bank rates credit cards insurance finance calculators

Lou Dobbs: Federal employees earn twice as much as private workers

Posted in Economy by CrankySaver
May 16, 2009 07:00 AM - 10 Comments

Federal wages

This report from CNN’s “Lou Dobbs Tonight” says the “pay gap between pubic and private workers is exploding.”

It cites a study that says the difference in average compensation — that’s wages and benefits — between federal and private workers grew from 68% in 2000 to 102% in 2007.

The average compensation for federal workers reached $110,450 a year vs. $57,615 for the average private worker.

Why?

The biggest reason, according to CNN, is that federal workers continued to receive pensions and retiree health care benefits that were being reduced or eliminated by private employers.

There’s no reason to expect the trend will change anytime soon since federal workers just got a 3.9% pay raise at a time most private employers are dealing with wage freezes or pay cuts.

“The American taxpayer is paying for exorbitant benefits and compensation and pay scales that are double their own average salaries,” Dobbs says. “That’s the stuff of revolutions.”

Yeah, but shouldn’t some of that outrage be saved for the private employers who keep cutting the pay and benefits of their workers?

And anytime someone talks about fixing the economy you can bet they want to eliminate good paying jobs and make middle-class families work for less.

Is this really the road back to prosperity?

Comments (10)
1 Star2 Stars3 Stars4 Stars5 Stars (4 votes, average: 4.75 out of 5)
Loading ... Loading ...
10 Existing Comments

  1. Taylor Cal. said:
    on May 16th at 12:06 pm

    Beside being paid twice as much as private workers, federal/civil workers work 1/2 as hard. Most civil workers I know of live in expensive houses (because their income is fixed for life) and have additional time to do additional side jobs such as, realtor, sell insurances, teaching.. to get extra $. And on top of that, when they retire, they get pension and social security payments, whereas, private sector worker only get the social security payment.

  2. Mike M said:
    on May 18th at 01:52 pm

    This is an idiotic story, if you ask me. They compare average salaries, but they don’t compare average salaries for the same job in private v. public sectors. Naturally the president will make more than a McDonald’s part time employee. But he’ll also make less than the CEO of just about any moderate size company. Which comparison is fairer?

    I work in private industry. When I was looking for a job, I had offers private and public. The Federal Government’s offers were consistently at 50-60% of the offers from private industry in terms of wages. The benefits may have made up SOME of the difference, but not all.

    And those benefits are often overblown.

    My spouse works in the public sector. People are often complaining about their “over-generous pensions”. Never is it accurately reported that those pensions are funded largely through a mandatory 10% employee contribution. The remainder of the funding is equivalent to a 3% employer match and a guaranteed rate of return of a little over 7%.

    In other words, their “over-generous pension” is equal to an AVERAGE corporate 401k with a guaranteed rate of return just barely over what municipal bonds are paying. Is that really overly generous? What happens if the employee dies young? The pension does not pass on to heirs. Wouldn’t the employee be better off with an average corporate 401k? Even if you invested in 1928 BEFORE the market crash and held on through this current bubble collapse, your average rate of return on the S&P 500 was WELL over that rate.

    That is not an overly generous pension. That is a slush fund that the state raids to pay its current bills, only to complain later that there is no money to pay the pensions. How would you like it if your employer could raid your 401k anytime they felt like it?

    BTW, Taylor Cal. is dead wrong about getting pension AND social security payments – because of the social security windfall provisions, this simply doesn’t happen. My spouse stands to get next to none of my future SS payments should I die young, or even of her own earned SS benefits because of her pension. On the other hand, were she not working at all, she WOULD get my SS benefits. How screwed up is that?

    BTW – my private sector 401k match – FAR, FAR, FAR more generous than that pension. I don’t even have to average 7% rates of return. Heck, I only have to get just under 5% average rates of return for the same benefit. ANY decent bond fund will return that rate of return over the long haul. You could almost invest in nothing but 30 year treasuries and get that.

  3. 411 Realty Inc. said:
    on May 20th at 11:11 pm

    The story is not idiotic,the point is a subject with which all should be concerned.The President and McDonalds is no comparison.Federal positions are secured by your tax dollars,with a lack of service by most affiliated groups.If a civilian business operated as most federal agencys do,they would be a statistic,and out of business.Real Estate related,a good example would be FHA.The primitive robotic methods of most federal operations create concern to all applications.No service required within tax paying,federal employed positions–That is extra!!.“That’s the stuff of revolutions.”as stated above.

  4. Mike M said:
    on May 22nd at 03:46 pm

    I stand by my prior statement – the story is idiotic.

    They compare average salaries without considering the job being performed. They aren’t comparing what an average civil engineer working for the government makes relative to an average civil engineer working in private industry.

    Compare like jobs and you’ll find that private industrty almost always pays SIGNIFICANTLY better than government positions. The catch is that there are a LOT more low-level jobs in the private sector than in the public.

  5. Artaban said:
    on June 5th at 04:16 pm

    Mike M, you’re correct about wage disparities when comparing the compensation of top leadership in government with CEOs in private industry, but not for the majority of government jobs, which is the point of the article.

    In my profession (secondary education), it’s been well established that a private school teacher can double his or her salary overnight by taking a public teaching job. Never mind that the average test scores are lower among the public students when compared with those schooled privately (or at home). When one takes the time to use one’s brain, and considers how many more public teachers there are than private CEOs, this article makes perfect sense.

    Furthermore, I can tell you with certainty there are public school principals that have shamelessly exploited the government system. One worked as a principal in two states, so upon his retirement he could collect two pensions. He pulls in over $200,000 a year as a retiree.

    Government will bankrupt us yet (oh wait, they already have!).

  6. HipHopStar said:
    on June 9th at 07:56 pm

    Hey I’m new and I guess this is as good a place as any to see if anyone knows of a good loss mitigation training course?

    I keep hearing about people making tons of money becoming foreclosure consultants.
    So, If you have any info or you have purchased a good course, please share. I’m retired and looking for a home based business that I can earn a decent income with.

    Thanks,

  7. Thane of Towson said:
    on August 17th at 06:25 pm

    One can make more money working for Uncle Sam than for Mr. Charlie? Why is this a problem? You can’t have a nation of shopkeepers when the population is reaching hundreds of millions toward a billion. Grow up America. One can still be a Hunter–Gatherer, but it not practical or satisfying.

  8. Rebmom said:
    on February 1st at 09:40 pm

    It is apples and oranges. Now that government has outsourced everything possible, most government jobs are higher level and most outsourced jobs are private and low level. Just as planned–death of the middle class.

  9. Jim Ory said:
    on March 30th at 11:05 pm

    As an electrical engineer working for uncle Sam, I know the pros and cons of comparing “average compensation” and many of the other falsities. Federal employees cannot move from one state to another and get two different retirements. State employees can. Federal employees now give up half of their pension to be even eligible for social security. Those of us on the original retirement plan did not earn any social security credit for our employment and even if we did moonlight and earn credit it is all but eliminated by various double dipping laws.

    Typically the lowest paid of the federal civil service employees are the ones that do best (make more) when compared to their civilian counterparts. Whereas those of us (engineers, doctors, senior managers etc. are the ones hardest hit in those comparisons. I would cringe every year when the electrical engineering journal came out with their payroll comparisons. I was anywhere from 35% to 50% underpaid.

    Another fallacy/mistake in these comparisons is the lumping of federal and civil workers together. Even though the federal employment system is called the civil service system; the term civil workers refers to all the state, county, city, school district, etc. employees. Many of these employees do extremely well due to their respective unions. Remember Wisconsin? So – don’t be envious of the federal workers; you and every citizen has the chance to be one. But it is not all the glamor that Taylor thinks it is. Oh and did I mention that we feds give up most of our rights to having a voice in the political process.
    Yea a bitter pill to swallow especially in this day and age.

  10. Joe said:
    on May 17th at 03:12 am

    This story is simple. It’s a republican strategy to destroy the middle class. Nothing more nothing less. Wal-street CEO’S and big business already have succeeded in ending retirement benefits for many public sector jobs and now the last hold out is government employees. It’s a turn on each other approach the republicans are using. The only thing is government employees will be the undoing of this strategy. If the republicans succeed then in a very short time frame, about 20 years, the backlash will reach our doorstep. It will start with the public safety sector. Police and Firefighters traditionally retire much earlier than their fellow public sector employees. The physical stress of those jobs demand most retire in their 50’s. Without a defined pension good luck getting replacement police and firefighters. Then shortly afterward, when the last of the old guard have retired, your kids will go to school with no teachers or contract teachers making much less and just passing through. Instead of folks going into teaching as a career it will be just a stepping stone to something better. Then all the other jobs will fall in line. So to America good luck your going to need it.

    Sincerely, Joe.

© 2013 Bankrate, Inc., All Rights Reserved.
privacy policy/your california privacy rights - terms of service - contact us - affiliates - press