Wednesday, October 2, 2013

Comparing Federal Government and Private Sector Employment

With the Federal government in shutdown mode and hundreds of thousands of federal government workers on temporary furlough, I thought that it would be an interesting exercise to look at the number of Federal government employees and how the level has changed over the past decade.  Here is a graph from FRED showing just that:

Ten years ago, there were 2.742 million federal government employees, excluding uniformed members of the military.  At the beginning of the latest recession in December 2007, there were 2.756 million federal employees, the level being basically unchanged over the four years leading up to the Great Recession.  By the end of the recession in June 2009, federal government employment had risen to 2.815 million and hit a peak of 3.415 million for a single month in May 2010.  Between September 2010 and October 2012, the number of federal employees remained in a range of between 2.8 and 2.9 million then began its gradual drop to its current level of 2.739 million.  At its current level, federal government jobs comprise about 2.4 percent of the total workforce, down very slightly from 2.5 percent a decade ago.   It is interesting to see that while the rest of the economy saw a significant retrenchment in total private non-farm employment during the Great Recession as shown here:

The number of total non-farm, private sector employees is still 1.68 million or 1.45 percent below its pre-Great Recession peak, having dropped from a peak of 115.66 million in December 2007 to its nadir of 106.9 million in January 2010, a fall of 7.6 percent.  In contrast, over the same time frame, the number of federal government workers was at a level that was higher than its pre-recession level for the entire five year period from the beginning of 2008 to the end of 2012.

Here's a graphic showing how federal government employees were divided by government branch and department in 2010, including part-time and part-year workers:

Here is a chart comparing education levels for the federal government employees and private sector employees:

A hefty portion of private sector workers (41 percent) have high school or equivalent education compared to only 20 percent of workers in the federal government.
How does wage compensation level for an average full-time, private sector worker compare to an average full-time federal government employee?  Here's the answer in 2010 dollars from a January 2012 study released by the Congressional Budget Office:

Private sector workers with a high school diploma or less are earning 21 percent less than equivalent workers in the federal government.  Even private sector workers with a Bachelor's Degree are seeing a 2 percent penalty compared to their federal counterparts.  The biggest gains in the private sector over the federal government are not seen until one has a Professional Degree or PhD; for these individuals who are working in the private sector, there is a 23 percent wage premium over their federal government counterparts.

I found this part particularly interesting.  Here is a comparison of private and federal government benefits by level of educational attainment:

On average, over all educational levels, the benefits paid to federal employees are 48 percent higher than those found in the private sector.  For those private sector workers with some college or a high school diploma, there is a 71 and 72 percent negative difference in the value of their benefits compared to their federal government counterparts.  It is largely the value of federal pension and health care benefits that attracts workers who plan to stay with the federal government for most of their working career, unlike the private sector where both benefits have historically been optional.

Now, let's total the wage and benefit compensation for both sectors and divide it into groups based on educational attainment:

As expected, the private sector loses out again, particularly if a worker has achieved an educational level of some college or less.  In those two cases, there is a 32 and 36 percent negative difference in the total value of their compensation.

In graphical form, here's what total average compensation for both private and federal government workers looks like:

In fiscal 2011, the government spent approximately $200 billion to compensate federal employees; a total of about $80 billion to compensate civilian personnel working for the Department of Defense and about $120 billion for non-defense personnel working in all other departments.

It is interesting to put the amount spent on federal employee compensation into context in the grand scheme of federal spending and then compare average compensation levels in the federal government to those found in the private sector.  It will be fascinating to see how long it takes before someone proposes either a significant cut in staffing levels or a realignment in compensation to bring it more in line with the private sector, particularly if the Senate and Congress are looking to reduce spending (if indeed that EVER happens).

 As an aside, today when I tried to get data on United States federal government payroll, I got this:

...and this:


  1. The biggest reason for the difference in pay based on education is that lacking college is not a barrier to move up in the federal workforce. Hard work and preforming well can see someone with only a HS diploma end up as the chief of a department. This does not happen in the private sector. So while looking at the surface you are see things that don't make sence, there are countless differences between private and public work. But the biggest is that once you’re in, you’re in and it is up to you on where you go and how far you can advance, due to good old fashion hard work.

    1. What fact based evidence do you have to back that up?