching, David. Odd how sometimes a figure that seems like it should be basic public knowledge is unavailable anywhere.
I would say that in terms of government spending, vastly greater amounts are wasted on contractors and grants to certain companies than on salaried employees. There are businesses and projects even here in Madison that receive flabbergasting sums of federal funding to decorate their lake-view offices with the most expensive wallpaper available, etc.
March 6, 2010 at 2:14 pm | Reply
“Great number-crunching, David.”
I don’t think that I deserve that much credit, it’s just algebra hehe, but thanks.
“Odd how sometimes a figure that seems like it should be basic public knowledge is unavailable anywhere.”
Yeah, no kidding. This is a bit of a side tangent:
I wish that the CBO had detailed revenue and outlay projection models that the general public could play around with on their website. What I mean is: anybody should be able to go on the CBO website and design their own 10 year horizon budget plan with their preferred tax burden structure, spending cuts, spending increases, etc. That would be so awesome and would help add some more realism and facts into fiscal arguments and debate among the general public.
“I would say that in terms of government spending, vastly greater amounts are wasted on contractors and grants to certain companies than on salaried employees. There are businesses and projects even here in Madison that receive flabbergasting sums of federal funding to decorate their lake-view offices with the most expensive wallpaper available, etc.”
I don’t think there is that much savings to be had with federal civilian employee compensation either, but everything has to be on the table when it comes to deficit reduction. I also agree with your contractor remark.
March 6, 2010 at 4:55 pm | Reply
I’d wager the state/local proxy number you use for federal government non-salaried and non-wage compensation would actually be higher for federal employees.
March 6, 2010 at 7:04 pm | Reply
“I’d wager the state/local proxy number you use for federal government non-salaried and non-wage compensation would actually be higher for federal employees.”
You think that these benefits are higher than 34.1% of total compensation? I wish I could find an actual federal number. I assumed that this was a decent proxy because many state and local governments also have very generous pensions and health insurance benefits for their employees. We know this from the enormous unfunded obligations of Illinois and California current and former state employee benefits – and these aren’t not the only examples.
March 6, 2010 at 11:56 pm | Reply
This post has nothing to do with whether federal government civilian employees in general make too much or too little, that is a separate topic.
I’m highly entertained by this statement. Even if this blog post is purely a positive exercise, it clearly has normative implications.
I think your benefit increase estimates are fairly accurate. Looking at health care (largest benefit), health care costs have been going up 7-9% each year. Federal employees have generous plans so the costs should be at least the average.
I disagree with the methodology used to calculate benefits, I believe that federal employees would have a lower proportion of their compensation going toward benefits than state/local employees. Here’s why… I don’t have the benefit breakdown but let’s assume the largest share is health care. Health care benefits should stay fairly static for an employee whether they are making $30,000 or $100,000. Since federal employees (on average) make a substantial higher wage than state/local, benefits should be a great proportion of the state/local employee’s paycheck.
Here’s the math:
State/Local Worker
Salary: $26.24/hour * the average work year (260 days) = $54,579.20
According to the math, local/state employees make only 73.3% of federal employees in 2008. The math above assumes employees are paid for holidays and vacation (which I believe is standard in government). The math also assumes a 40 hour work week, 8 hours a day (standard as well).
Benefits: $13.60/hour * 260 days = $28,288
Total Compensation = $82,867 (benefits = 34.1% of compensation)
Federal Worker
Assume benefits are static. Clearly they won’t be because pension benefits will be higher to higher paid employees. Health care benefits may be slightly higher as well but most likely not substantially.
Salary: $74,403
Benefits: $28,288
Total Compensation: $102,691 (benefits = 27.5%)
I can predict with high certainty that benefits packages will be a lower % of compensation for federal workers. However, it is possible that the federal government gives higher pension benefits or some type of other benefit than state/local governments nullifying my argument.
One more unrelated point, in terms of federal budgeting, I agree that the cost cutting and benefit trimming would not matter greatly. However, in terms of state/local budgeting, this is a different story.
March 7, 2010 at 12:07 am | Reply
“I’m highly entertained by this statement. Even if this blog post is purely a positive exercise, it clearly has normative implications.”
lol true
“I think your benefit increase estimates are fairly accurate. Looking at health care (largest benefit), health care costs have been going up 7-9% each year. Federal employees have generous plans so the costs should be at least the average.”
While true, this does not necessarily mean that federal benefits have increased at this rate since pension obligations grow at a different rate than health insurance benefits.
“I disagree with the methodology used to calculate benefits, I believe that federal employees would have a lower proportion of their compensation going toward benefits than state/local employees. Here’s why… I don’t have the benefit breakdown but let’s assume the largest share is health care. Health care benefits should stay fairly static for an employee whether they are making $30,000 or $100,000. Since federal employees (on average) make a substantial higher wage than state/local, benefits should be a great proportion of the state/local employee’s paycheck.”
That is a fair point. This means that the overall total compensation cost would be lower. You’re saying the opposite of Brad essentially lol.
“Here’s the math:
State/Local Worker
Salary: $26.24/hour * the average work year (260 days) = $54,579.20
According to the math, local/state employees make only 73.3% of federal employees in 2008. The math above assumes employees are paid for holidays and vacation (which I believe is standard in government). The math also assumes a 40 hour work week, 8 hours a day (standard as well).
Benefits: $13.60/hour * 260 days = $28,288
Total Compensation = $82,867 (benefits = 34.1% of compensation)”
I agree with those calculations.
“Federal Worker
Assume benefits are static. Clearly they won’t be because pension benefits will be higher to higher paid employees. Health care benefits may be slightly higher as well but most likely not substantially.
Salary: $74,403
Benefits: $28,288
Total Compensation: $102,691 (benefits = 27.5%)”
If your assumption is correct: federal employee benefits will be absolutely – not relatively – comparable to state and local employee benefits and pensions are static…then this math makes perfect sense.
“I can predict with high certainty that benefits packages will be a lower % of compensation for federal workers. However, it is possible that the federal government gives higher pension benefits or some type of other benefit than state/local governments nullifying my argument.”
I wouldn’t be surprised if this was the case, but I don’t know for sure. You can see, however, that your points here (except for the health care inflation one) suggest that my upper bound claim was correct.
“One more unrelated point, in terms of federal budgeting, I agree that the cost cutting and benefit trimming would not matter greatly. However, in terms of state/local budgeting, this is a different story.”
State and local pensions are a far more significant burden on state budgets than with the federal government. That is for sure. The same can even be said for wages and salaries.
March 7, 2010 at 1:09 am | Reply
You’re saying the opposite of Brad essentially
Indeed. Curious to hear what his assumptions and thinking are.
David, do you have any data on pension benefits state/local versus national?
March 7, 2010 at 1:28 am | Reply
I don’t have shat on national and not much on local. For state I have tons.
The Center for Retirement Research at Boston College is a fantastic resource for state pension data:
http://crr.bc.edu/frequently_requested_data/state_and_local_pension_data_4.html