Federal Personnel:

Federal/Private Sector Pay Comparisons

OCE-95-1: Published: Dec 14, 1994. Publicly Released: Dec 14, 1994.

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GAO reviewed the methodologies for estimating the differences between federal and private-sector white-collar pay, focusing on possible explanations for the discrepancy between official and academic estimates of the federal/private pay gap.

GAO found that: (1) there are two main factors that account for the discrepancy between official and academic estimates of the pay gap; (2) official estimates show that federal employees are paid less than similar private-sector employees while academic studies show they are paid more; (3) the official estimates compare the pay of federal workers with that of workers in similar occupations with predominantly large employers, while ignoring workers' personal characteristics; (4) academic studies compare the pay of federal employees to that of private-sector employees of the same age, education, race, and gender while largely ignoring employee occupations; (5) private-sector female and minority employees are generally paid less than similar federal employees; (6) the choice of comparison groups can affect estimates of the pay gap; (7) when academic studies are adjusted to resemble official estimates of employer size, the discrepancy between the two estimates essentially decreases; (8) it did not form conclusions on the appropriateness of the methodologies or the level of federal pay, since federal personnel management policy includes important factors that are beyond the scope of the report; and (9) both methodologies have limitations and neither is clearly superior.

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