Which pays better: Government or private sector?

@CNNMoney January 31, 2012: 5:44 AM ET
Which federal worker sector pays better?

NEW YORK (CNNMoney) -- Which is the better gig: The federal government or the private sector?

It depends in part on education levels, according to a report put out Monday by the Congressional Budget Office.

Federal workers with a master's degree or less are better compensated on average than their similarly educated private sector peers, CBO found.

Those with professional degrees or doctorates, however, do less well than they might working for a large business.

The CBO measured the differences in salary and benefits between the two workforces.

Federal and private-sector workers with bachelor's degrees earned the same hourly wage on average. But those working for the federal government enjoyed average benefits that were worth 46% more. (See where the top-paying companies are.)

Federal workers with no more than a high school education are paid 21% more on average than their private-sector peers, and have average benefits worth 72% more.

White House to propose small raise for federal workers

The premium working for Uncle Sam disappears, however, for those with advanced degrees such as law degrees and Ph.D.s. Their average wages were about 23% less than they might be in the private sector, while their benefits were roughly on par.

In fiscal year 2011, the CBO estimates that the government paid 16% more in salary and benefits combined than it would have for a comparable workforce in the private sector.

The 2.3 million federal civilian employees represent less than 2% of the total U.S. workforce. Fully a third of federal workers are in professional occupations, such as science and engineering -- almost twice that of private-sector workers.

Union membership is nearly three times higher than in the private sector, where 8% of workers belong to a union.

Colleen Kelly, president of NTEU -- the largest independent union of federal employees -- took exception to the CBO's findings. Kelly cited Bureau of Labor Statistics data showing a pay gap of 26% in favor of private sector workers.

Obama focuses on income inequality

The CBO noted in its report that it incorporated BLS data but used a different methodology. And it acknowledged that its estimates of the differences in benefits between the two sectors are more uncertain than its estimates of the differences in wages.

The CBO report was conducted at the request of Sen. Jeff Sessions, the top Republican on the Senate Budget Committee.

Compensation for federal government jobs has become a hot-button issue in the highly fractious debate over how to curb deficits.

Federal workers' pay has been in lawmakers' crosshairs for the past year. In December 2010, Congress and President Obama signed off on a two-year federal pay freeze.

Since then, there have been proposals to extend the freeze and reduce the size of the federal workforce though attrition.

Most recently, however, the White House said the president will propose a 0.5% pay increase for federal workers for 2013. That's not enough to keep pace with inflation, and it is below the more than 2% increase in private wages over the past year. But federal workers welcomed the proposal as a step in the right direction. To top of page

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