Government v. Private-Sector Compensation

Earlier this year I wrote about government employee benefits in Florida outpacing private-sector benefits — particularly noteworthy in a time of recession. Now comes an interesting analysis comparing average federal government wages and total compensation to those in the private sector.

 In an update from a previous post, the Cato Institute‘s Chris Edwards notes the following:

The new data show that average federal compensation is now more than double the average in the private sector.

Here is his graph displaying the average difference since 2000:

He also created a graph comparing just the average wages. He used data from the U.S. Department of Commerce’s Bureau of Economic Analysis.

In a time of economic downturn, the stark contrast between the government and the private sector is a bit worrisome — especially to those recently experiencing pay cuts or a layoff. But government doesn’t often face the same pressures as the private sector. It isn’t required to be competitive in order to stay in business; it can simply raise taxes or print or borrow money.

Ironically, all of that taxing, printing and borrowing in one way or another reduces private investment in things like jobs and higher compensation packages. Taxing takes that money directly. Printing reduces the value of that money. Borrowing diverts that money and eventually leads to higher taxation or more printing.

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3 Responses to Government v. Private-Sector Compensation

  1. […] is particularly troubling in this  time of economic downturn, as I have noted in several previous […]

  2. […] judgment of free individuals in the economy with the judgment of government officials — insulated to a large degree from conditions in the private sector. Those who espouse these means of “creating […]

  3. […] written on the pay gap several times before (here and here and here), but this new report explicitly shows a side-by-side comparison of like jobs. It found that in 83 […]

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