Source: Flickr / Images of Money.
There was a time when working in the public sector was considered a bid for job security, but not high wages. For that, the conventional wisdom said, you would pursue private sector employment.
That model seems to be changing. According to the Common Characteristics of the Government 2012 report, the average salary of a non-seasonal, full-time permanent federal employee was $78,467 as of September 2012. In December 2010, the average salary was $76,701.
That's not bad, considering that the average wage in the U.S. was $48,301 in 2011, according to government data. There's nothing wrong with the government paying good wages, either – as long as those salaries are in line with those of the private sector. After all, we are talking about taxpayer money, right?
Here are a couple of instances in which pay levels seem a little too high – and, in many cases, bonuses undeserved.
Internal Revenue Service
The recent brouhaha over bonuses bestowed upon IRS employees with histories of misconduct – including the non-payment of federal income taxes – has shed some light on the compensation practices of the federal government, and the situation looks rather dodgy.
In the report from the Treasury Inspector General for Tax Administration released in March, it was revealed that between the last quarter of 2010 and 2012, more than 2,800 IRS employees with documented conduct problems were awarded over $2.8 million in bonus money, more than 27,000 hours off with pay, and 175 quality step increases. Of these employees, 1,100 had issues with federal tax compliance.
If that isn't annoying enough, the document acknowledges that these "performance" awards are in keeping with government regulations, which "do not provide guidance on providing awards to employees with conduct issues." This begs the question: For what type of performance are these employees being rewarded?
The IRS isn't skimpy with salaries, either. For example, an opening on USAjobs.gov gives the pay range for an Internal Revenue Agent as $69,497 to $107,434. Assumedly, bonuses are extra.
Federal regulators' pay tops that of bankers
A new study by Paul Kupiec of the American Enterprise Institute shows that banking watchdogs on the government payroll do pretty well when it comes to compensation – over 20% better than the average federal employee.
Kupiec took a look at salaries at agencies such as the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Board.
Compared to the average annual compensation of $69,266 received by a typical American bank employee in 2012, he found that 66% of OCC workers enjoyed a salary and bonus package totaling $100,000, 19% made over $180,000, and 10.5% earned more than $200,000. Similarly, 68% of CFPB and FDIC employees took home over $100,000, as well. Very few employees – less than 7% -- made less than $50,000 at any of these agencies in 2012.
These high compensation schedules come with a price. Not only are taxpayers shelling out for these healthy salaries, but Kupiec points out that bank customers pay, too, through increased banking fees. Shareholders also bear some of the burden, as well.
The federal government, like any employer, should compensate employees equitably for the good work they do. Perhaps these pay rates look incredibly high because so much of private sector pay has stagnated over the past few years. In my view, high wages are not the biggest issue here, since they may be necessary to procure excellent candidates who may feel that they could make more in the private sector.
The bonus system is much more worrying, since it seems unclear exactly why these employees are being given extra compensation. In private industry, workers are usually rewarded in this way for adding to the company's bottom line, which is not the case in government work. As the Treasury Inspector General has pointed out, there is no clear protocol for awarding bonuses. Shouldn't just doing their jobs well be enough remuneration? I think so. How about you?
