For a long time now I’ve been writing about how student aid fuels explosive college costs, while Chris Edwards and Tad DeHaven have been highlighting the ever-cushier compensation of federal workers. Well, I’m pleased to have finally discovered a direct linkage between these topics: A new U.S. Office of Personnel  Management report on student loan repayment programs for federal workers.

According to the report, in calendar year 2009 “36 Federal agencies provided 8,454 employees with a total of more than $61.8 million in student loan repayment benefits.”

Now, 8,454 employees is a small chunk of the entire, roughly 2-million-person federal workforce. Still, $61.8 million isn’t anything to sniff at, and loan forgiveness is one more perk that needs to be considered when thinking of federal worker compensation. And then there’s the trajectory of forgiveness: According to the report, spending on student-loan forgiveness by federal agencies in 2009 was “more than 19 times” bigger than it was in 2002. Were things to continue at that rate, in 2017 the cost would be almost $1.2 billion, and then you’d almost be talking real money!

The important point from a student-aid perspective is to emphasize something that must never be forgotten: While many analyses of student aid will only count grants – because they don’t ever have to be paid back — as “aid,” the reality is that that hugely under counts the true cost of federal aid to taxpayers. In addition to grants, taxpayers fund all federal student loans (and eat them when they aren’t repaid), help finance work-study, and pay for federal expenses that people taking federal education tax credits don’t pay for. So when you look just at federal grants, the bill for taxpayers in the 2008-09 school year was about $24.8 billion (see table 1). Add in loans, credits, and work-study, however, and the bill suddenly balloons to nearly $116.8 billion.

“But wait,” will say the only-grants-are-aid crowd, “isn’t a lot of that $116.8 billion loan money that will be paid back?” Yup — it’s just that at least $61.8 million of that repayment is coming, once again, from beleaguered federal taxpayers. And that, to be sure, is just the tip of the federal loan-forgiveness iceberg.

The Bureau of Economic Analysis has released its annual data on compensation levels by industry. The data show that the pay advantage enjoyed by federal civilian workers over private-sector workers continues to expand. This state of affairs is a thumb in the eye of the private sector, which continues to struggle with high unemployment. Many private sector employees have been forced to take pay and benefit cuts while continuing to fund generous federal employee compensation with their taxes.

Figure 1 looks at average wages. In 2009, the average wage for 1.95 million federal civilian workers was $81,258, which compared to an average $50,462 for the nation’s 101 million private sector workers (measured in full-time equivalents). The figure shows that the federal pay advantage (the gap between the lines) continued its steady increase over the past decade.

Figure 2 shows that the federal advantage is even more remarkable when worker benefits are included. In 2009, federal worker compensation averaged a whopping $123,049, which was more than double the private sector average of $61,051.

The disparity between average federal and private employee compensation has risen dramatically over the decade: from 66 percent in 2000 to 101 percent in 2009. Defenders of generous federal employee compensation point to the higher levels of education in the federal workforce. However, it’s doubtful that education accounts for the growing disparity between federal and private compensation.

Figure 3 shows that federal employees also enjoy much greater job security (data is from Table 18 here). In 2009, a private sector employee was more than three times more likely to be laid off or fired than a federal employee.

A good indicator of the adequacy of federal compensation is the quit rate. Figure 4 shows that in 2009, private sector employees quit at a rate that was more than eight times higher than federal employees (data is from Table 16 here). This indicates that federal employees recognize that the generous combination of wages, benefits, and job security is hard to match in the private sector, so they stay put.

The 1990s were a decade of rapid private sector expansion and federal government restraint. The 2000s are a decade of government expansion at all levels and private sector retrenchment.

From 1990 to 2000, private sector employment soared 21 percent. Then, remarkably, private sector employment actually fell during the 2000s and was 3 percent lower in 2010 than it was in 2000.

The chart shows the changes in government employment in these time periods.

(Note: Numbers are for January of each year for consistency and to avoid the inclusion of temporary federal decennial census workers that show up in later months.)

Federal employment declined during the 1990s, when we mainly had Clinton in the White House and Republican control of Congress. However, federal employment increased under the Bush administration and the Obama administration is pursuing further growth. As a Cato essay on overpaid federal employees shows, growth in federal employment will cost taxpayers billions of dollars.

The Obama administration is concerned that the economic recovery will be jeopardized by revenue-strapped state and local governments cutting employees. Therefore, it’s advocating another federal bailout for the states to head off government job cuts. However, government jobs are supported with money taxed or borrowed out of the economy. Diverting more resources away from the private sector in order to sustain the public sector is a recipe for economic stagnation – not growth.

The 1990s were a decade of rapid private sector expansion and federal government restraint. The 2000s are a decade of government expansion at all levels and private sector retrenchment.

From 1990 to 2000, private sector employment soared 21 percent. Then, remarkably, private sector employment actually fell during the 2000s and was 3 percent lower in 2010 than it was in 2000.

The chart shows the changes in government employment in these time periods.

(Note: Numbers are for January of each year for consistency and to avoid the inclusion of temporary federal decennial census workers that show up in later months.)

Federal employment declined during the 1990s, when we mainly had Clinton in the White House and Republican control of Congress. However, federal employment increased under the Bush administration and the Obama administration is pursuing further growth. As a Cato essay on overpaid federal employees shows, growth in federal employment will cost taxpayers billions of dollars.

The Obama administration is concerned that the economic recovery will be jeopardized by revenue-strapped state and local governments cutting employees. Therefore, it’s advocating another federal bailout for the states to head off government job cuts. However, government jobs are supported with money taxed or borrowed out of the economy. Diverting more resources away from the private sector in order to sustain the public sector is a recipe for economic stagnation – not growth.