First CBO Pay Report Since 2015, Finds Federal Comp Declining Against Private Sector

The Congressional Budget Office (CBO) released its first report on federal pay and benefits since 2015.

The report, which CBO typically releases every five years, analyzed federal pay and benefits from 2015 to 2022 and compared them to similar private sector occupations. The reason for the longer period between reports was due to the disruption caused by the COVID-19 pandemic.

Overall, CBO found that federal workers earn about five percent more than private sector counterparts when you factor in pay and benefits. That’s a significant drop from the 17 percent gap that existed in the last report in 2015.

Digging into the numbers, a trend emerges. CBO found that less educated federal workers are still outpacing the private sector but by less than they were in 2015. The higher you rise on the education scale, the more the private sector starts to pull away with higher compensation packages. 

Source: https://www.cbo.gov/system/files/2024-04/59970-Compensation.pdf

Data sources: Congressional Budget Office; Census Bureau, the Current Population Survey, from IPUMS-USA; Office of Personnel Management; Bureau of Labor Statistics. See www.cbo.gov/publication/59970#data

·         Federal employees with high school diplomas earned 40 percent more in total compensation than private sector counterparts in 2022, down from 47 percent in the 2015 report.

·         Federal employees with bachelor’s degrees earned five percent more than 2022, down from 21 percent in 2015.

·         Professional or doctorate holders earned 22 percent less. That gap was just 18 percent in 2015.

It’s important to note that the report does not account for the 4.6 percent federal worker pay raise in 2023 and the 5.2 percent federal worker pay raise in January. Also not included: the up to 30 percent pay raises received by Transportation Security Administration (TSA) employees starting last July, that brought TSA employees in line with General Schedule (GS) employees.

Differences with Federal Salary Council

The report contrasts with the Federal Salary Council, which found that federal workers made an average of 27 percent less than private sector workers in 2023, widening the federal pay gap to 24 percent. The Federal Salary Council report only measures wages. 

The reports are important because the numbers are used to negotiate raises for federal employees in Congress, absent an alternative pay plan offered by the president. Democrats prefer the Federal Salary Council, while conservatives usually turn to the CBO report.

Democrats Propose a Larger Raise

Many Democratic lawmakers, including Representative Gerry Connolly (D-VA), were upset with President Biden when he proposed a two percent raise for federal employees in the 2025 budget, noting that is well below in the inflation rate.

In response to questions from Rep. Connolly at a House Oversight Hearing, Office of Management (OMB) Deputy Director Jason Miller said, “Our fiscal 2025 budget had to comply with fiscal responsibility acts, and we took that very seriously. We also wanted to make sure our pay policy decisions weren’t having negative impacts on near-term service levels. We’re currently several months into implementing the most recent increase, which is why we recommended the 2% pay increase as part of the fiscal 2025 budget.”

Earlier this year, Representative Connolly and Senator Brian Schatz (D-HI) proposed legislation to give federal employees a 7.4 percent raise in 2025.