Attacking Federal Worker Compensation

Conservatives think they have scored again in their ongoing attack on federal workers. Writing in the Wall Street Journal (see here for a reprint at AEI), Paul Kupiec points out that federal bank regulators earn higher compensation – gasp! – than employees of the firms they regulate.

Evidently, the average bank employee earned $49,540 in 2012 and compensation of the average employee of a federal bank regulatory agency was 2.3 times higher and in some cases “considerably more.” Predictably, Kupiec wants Congress to establish control of these “runaway” labor costs, and seems to suggest that regulators’ salaries should be no greater than bankers’ salaries.

Okay, but shouldn’t we also apply this logic to other federal employees (not to mention state employees)? After all, the compensation for law enforcement personnel and prosecutors working for the federal or any state government most likely is also higher than the compensation of those arrested and prosecuted by the government.

If Kupiec’s standard is to equalize the salaries of government employees who enforce the law with the salaries of those who violate the law, then the salaries of police officers and prosecutors are also out of control. And why stop there? Let’s also look at the military: Kupiec’s reasoning would lead us to equalize the pay of American soldiers fighting in Afghanistan with the earnings of the Islamists fighting against them. But somehow I don’t see Kupiec going along with this.

Kupiec also points out that the compensation gap between the regulators and the regulated is greater at the lower pay grades. But this insight is not new. Both the Federal Salary Council and the CBO have found that salaries at the lower pay grades are higher for federal employees than private workers, but at the higher pay grades (e.g., occupations such as doctors, attorneys, economists, etc.) private sector salaries are higher.

Given these facts, if we want government salaries to match the private sector, the rational approach would be to lower the salaries of government employees at the lower grades and increase the salaries at the higher levels. But good luck finding any Republicans willing to push for those adjustments, especially as Democrats are making inequality a campaign issue.

As a matter of principle the government should operate as efficiently as possible. But it’s time for conservatives to stop their ongoing attacks on federal employees. Even if federal employee compensation declined by 10%, the savings from this as a percentage of the annual budget would be less than one-half of one percent. In other words, the savings to the budget would be approximately zero. This issue is getting old and there are other more important things out there.

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