Good News on Federal Worker Pay

Chris EdwardsNew data show that growth in federal worker pay lagged growth in private ‐​sector pay in recent years. The average federal worker still makes far more than the average private‐​sector worker in total compensation, but the advantage has narrowed. From the taxpayer perspective, the moderation in federal worker costs is good news.Figure 1  shows average wages for the U.S. private sector and for the federal government’s 2.2 million civilian workers. Federal pay growth outpaced private pay growth for the decade up until 2011 when a three‐​year soft wage freeze kicked in. After that, federal wages resumed strong growth until 201 8. The data is from the Bureau of Economic Analysisnational income accounts, Table 6.6D.Then in 2020 and 2021, federal pay growth slowed and private pay soared, as shown in the figure. Average federal wages rose 1.8 percent in 2020 and 2.3 percent in 2021, while average private ‐​sector wages increased 7.7 percent in 2020 and 5.9 percent in 2021.The consumer price index increased 1.2 percent in 2020 and 4.7 percent in 2021. Thus, real federal wages rose in 2020 and fell in 2021, while real private wages soared in 2020 and rose slightly in 2021. Now in 2022, inflation is soaring and pushing down real wages formost workers across the economy.Here are some observations on the pay data:Private pay is set in markets, and high worker demand in recent years has pushed pay upwards. By contrast, federal pay is set by politics and is ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs