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Focus on Expenses if D bs www.kpcb.com Review Wages: A Comprehensive / Independent Review of Federal Wages & Benefits System May Be Worthwhile Analysis of existing data on federal wages & benefits is controversial. USA Today and the Cato Institute examined simple averages of federal (excluding military) wages & benefits vs. private sector using Bureau of Economic Analysis (BEA) data and concluded that federal wages & benefits are ~100% higher than private industry — wages are 58% higher while benefits are 3x higher.’ (March 2010, updated in August 2010) The White House Office of Management and Budget (OMB) and the U.S. Office of Personnel Management (OPM) responded that gross average comparisons are ‘unfair and untrue.’ And when one holds education and age constant, federal employees earn slightly less than those in the private sector on average, although the difference is not statistically significant.2 (March 2010) The Heritage Foundation, in response to OPM and OMB’s comments, released a statistical analysis based on BEA data, and claimed that adjusting for variables such as age, education, marital status, race, gender, size of the metropolitan area, and several others, federal wages & benefits are 31% higher than private industry for occupations in both government and private sector.? (July 2010) Source: 1) Dennis Cauchon, USA Today, “Federal Workers earning double their private counterparts,” http:/;www.usatoday.com/money/economy/income/201 0-08- 10-1Afedpay10_ST_N.htm Tad DeHaven, “Federal Employees Continue to Prosper,” http://www.cato-at-liberty.org/federal-employees-continue-to-prosper/, 2) John Berry, “OPM Statement on Federal Employee Pay — Recent Comparisons of Federal Pay to Private Sector are Unfair and Untrue,” http:/www.opm.gov/opm_federalemployeepay/ & Peter Orszag, “Salary Statistics,” http:/;www.whitehouse.gov/omb/blog/1 0/03/10/Salary-Statistics; 3) James Sherk, (@ =] www.kpcb.com “Comparing Pay in the Federal Government and the Private Sector,” http://www. heritage.org/research/reports/201 0/07/comparing-pay-in-the-federal-government- and-the-private-sector HOUSE_OVERSIGHT_021009 USA Inc. | What Might a Turnaround Expert Consider? 335 USA Inc. | What Might a Turnaround Expert Consider? 336