Growing up in Chicago, it seemed everyone knew the route to a safe, secure future: Get a government job. It might not pay as well as a “real” job, but you couldn’t beat it for security; once on the payroll it was virtually impossible to lose a government job.
 
Well, that last part remains true. Red tape still makes it extremely difficult to fire a federal “civil servant,” even if that employee is no longer serving the public well (or at all). But in recent decades, the other half of the equation has changed. Now, most federal employees make more—much more—than their private sector counterparts.
 
A recent study by economists at The Heritage Foundation found that, “The federal pay system gives the average federal employee hourly cash earnings 22 percent above the average private worker’s, controlling for observable skills and characteristics.”
 
Of course, it’s not always easy to compare federal jobs with private-sector jobs. Many federal jobs don’t exist in the “real world.” Some of them probably shouldn’t exist at all! Still, the Heritage analysis uses two different methods to control for the differences, and finds that federal employees are comparatively overpaid.
 
And it’s not simply better pay. Federal workers also enjoy better benefits. These include excellent coverage through the Federal Employees Health Benefits Program, which contributes 33 percent more toward health-care costs than the average private sector worker gets. Federal workers also enjoy a defined-benefit pension program, which is almost unheard of in the private sector. Plus, federal employees who put in 30 years can retire at age 56 and still collect their full pension, even if they take another job.
 
There’s one more benefit that’s priceless: job security. “Civil service rules make it difficult to fire federal employees for bad performance once they pass their probationary period,” writes labor expert James Sherk. Probation usually lasts just a single year. Once hired, feds “keep their jobs unless their supervisor works through an arduous process of exhaustively documenting their performance and working through a complex appeal process,” Sherk notes.
 
And in these recessionary times, Uncle Sam’s about the only one doing much hiring. The federal government has added almost 200,000 jobs since the recession started. Private employers, meanwhile, have pared some 8 million net jobs.
 
Federal over-compensation is bad enough simply because we taxpayers are stuck with the bill. But our government is also sending the wrong message. Since it overpays, it encourages people to work for it even though most federal jobs contribute little to overall economic growth. “Overpaying government employees means less economic growth and fewer jobs for everyone else,” Sherk writes.
 
Not all federal employees are overpaid. Some high-performing federal workers earn less than they would in the private market. Still, lawmakers should begin to apply market principles to the federal payroll, a process that could save up to $47 billion each year—enough to patch the Alternative Minimum Tax.
 
First, Congress should get rid of the General Schedule, which rewards employees based on seniority, and replace it with performance-based pay where the pay bands are based on signals of market demand. This would encourage workers to excel without overpaying workers who do not deserve it.
 
The federal government should also hire private contractors. Rather than hire, for example, staff assistants who can advance through the ranks and eventually earn $80,000 per year, Washington should contract such jobs out. Private workers can do such jobs on an as-needed basis, and save the government money in the long run.
 
In addition, Congress should pare back federal benefits to bring them in line with what private-sector workers earn. This seems only fair, since it’s private workers who pay the taxes that fund government jobs.
 
Americans deserve a federal government that’s efficient and effective. Reforming the way it pays civil servants would be a good first step.

Ed Feulner is the president of The Heritage Foundation.