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“This is the fruit of free labor. It is able to create more wealth for everyone than slave labor once provided for the masters.”     Ludwig von Mises,    Liberalism

October 7, 2013

Don’t you wish YOUR job had raises like this?

by Chris

This whole government “shutdown” thing has brought out a lot of talk about federal pay.

A liberal of my acquaintance posted something on facebook a couple days ago:

“A Republican I know said, ‘If you got furloughed because of the shut down, maybe you should get a real job.’
Yeah… about that…”

‘pon which he linked to a story about the cops, border patrol agents, etc… who were not being paid while protecting congress, and our country.

It’s a good point. There are plenty of people doing real, important jobs, who are not being paid… Some of them have gone home, but a LOT of them… actually about 2/3 of the federal non-military workforce, hasn’t. They’re still doing their jobs, they just aren’t getting paid for them.

I don’t have a problem with good people doing as best they can at their job…

The problem I have is… there’s too damn many of them… And they are doing too many things, that they don’t need to be, or shouldn’t be doing.

So, I said something which I think is fairly well known in libertarian circles:

“A good friend of mine is a border guard with ICE… yeah, he’s got a real job.

That said, there IS a point when the most liberal liberal in America has to think ‘why in the hell do we have 50% more federal government payroll than 1998… we’re not getting more than we got then… at least not more good useful stuff….’ That’s just non-military federal staff payroll by the by, not any other spending…”

His commenters didn’t believe me, or just said inflation or homeland security etc…

I clarified, no, federal non-military payroll; meaning the total compensation (wages/ salaries, non-cash compensation and benefits) of full time permanent non-military federal workers, has increased, by at least 50%, in constant dollar terms, from 1998 to today.

Oh and homeland security is only a fairly small portion of that increase (Only 9% of the federal workforce, though it is the single largest federal agency – excluding the civilian employees of the military and veterans affairs – in terms of manpower).

To which he said, quite reasonably Would you care to source that?.

Gladly sir….

Congressional Reporting Service report on trends in the federal workforce:

http://assets.opencrs.com/rpts/RL34685_20110419.pdf

Congressional Reporting Service report on average wages etc… in the federal workforce:

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1702&context=key_workplace

Several other primary sources in the footnotes of this article, notably from the Bureau of Economic Analysis:

http://www.downsizinggovernment.org/overpaid-federal-workers

So… let’s break it down shall we?

The CRS reports there was a 17%… actually 16.7% increase in the federal workforce between 2000 and 2010.

I don’t have the numbers from 1998, 1999, 2011, 2012, or 2013, but other sources indicate that it’s probably not much, because there were hiring freezes and reductions that make it pretty much a wash. 17% is probably good for 1998 to 2013.

So, a 17% increase in non-military federal staff from appx. 1.8 million to appx. 2.1 million (excluding the civilian employees of the Army, Navy, Air Force, and Veterans Affairs; currently about 900,000).

Oh and it’s important to note that these numbers do not include contractors. Contractors compensation does not count against federal payroll, and they are not counted as federal workers… which is one of the major reasons there are so many of them…

How many?

In 1998 there were approximately 1.8 million federal workers, and only 6.5 million contractors.

Well, as of 2013, there are appx 2.1 or million federal non-military workers… and appx 17 million contractors.

Contractor compensation DWARFS the federal payroll. It’s well over 20 times federal payroll in fact… though we really have no exact idea how much, because it’s buried in hundreds… or possibly thousands… of different budgets, and literally millions of line items (many of which are gray, or black).

So, let’s talk money…

First, let’s talk about total compensation.

Total compensation includes both wages and other cash compensation, and non-cash compensation such as benefits.

Bureau of Economic Analysis reported average total compensation for federal employees went from appx. $67k in 2000 to appx. $115k in 2012.

In constant dollar (that is, adjusted for inflation) terms that is a 29% raise.

Oh but that’s just from 2000-2012 I don’t have the exact numbers here from BEA for ’98,’99, and 2013…

Purely from a trendline analysis, you see a 2.15% annual average constant dollar compensation increase. Extend the trendline from 1998 to 2013, and instead of 29% it’s about 38%.

A 17% workforce increase and a 38% raise, is a 60% increase in total payroll…

Now… even if you just take cash compensation, BEA reports an increase from $56k to $82k; a constant dollar increase of 16%.

That’s much lower than the increase in total compensation, but still quite respectable… And remember, this is in constant dollar terms, so that’s over and above inflation and cost of living increases.

Again, thats 2000-2012. Extending the trendline from 1998 to 2013 and you get 21%.

21% raise times a 17% workforce increase, is a 41% total increase in constant dollar terms; for just cash compensation.

Now… those are BEA numbers, what about CRS numbers?

Hmm… I don’t have the exact numbers on total comp increases from those years… But I do have their percentages… in fact I have every percentage increase, and the inflation percentage, for every year since 1969…

Federal Average salary and wage increases year over year, 1999-2013 (1998 would reflect increases from 1997):

1999: 3.4% over inflation
2000: 2% over inflation
2001: 0.3% under inflation
2002: 0.4% under inflation
2003: 0.2% over inflation
2004: 2.0% over inflation
2005: 0.2% over inflation
2006: 1.4% over inflation
2007: 1.6% over inflation
2008: 1.8% under inflation
2009: 1.6% over inflation
2010: 1.9% over inflation
2011: 1.8% over inflation
2012: 1.8% over inflation
2013: 1.8% over inflation

Official numbers have not been released for 2011, 2012, and 2013; the 1.8% is from news reports and other websites stating that though federal salaries have been in a base rate freeze, the average salary has increased 1.8% over inflation in each of the last 3 years. This is consistent with previous increases.

So, from purely federal internal sources, we have an average wage/salary only, increase of 24.8%. Times a workforce increase of 16.7% (also from the CRS), we have a 45.6% increase.

So… there’s the CRS’s own estimate, of average wage and salary alone.

Unfortunately, the CRS doesn’t estimate total compensation, but if we assume the BEA numbers are reliable, non-cash compensation has increased from appx 22% of cash compensation in 1998 to approximately 40% of cash compensation in 2012.

This estimate is not out of line with other trends and percentages well known in HR (noncash compensation, particularly benefit costs, have doubled or more in the last 15 years)… so I think it’s a good and reasonable approximation.

Oh… might be useful to summarize here.

I’ve got two different sets of numbers, which are different enough to be noticeable, but not enough to completely contradict each other.

Note: The difference between the BEA and CRS may include slight differences in the way they calculate compensation; and they definitely include differences in the way inflation is calculated. The BEA numbers used BLS inflation adjustment. CRS uses CPI based inflation adjustment (CPI is a component of the BLS inflation adjustment, but there are other elements included as well).

Workforce increase 16.7%

BEA: cash compensation increase 21% total comp increase 38%
CRS: cash compensation increase 24.8% total comp increase 42.8%

Total payroll increase cash/comp

BEA: 41%/61%
CRS: 46%/66%

So… no matter which numbers you believe, total comp increase is WELL over 50% in 15 years, and according to the CRS cash comp is up nearly 50%; and the lowest estimate is 41%…

Over and above inflation…

Yeah… don’t you wish your job had raises like that?

Oh and one more thing…

From the late 1960s, through the 80s and into the early 90s, federal workers as a whole were actually paid quite poorly, as compared to comparable private sector jobs. Their wage scales were originally set at bottom of market to begin with (generally though of as a tradeoff for their better job security and benefits), and the unusually high inflation from 1968 to 1984 had private sector wages rapidly increasing, while federal cost of living adjustments were significantly under the rate of inflation.

This left a population of workers who were dramatically underpaid in comparison to the private sector, all the way through the early 1990s.

Many still are. Those in the bottom 2/3 of the federal pay scale are generally still significantly UNDERPAID, not overpaid as compared to private sector; sometimes dramatically so (permanent non-contractor federal IT staff make less than half industry comparable salary for example).

Those in the top 1/3 though make quite a lot more than comparable private sector jobs.

…Well, that is, until you get to the “senior executive” level, where, once again, they make 1/2 or less what they would in the private sector ($190k a year is the top out. Private sector workers at those levels of education, experience, responsibility etc… typically make anywhere from $200k to over a million, with $400k+ not uncommon).

It is only from the mid 90s that the federal payroll, and specifically average pay (skewed by the top 1/3), began to dramatically outpace private sector pay.

The bottom 2/3 of the federal workforce didn’t get very much of that increase.

The top 1/3 of the federal workforce got much larger increases.

Also, there are far more workers in the top 1/3 of the pay scale than there were in 1998. Far more making more than $100k a year, and far more making more than $150k a year.

The middle 1/3 shrank significantly.

So there’s more low end, more high end, and less middle…

Not exactly shocking…

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3 Comments

  1. “… cops, border patrol agents, etc… who were not being paid while protecting congress, and our country…”

    They aren’t working for free. Their pay is deferred until the shutdown ends. Not quite the same thing.

    Comment by MingoV — October 7, 2013 @ 3:37 pm
  2. Didn’t say it was. I said they weren’t being paid during the shutdown. They’re not.

    Comment by Chris — October 7, 2013 @ 8:55 pm
  3. Hi friends,

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    Comment by rate your job — October 16, 2013 @ 12:28 am

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