Freedom Line Blog

Jason Richwine of Heritage and Andrew Biggs of AEI provide an interesting thought experiment about the disparities between public and private employee compensation:

If public employees are underpaid, they ought to get raises when they switch to the private sector. But they don’t, and that fact is telling.

…

According to the SIPP data, the average federal worker shifting to a private job actually accepts a small salary reduction of around 3 percent. Similarly, private sector workers who move to federal jobs don’t take a pay cut. They get a first-year raise averaging 9 percent, well above the raise other workers get when they switch jobs within the private sector.

SIPP stands for Survey of Income and Program Participation, a Census Bureau dataset that tracks tens of thousands of households over several years as they switch jobs.  Using it above, Richwine and Biggs turn their thought experiment into a cold hard fact: Compensation is better in the public sector.

Think that’s sustainable?