April 26, 2017

Tim Kauffman

[email protected]

AFGE: CBO Report Uses ‘Faulty Assumptions’ for Inaccurate Federal Pay Report

Categories: Washington, D.C., Pay, Labor, AFGE National President, General Schedule

Erroneous wage report shows federal workers are overpaid, when data proves otherwise

WASHINGTON – An update to the Congressional Budget Office’s 2012 comparison of federal and private-sector compensation relies on the same faulty assumptions as the earlier report, resulting in highly politicized and inaccurate conclusions, the American Federation of Government Employees said today.

“This report is designed to justify the elimination of a pay system that does an excellent job of avoiding pay discrimination in the federal government,” AFGE National President J. David Cox Sr. said.

“According to scientific studies by the government’s own wage experts at the Office of Personnel Management and Bureau of Labor Statistics, federal employees on average earn 34 percent less today than employees performing comparable jobs in the private sector,” Cox said. “The Congressional Budget Office ignores these data and instead focuses on educational attainment as the basis on which pay comparisons are made. The CBO approach is not useful for pay-setting but it’s very useful for those who want to cut wages and salaries for the federal workforce.”

Specifically, the CBO report:

  • Concludes that federal employees are overpaid relative to the private sector, basing the analysis almost exclusively on education. Wages and salaries for most federal employees are based on the duties of the job, and anyone who holds that job is paid roughly the same amount – regardless of age, race, gender, or educational attainment. 
  • Relies on employees in the private sector accurately self-reporting the monetary value of their benefits, instead of using actual data obtained from employers.
  • Fails to account for profound differences in the cost of retirement benefits paid by the federal government and private-sector employers. Each dollar of retirement benefit provided by the government costs more because the government invests the assets of the federal employees’ retirement trust fund solely in Treasury securities. The rate of return on Treasury bonds is lower than that of the private equities that private employers purchase for their pension funds. This difference explains the difference in employer benefit costs.

“The Labor Department’s Bureau of Labor Statistics produces a far more accurate assessment of the pay gap between federal government employees and private-sector workers,” Cox said. “These data show that federal employees earn far less than their peers doing similar jobs in the private sector. The law relies on these BLS data for making pay determinations because these are the highest quality, most reliable data on which to base pay-setting.” 

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