Federal employees are generally overpaid. Federal, civilian employees made $81,076 in 2013 in wages, on average, compared to $55,424 in the private sector. Their benefit packages are particularly out of line with the private sector. Total compensation including wages and benefits for federal, civilian employees was $115,524 in 2013, on average, compared to $66,357 in the private sector.
A new study released by the National Bureau of Economic Research finds that the advantages of government employment include more than just higher compensation. Government jobs are more secure, and employees are more likely to keep their jobs during economic downturns.
The authors of the study, Jason L. Kopelman and Harvey S. Rosen, used data for 800,000 workers from 1984 to 2012 to study the differences in job loss rates between workers in the private and public sectors. They wanted to determine how the differentials changed during recessions. They asked: Are government jobs more secure during recessions?
The results are striking. According to the researchers, “public sector jobs, while not generally recession-proof, do offer more security than private sector jobs, and the advantage widens during recessions. These patterns are present across genders, races, and educational groups.”
The researchers found that private sector workers are 4.2 percent more likely to lose their jobs than federal employees during nonrecession periods. The gap grows during recessions; private workers are 6.5 percent more likely to lose their jobs than federal employees. During the Great Recession, the gap narrowed slightly. Private workers were only 5.3 percent more likely than federal employees to lose their jobs.
The results for state and local government employees are similar. Private sector workers are 4.6 percent more likely than local government employees and 4.7 percent than state government employees to lose their jobs during a recession.
The study does not discuss the causes of the high federal job security, but a number of reasons seem obvious: civil service protections, the strength of federal employee unions, manager unwillingness to fire poor performers, and the greater budget stability in the government than the private sector.
In sum, the new NBER study provides input to the discussion about federal versus private pay. Federal workers received generous compensation packages, but they enjoy other advantages as well, such as higher job security.