Another Take on Pay for Performance

A new study by the Heritage Foundation aims to point out that federal workers are paid 30 to 40 percent higher than their private sector counterparts. And this discrepancy is not justified because the federal government employs a more educated and skilled workforce, as many in government have claimed, the report states.

The report, released Wednesday, found that the federal pay system gives the average federal employee hourly cash earnings 22 percent above the average private worker, and overall, federal workers earn approximately 30 to 40 percent more in wages and benefits than comparable private sector workers. Non-cash benefits also add to the disparity, with the average private sector employer paying $9,882 per employee in annual benefits and the federal government paying an average of $32,115 per employee.

Federal workers also enjoy tremendous job security irrespective of the state of the economy, Heritage noted. Since the recession began, for example, federal employment has risen by 240,000, or 12 percent, while the unemployment rate for federal employees rose only slightly from 2 percent to 2.9 percent between 2007 and 2009. Federal employees also quit their jobs at one-third the rate of private employees, according to the report.

The study does go so far as to say that these averages do mask large differences in pay across occupations and skill levels, however. For example, many federal employees in highly skilled occupations receive pay comparable to the private sector, but the government's rigid pay scale also allows semi-skilled federal workers to earn substantially more than they would in the private sector. "Congress should not cut federal pay across the board - this would unfairly penalize the federal workers who earn market wages," the study states.

The answer, according to Heritage, is to implement a pay-for-performance system based on market signals of labor demand, expand the contracting of federal work to private companies, reduce the generosity of federal benefits and end the near-absolute job security of underperforming federal workers.

Does the rigid federal pay system reward some jobs over other, more highly skilled fields, including information technology? Is a pay-for-performance system the answer to solving these discrepancies and better recruiting and retaining the highly skilled workforce?