Are Public Sector Workers Overpaid? Underpaid? Both?

A recent article on whether public sector employees are overpaid lit up in the comment section with a feisty and informative debate about whether we need to change the way we compensate workers with our tax dollars. From the commenters, here are the best two arguments for each side.


Commenter steveinch points to a government survey showing that voluntary turnover in the public sector is a third of the private sector average. He writes: "The real clue that you are paying people too much...nobody ever leaves."

Commenter mtbr1975, a self-professed liberal, supports reforming compensation for government employees:

I'm a Liberal, and I'm very happy that Obama froze their benefits and I also believe they should get rid of the pension system and put them all on 401K/IRAs like the rest of us peasants. There is a big problem, when the average Public Sector worker makes more than the average Private Sector worker. There was a time, when the PS workers made less, but had better benefits... Now, they make more and still have the better benefits, and we're the ones that pay for it. All the while, our pay goes down. This is not a sustainable position, regardless of what party or political philosophy you hold near and dear.


Commenter Scott points out that for some jobs, the public sector clearly underpays, although it tries to compensate with slightly better benefits:

The State Agency where I worked for 10 years tried to hire five programmers but couldn't hire a single one because the pay for a SENIOR LEVEL I.T. specialist was $55K. Meanwhile, private firms were paying about $100K for the same work. It's the same for engineers, lawyers, etc.

I left for the private sector and got a $25K raise immediately. Next year, I'll pay 4.2% Social Security tax instead of the 8% I had to contribute to my pension. The downside is I'll have two weeks vacation instead of three, and one less holiday. Big deal.

Kevin G. says the trade-off between lower salaries and slightly better benefits is so obvious, recruiters will admit it upfront:

When I left college (mid 2000's), one place I applied to was a job on a base evaluating engineering contracts on technical merit.

The recruiter essentially said, quite bluntly, we can't offer you competitive wages versus the private sector, so we try and offer better benefits and a signing bonus to counteract our law-mandated disadvantage.

Not everyone who works for the government is overpaid. In fact, quite a few aren't even paid competitive wages.