Yes, they’re overpaid

Vince Coglianese Contributor
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“Scapegoating,” claimed the American Federation of Government Employees. “Punishment,” said the Federal Managers Association. “Transparently cynical,” declared Paul Krugman. President Obama’s late November announcement of a two-year pay freeze for federal workers has been poorly received by unions and left-wing activists, who see it as the end result of a year-long campaign to reduce federal salaries. Taxpayers should hope it is just the beginning. Fundamental reform of federal pay would save tens of billions of dollars annually, and it would be a strong indication that lawmakers are serious about reducing long-term deficits in all parts of the budget.

Unfortunately, the debate over federal pay has been fraught with extreme claims. Some politicians have accused federal workers of making double what they deserve, while government unions maintain they are underpaid by around 25 percent. The rhetorical back and forth has largely hidden a substantial academic literature, dating back to the 1970s, that compares the pay of federal and private workers. Economists have addressed the issue with a variety of techniques and from a number of different angles. Over the past year, we have worked to update their results with the most recent data, and our conclusions have been the same as theirs: Federal employees do receive a substantial wage premium by comparison with similar private workers.

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