Another Call to Cut Federal Pay

A new report by the libertarian Cato Institute marks the latest call for the government to freeze or cut federal wages and start overhauling federal benefits to reduce costs.

The report, written by Chris Edwards, argues that the Federal Salary Council has determined that the gap between federal and private sector pay in 2009 was 26 percent. But this data is inconsistent with Bureau of Economic Analysis data on overall pay trends, which show that average salaries rose 46 percent between 2001 and 2008, much faster than the 26 percent increase in the private sector, he writes. Federal workers also enjoy a generous benefits package, he adds, with average benefits totaling $40,785, compared to just $9,881 in the private sector.

Edwards also makes the case that while it is often assumed that the government should have the best and brightest workers, and should pay top dollar to get them, hiring such workers imposes an opportunity cost on the U.S. economy by drawing them away from higher-valued activities in the private sector. "Unlike, say, France, where the best university graduates historically have gone into government, the United States has historically prospered because the best and brightest have flocked to places such as Silicon Valley," he writes.

The report marks the latest call to cut federal employee pay and benefits to reduce costs. Late last month, the Senate voted to table an amendment that would have frozen federal salaries to help cover the costs of the wars in Afghanistan and Iraq. The House GOP's YouCut program also sought to put the proposed 2010 civilian pay increase of 1.4 percent on the chopping block.

Are the claims against federal employee pay fair? And where does the United States benefit most from having its best and brightest: the private sector -- in areas like Silicon Valley -- or in government?