The money in banking: Comparing salaries of bank and bank regulatory employees

Article Highlights

  • Bank regulators make more than 2.7 times the salary of bank employees.

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  • Dodd-Frank Act has increased the pay gap between bank regulators and the private sector.

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  • Bank shareholders and customers pay the cost of excessive regulator salaries.

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Key points:

  • Outside of executive salaries at the largest institutions, perhaps the highest-paying and most-secure jobs in banking can be found at the federal bank regulatory agencies, where average employee compensation is more than 2.7 times that of private-sector bank employees. The easiest-to-fill jobs earn the largest premiums over private-sector salaries.
  • The average compensation at federal bank regulatory agencies is more than 20 percent higher than the compensation at General Schedule federal government agencies. Average salary and bonuses are nearly 20 percent higher, and the banking agencies have additional benefits compensation.
  • The Dodd-Frank Act introduced changes that allow the National Treasury Employees Union to negotiate compensation at nearly all federal banking agencies. 
  • Bank shareholders and customers pay the cost of excessive regulator salaries. Shareholders pay directly through higher deposit insurance premiums and bank examination fees, and customers pay indirectly through higher fees, higher loan interest rates, and lower returns on deposits.


Those who studied economics in college probably took a course called "Money and Banking" that focused on macroeconomics and monetary policy. The last time I taught this course—some years ago—it focused on the Federal Reserve System's role in managing economic growth by regulating the money supply. The course discussed fractional reserve banking, money multipliers, liquidity traps, and other basic ideas in macroeconomics. Strangely enough, the course never once discussed who made money in banking.

Today it is hard to find a week without a news story about the money made in banking. Stories often focus on misanthropic bank officials who enrich themselves through money laundering, rigging the London Interbank Offered Rate (LIBOR), or some other illegality or transgression. With headlines reporting record bank regulatory fines, and financial crisis stories of banker greed and inhumanity still fresh in our minds, it is understandable how many people get a mistaken impression that most bankers make huge salaries. Against this backdrop, I think it is past time to check the facts and take a closer look at the money in banking.

Myths about Banker Pay

Long before the days when George Bailey wrestled with Mr. Potter in It's a Wonderful Life, it was fashionable to decry the rich pay packages awarded to the greedy chief executives of large financial institutions. There are many contemporary examples of this old morality play. Just this year, countless press stories and blog entries express outrage over the 2013 pay packages for JPMorgan Chase's Jamie Dimon ($20 million) and Goldman Sachs Group's Lloyd Blankfein ($26 million). Less vitriol has been aimed at Bank of America's $14 million pay package for Brian Moynihan, but even Moynihan's pay ain't too shabby for a year of work.

The pay packages showered on the top executives of the largest US bank holding companies are truly formidable sums, but few seem to realize that compensation of this magnitude is very rare among bankers. Indeed most US banks are actually small businesses that pay their employees like small businesses.

In 2012, the last year for which data is available to make comparisons, the average annual total compensation of a US bank employee was $69,266. This figure is the total expense per employee, including salary, bonus, benefits, and employment taxes.1 According to the US Bureau of Labor Statistics, the average annual salary of a US bank employee in 2012 was $49,540. While Jamie Dimon may earn as much in only five hours at his annual pay rate, an ordinary banker's salary does not compare so badly with salaries earned by ordinary Americans. For example, the US Bureau of Labor Statistics reports that average annual salary in the US across all occupations was $45,790 in 2012. The median annual salary, a salary where half the workers earn more and half earn less, was $34,750.

Regardless of talent, education, work ethic, and dumb luck, very few individuals will have the opportunity to manage a large financial institution. So if you are not fortunate enough to land an executive-suite job at a Dodd-Frank Act-designated systemically important bank holding company (those with assets greater than $50 billion), where might you look to earn an exceptionally good salary in banking?

To Make Money in Banking, Become a Federal Bank Regulator

Any search for high-compensation banking employment has to include the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Board (CFPB), and of course, the Federal Reserve System (Fed). As a group, those lucky enough to find employment at any of these bank regulatory agencies earned average total compensation that exceeded the average total employee compensation paid by 99.9 percent of all banks that filed regulatory reports in 2012.

Do you need specialized training or postgraduate education to qualify for a lucrative regulatory payday? No worries. Even the average annual salaries of secretaries and motor vehicle operators at these agencies far exceeds the average private-sector banker's salary. Let's take a closer look at this lucrative field in banking.

Regulators Make More than Double the Average Banker's Pay. In the years before the Dodd-Frank Act, the average OCC and FDIC compensation per employee was about 2.3 times the average compensation of a private-sector bank employee. Since 2011 and the passage of the Dodd-Frank Act, this ratio has increased to more than 2.7 times the average salary.

The evolution of average employee total compensation in the private banking sector as compared to two federal bank regulatory agencies (FDIC and OCC) is shown in figure 1. The average annual total compensation for bankers is calculated from data provided in banks' December regulatory reports.2

Average salaries were higher at the Office of Thrift Supervision (OTS) for 2007-09.3 The CFPB is a new regulatory agency and has issued only one semiannual report (July 2012).4 Still, the half-year results suggest that CFPB total compensation per employee is at least as large as that the OCC and FDIC reported in 2012.

If federal bank regulatory agency employees worked for a bank, they would have to work at one of the highest-paying institutions to earn compensation equivalent to their government pay. Figure 2 plots the cross-sectional distribution of average total compensation reported by all banking institutions in 2012. Average total compensation at these regulatory agencies was roughly $190,000 in 2012, and only 40 banks that filed regulatory reports have average employee total compensation costs that exceed $190,000.

Ignoring the cost of benefits, the average salary and bonus these financial regulatory agencies paid exceeds 2.33 times the annual employee salary in the private banking sector in each agency and every year.

Figure 3 compares the average salary and bonus compensation paid by banks and three bank regulatory agencies, the FDIC, OCC, and CFPB (2012 only) to the average salary in banks. These data exclude benefits and employment taxes paid by the employer. The average annual salary in private-sector depository credit institutions is reported by the US Bureau of Labor Statistics in the Occupational Employment Survey data.5 The estimates for average employee salary plus bonus at each bank regulatory agency are calculated from individual employee data released by the US Office of Personal Management (OPM).6

Figure 4 shows the distribution of employee salaries plus bonus for the bank regulatory agencies for the 2012 calendar year. The OCC had the largest share of staff earning above $200,000 per year (10.5 percent) followed by the FDIC (9.3 percent). Close to 19 percent of the CFPB and OCC staff earned more than $180,000 per year.7 Sixty-eight percent of employees at the FDIC and CFPB earned upward of $100,000 per year (66 percent of OCC staff). Fewer than 7 percent of employees in any of these regulatory agencies earned less than $50,000 in 2012, when the average bank salary was $49,540. In other words, more than 93 percent of all employees in these federal bank regulatory agencies earned more than the average private-sector banker in 2012. Add into this mix the fact that federal bank regulatory employees almost never get fired, are rarely vilified in press stories, and cannot be sued for loan discrimination or for making a loan to a borrower who subsequently defaults, and it is truly a wonder why anyone would want to be a banker if they could be a federal bank regulator.

How Does Federal Bank Regulators' Pay Compare for Similar Job Classes? A comparison of average salaries or compensation is informative, but it leaves a lot of issues unanswered. Don't banks employ many tellers, and aren't tellers low-paid? Perhaps, but don't the federal bank regulatory agencies also employ a lot of relatively low-paid workers? You might think they would, but it turns out that they don't. To better answer these and other questions, it is important to disaggregate the data and compare average salaries paid for comparable jobs.

Abstracting from the details of the job-specific comparison that follows, the headline result is, across virtually every job category, the average pay at the federal bank regulatory agencies is substantially higher than the average pay for the same job in the banking industry. For many job categories, the average federal bank regulatory pay far exceeds the 90th percentile of private-sector pay distribution.

The Bureau of Labor Statistics (BLS) Occupational Employment Survey (OES) data reports banking salaries according to management job categories and nonmanagement positions. Management positions in the FDIC data are easily identified because managers are paid under a separate pay scale from nonmanager employees. The OCC pay scale is less transparent in publicly available data. While OCC employees in pay grades 8 and 9 are clearly senior managers and excluded from the analysis, lower OCC pay grades (primarily grade 7) likely include a mix of managers and nonmanagers, and it is not possible to separate managers in lower grades without additional information. The CFPB salary grades are completely opaque based on publicly available data, so no attempt has been made to exclude manager salaries in the CFPB analysis.

Because nonmanagement compensation terms are determined by union negotiations, the distinction between managers and nonmangers is especially important for the FDIC and will become important for the OCC and CFPB going forward. The FDIC nonmanager pay scale is set through a negotiation process between FDIC management and the National Treasury Employees Union (NTEU), which represents the FDIC nonmanagerial staff. The NTEU also represents OCC nonmanagement employees, but prior to the passage of the Dodd-Frank Act, the NTEU negotiated only work rules and related conditions for OCC employees-not compensation. The Dodd-Frank Act changed this and empowered the NTEU to negotiate OCC employee compensation agreements as well. The first NTEU-negotiated OCC compensation agreement was ratified in December 2013.8 In May 2013, CFPB employees voted in favor of joining the NTEU, and the initial CFPB-NTEU compensation negotiations commenced on January 27, 2014.

The average salary and bonus for each FDIC job category in 2012 is calculated and matched with the average salary and the 90th percentile salary from a comparable nonmanagement job category in the US BLS OES for the Depository Credit Intermediation industry (North American Industry Classification System 5221). In many cases, FDIC job categories and BLS OES job categories clearly match, but in some cases the proper BLS OES match is less clear. In the latter cases, judgment is required, but even then, the selection of different but reasonable alternative job categories does not significantly change the conclusions of the analysis.

Figure 5 shows that the average salary and bonus for every FDIC job category except one (administrative law judge) exceeds the average salary for a comparable job in the banking industry. For most job categories, the average FDIC salary and bonus exceeds the 90th percentile industry salary for a comparable position. Across all job categories, the (simple) average FDIC salary and bonus premium over comparable private-sector banking salaries is 88 percent; weighted by share of employees in each job category, the average premium is 62 percent. Among the FDIC job categories, attorneys, economists, and administrative law judges earn the smallest premiums relative to comparable private-sector banking positions.

Figure 6 summarizes the 2012 salary plus bonus data for the OCC. Again, all but a single OCC job category has an average salary plus bonus that exceeds the average salary for the comparable BLS OES job category, and many job categories have average salaries that also exceed the BLS OES 90th percentile.9 The simple average OCC salary plus bonus premium over comparable private-sector positions across all job categories is 92 percent; the employee-weighted premium is 75 percent.

Figure 7 plots the matched job comparison results for the CFPB data. In all but one job category (general attorney), the average CFPB salary plus bonus exceeds the average private-sector salary, and for many job categories, the CFPB salary and bonus exceed the 90th percentile of the salary distribution for comparable private-sector jobs. Across all job categories, the average CFPB premium over comparable private-sector positions is 94 percent; weighted by the number of employees in each job category, the average premium is 60 percent.

Publicly available data on bank regulatory salaries and bonuses contain no information about individual employee education, work experience, or other distinguishing features. Still, it is possible to use statistical analysis to infer the average relationship between employee education and experience and the government pay premium. To do this, I assume that BLS OES job categories with higher average salaries command higher pay in the private sector because they require more education, accumulated job experience, or a highly valued skill. I then fit regression models to see whether job category average BLS OES salaries are systematically related to the government salary premium.10

Figure 8 shows a plot of the job-category-specific FDIC average salary premiums over the average salaries for comparable BLS OES job categories. The linear regression coefficient estimate on the average BLS OES salary is negative and statistically significant, suggesting that higher-paying private-sector job categories on average accrue smaller annual percentage pay premiums at the FDIC.11

Figure 9 shows the relationship between the average 2012 salary and bonus premium for specific job categories at the OCC and the average salary for equivalent private-sector job categories. Un-like the FDIC data, the regression coefficient on the average BLS OES salary is not significantly different from zero. While the OCC pay premiums are clearly much smaller for two highest-paying private-sector job families (lawyers and economists), the job families with the lowest private-sector wages do not have the uniformly large premiums observed in the FDIC data. So while the OCC job families requiring the highest skill or experience level have the smallest percentage premiums, job categories in the middle of the income distribution on average receive a more uniformly generous premium.12

Figure 10 shows the relationship between 2012 average CFPB salaries and bonuses and salaries in comparable private-sector banking job categories. There is a strong statistically significant negative relationship between the CFPB premium and the average salary of the BLS OES job category, indicating that jobs that pay more in the private sector earn smaller percentage premiums in the CFPB.13 CFPB premiums are smaller for job categories that require more education or job experience. The CFPB job categories with the smallest average premiums relative to comparable private-sector jobs are economists and attorneys, where the data suggest that CFPB attorneys actually earn less salary on average than those in banking.

The analysis of regulatory compensation data thus far has excluded the most important bank regulatory agency, the Federal Reserve, because the Fed does not make its employee compensation data available to OPM and refuses to release this data in response to Freedom of Information Act requests.14 Moreover, the Federal Reserve Board, the Washington, DC, headquarters of the Federal Reserve System, does not publish data on its total annual employee compensation costs or number of employees. Instead, in its annual report to Congress, the Fed reports numbers of employees and total employee compensation costs for each of the Federal Reserve System's 12 districts and omits details on the employee compensation costs or the number of employees of the Federal Reserve Board.

Do All Federal Government Employees Get Paid This Well?

Many studies find that federal government employees on the General Schedule earn a premium over what they would earn in the private sector.15 How do the premiums paid by the bank regulatory agencies compare to federal government pay premiums that have been identified in other studies? The short answer is that premiums at federal bank regulatory agencies are much larger than those found in the rest of government.

Studies that compare the compensation of General Schedule federal government workers to private-sector workers find that government pay is nearly 60 percent higher than private-sector pay, but much of the premium can be attributed to the characteristics of government workers.16 Government workers may earn higher pay because they have more education, job experience, or highly valued skills than the private-sector workers whose salaries are the focus of comparison. For a variety of reasons, economic studies differ on magnitudes, but a number of recent studies suggest that the unexplained salary premium General Schedule federal government workers earn is somewhere between 2 and 20 percent.17

The average government employee salary premium is a single summary statistic that obscures the fact that the government salary premium varies tremendously across government job categories. Studies typically find that workers in jobs that require more education (or equivalent work experience) generally earn a smaller premium in the government.

A recent Congressional Budget Office (CBO) report uses Current Population Survey data to estimate the government salary premium associated with different levels of education attainment.18 The CBO study finds that government employees with at most a high school diploma on average earn a 21 percent wage premium over private-sector employees, those with some college education earn about a 15 percent premium, and those with a bachelor's degree earn a 2 percent premium. Government employees with advanced degrees generally earn less in salary than their private-sector counterparts; those with master's degrees earn about 5 percent less, and those with PhDs and professional degrees earn about 23 percent less.

Including benefits as well as salary, the CBO study finds that the average total compensation of government employees is about 16 percent higher than in the private sector. And again, the premium varies considerably depending on education and experience. For federal employees with at most a high school diploma, the total compensation premium is about 36 percent; with some college, it is 32 percent; and with a bachelor's degree, it is 15 percent. Master's degree holders earn an 8 percent premium, while government employees with a PhD or professional degree earn 18 percent less in total compensation than they would in the private sector. These compensation premium estimates are understated because they do not correct for the job security enjoyed by federal government employees but not by those in the private sector.

The results in the prior section display a pattern of salary premiums in the federal bank regulatory agencies that mirrors the pattern found in in other federal agencies. Job categories that require more education, job experience, or highly valued specialized skills on average earn lower salary premiums in the federal bank regulatory agencies as well as in the rest of the federal government.

Federal Bank Regulators' Pay Tops Pay at Other Federal Government Agencies

It is also instructive to compare the 2012 salaries of the FDIC, OCC, and CFPB to other midsized government agencies.19 In 2012, the average salary plus bonuses for each of the bank regulatory agencies was more than 18 percent higher than the average salary plus bonus in nine other federal government agencies.

Comparative data on total compensation (including the value of benefits) are not available, but on this measure, the average banking agency premium would far exceed 18 percent, as each of the banking agencies has additional benefit compensation to supplement the standard benefits accorded to General Schedule government employees. For example, the FDIC and OCC each have 401(k) plans with an agency match in addition to the government Thrift Savings Plan retirement saving benefit. The Federal Reserve System has a separate defined benefit retirement plan that is significantly more generous than the government Federal Employees Retirement System benefit, and the Federal Reserve Board gives its employees substantially more paid annual leave than General Schedule federal workers get.

The nine federal government agencies selected for comparison all have publicly available salary plus bonus data. Most are close in size to the banking agencies. The largest comparison agency, the Department of State, has more than 12,000 employees, or about 1.5 times the size of the FDIC, the largest of the three federal bank regulatory agencies examined. The averages reported include both management and nonmanagement employee salaries reported in each job category.

Figure 11 includes only job categories that are common in most of these agencies, so the specialized job families idiosyncratic to individual agencies are excluded. On average, across all job categories, 2012 salaries plus bonuses were more than 18 percent higher in the federal bank regulatory agencies.

Among the nine agencies in the sample that are not bank regulatory agencies, the Federal Trade Commission (FTC), Nuclear Regulatory Commission (NRC), and National Aeronautics and Space Administration (NASA) have average employee salaries plus bonuses in 2012 that are comparable to those of the bank regulatory agencies. Given this similarity, it is useful to compare the distribution of employee salaries across these agencies.

Figure 12 compares the 2012 salaries and bonuses in these six government agencies. While the average salary plus bonus per employee is very close among these six agencies, the nonbank and bank regulatory federal agencies have very different salary and bonus distributions. The high average salary plus bonus in NASA and the FTC is attributable to a high percentage of their professional staffs ­earning salaries in the $150,000-170,000 range. This reflects a concentration of highly compensated lawyers and economists in the FTC and highly compensated engineers and scientists in NASA. The NRC has less concentration in a single pay band, but a higher share of employees earning $100,000-160,000.

In contrast to other federal agencies, the federal bank regulatory agencies have a large share of their staffs earning more than $170,000 and a higher percentage of their staffs earning between $50,000 and $100,000. Unlike NASA and the FTC, the federal banking agencies do not show a pronounced salary spike in any individual salary cell.

How Are Federal Bank Regulatory Agencies Able to Pay Such High Salaries?

When legislators examined the causes of the savings and loan crisis of the late 1980s, one commonly cited factor was the inability of financial regulators to attract and retain experienced bank supervisory personnel.20 At the time, it was determined that the general government compensation scale and OPM policies did not provide the federal banking agencies with the flexibility they needed to attract and retain experienced supervisory staff.

In August 1989, President George H. W. Bush signed into law the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which empowered the federal bank regulatory agencies to establish and adjust their own schedules of compensation and benefits without the need for OPM approval. FIRREA also required the agencies to coordinate their salaries and benefits to avoid interagency competition.

The congressional intent behind the new FIRREA compensation powers was to ensure that federal bank regulatory agencies could attract and retain experienced bank supervisory staff. My analysis suggests that the flexibility afforded by FIERRA may not have worked out as Congress intended. Instead of using targeted compensation policies to attract and retain those in crucial job classes, federal bank regulatory agencies have increased the government salary premiums they offer to most agency employees, with especially large premiums for job families that require only limited education or experience.

It is unclear why general program administration, secretaries, human resources, or any number of other job categories are more difficult, demanding, or hard to fill at the federal bank regulatory agencies than they are at, for example, the Department of the Interior or the Bureau of Labor Statistics. And yet common job categories like these earn exceptionally large premiums at the federal bank regulatory agencies.


The rising tide of bank examination staff salaries has truly been used to float the boats of all federal bank regulatory agency employees, many of whom have no specialized skills, education, or hard-to-attract talents. Perhaps special targeted-compensation exceptions like the OPM scientific and senior-level pay grade designations are a more cost effective means of addressing hard-to-fill positions in federal government agencies. Targeted OPM compensation exceptions were not common until after the passage of FIRREA, but since that time they have been used successfully in NASA, the National Institute of Health, and in other agencies to recruit and retain specialized staff.

By limiting salary adjustments to specifically targeted job categories, General Schedule compensation exceptions can control the government salary premium inflation that has occurred in virtually all job categories at the federal bank regulatory agencies. Reform of the compensation practices at federal bank regulatory agencies is especially important post-Dodd-Frank since the NTEU is now empowered to negotiate compensation at virtually all of these agencies.21

In the end, bank shareholders and customers shoulder the costs of excessive salary premiums at the federal bank regulatory agencies.22 It is totally unclear why individuals that regulate an industry should enjoy much higher compensation than the people they are regulating, both on average and in specific comparable job categories.

To add insult to injustice, these excessive regulatory employee compensation costs are passed on to bankers through deposit insurance premiums and bank examination fees levied by the bank regulatory agencies. These excessive labor costs are off-budget, unappropriated, and the outcome of a negotiation between an employee union and agencies that merely pass on the costs to banks, consumers, and taxpayers. Given the poor governance practices currently in place, it is no surprise that federal bank regulatory labor costs are out of control.


1. Employers pay the following federal taxes on an employee's salary: 6.2 percent in Social Security taxes, 1.45 percent in Medicare taxes, and beginning in 2013, and additional 0.9 percent Obamacare tax for those earning above $200,000. In addition, employers are also required to pay federal and state unemployment taxes that are based on their employees' compensation.

2. The average total compensation per employee is calculated for each bank as the ratio of total employee compensation and benefits divided by the total number of full-time-equivalent employees. The average for the banking system is the simple average of the average compensation per employee at each bank. 2013 data are taken from FDIC and OCC documents that provide budgets or projections of annual total compensation costs and number of employees for 2013. Individual bank data on compensation and employment are available from Federal Deposit Insurance Corporation, "Statistics on Depository Institutions,"

3. The OTS was abolished by the Dodd-Frank Act, and so it is not included in the analysis. For 2007-09, the OTS annual average total compensation estimates well exceed those of the FDIC and the OCC: $168,261 for 2007; $168,698 for 2008; and $176,217 for 2009. The OTS annual report for 2010, its last year in operation, is not available on public websites.

4. In this report, the CFPB reports a total compensation and benefits expense through June 30, 2012, of $101.1 million and a staff of 889 employees. This would indicate a semiannual cost per employee of $113,723.28, or $227,446.57 if the semiannual figure is annualized.

5. These data are available from Bureau of Labor Statistics, "Occupational Employment Statistics," The average annual salary BLS OES series used in figure 3 is North American Industry Classification System category 5221 (Depository Credit Intermediation, all occupations). The BLS OES average values are based on a sample size of more than 1.5 million employees.

6. The data have been compiled and made publicly available by, I thank for permission to use their database.

7. The noticeable "spike" in CFPB employees in the $180,000-190,000 range arises because the CFPB attracted many midcareer employees from the other federal bank regulatory agencies in its initial staffing.

8. For a summary of the agreement, see National Treasury Employees Union, "Collective Bargaining Agreement Changes," December 6, 2013,

9. One OCC job category, Administrative and Office Support Student Trainee, makes less than the average salary for a comparable BLS OES job category, but the shortfall may be overstated. The BLS OES data do not include a category for student trainee, so the matching BLS OES category is for a nontrainee clerk position.

10. If the government salary premium is unrelated to the education, experience, or highly valued skills, then the average BLS OES salary should be unrelated to the government salary premium and have a regression coefficient of zero. If the government premium is larger for job families that are more highly compensated in the private sector, the regression coefficient estimate on the average BLS OES salary will be positive; if the government premium is negatively related to education, accumulated experience, or skills that are highly valued by the private market, then the regression coefficient will be negative.

11. The coefficient estimate on the BLS OES average salary is -.00082 with a t-statistic of 4.41, which is statistically significant at the 1 percent level.

12. The OCC salary premiums in 2012 were not determined by union negotiations as they will be going forward. To retain worker support, unions have a strong incentive to generate compensation premiums for the majority of their members, and not just high salaries for hard-to-fill positions. Over time, unless the method for determining compensation is amended by congressional action, I would expect the premiums for lower-skilled OCC job families to increase.

13. The t-statistic on average BLS OES salary is -3.15, which is statistically significant at the 1 percent level.

14. The Federal Reserve would not provide the data when Judicial Watch requested it under the Freedom of Information Act. See Matt Cover, "US Gov't Financial Regulators Earn Tax-Funded Salaries of $225,000-Plus,", October 25, 2011, http://cnsnews. com/news/article/us-govt-financial-regulators-earn-tax-funded-salaries-225000-plus.

15. For a description of the federal General Schedule, see

16. This is the average gross premium based on 2006-09 Current Population Survey data for full-time workers between the ages of
25 and 65, as calculated by James Sherk, Inflated Federal Pay: How Americans Are Overtaxed to Overpay the Civil Service, Heritage Foundation, July 7, 2010, /07/inflated-federal-pay-how-americans-are-overtaxed-to-overpay-the-civil-service.

17. The unexplained premium is the premium that cannot be accounted for by education, job experience, or other characteristics that can explain employee salary differences. After adjusting for education, occupation, years of work experience, geographic location, size of employer, age, sex, race, ethnicity, marital status, immigration status, and citizenship, the Congressional Budget Office (CBO) (January 2012) estimates that the federal government paid about 2 percent more in wages than the private sector. After controlling for similar factors, Andrew Biggs and Jason Richwine arrive at a lower bound on the federal salary premium of about 10 percent. They estimate a 9 percent premium using data on individuals moving into federal government jobs from the private sector and a salary premium of 14 percent when they use individual salary data and control for individual characteristics. (See Andrew Biggs and Jason Richwine, "Comparing Federal and Private-Sector Compensation, working paper, American Enterprise Institute, June 2011, /labor/comparing-federal-and-private-sector-compensation/.) In an alternative study that controls for individual characteristics but uses only data on occupations that are common in both the government and the private sector, James Sherk estimates the average federal government pay premium to be almost 19 percent. (See Sherk, Inflated Federal Pay.)

18. Congressional Budget Office, Comparing the Compensation of Federal and Private Sector Employees, January 2012, /default/files/cbofiles/attachments/01-30-FedPay.pdf.

19. The nonbank federal government agencies used to compare salaries are the Office of the Secretary of the Interior, Bureau of Labor Statistics, Department of Transportation, Federal Trade Commission, Nuclear Regulatory Commission, National Aeronautics and Space Administration, Smithsonian Institution, Department of State, and National Labor Relations Board.

20. See, for example, the testimony before the House Banking Committee Examination and Audit Review Task Force hearings on bank examinations, March 22, 1989,

21. The Federal Reserve Board is the only exception; its employees are not represented by a union.

22. CFPB funding is the exception, and its costs of operation are more widely disbursed among all taxpayers. The CFPB collects some fees that it uses to defer costs of operations, but its major source of funding is a levy on the Federal Reserve, which reduces the Federal Reserve surplus that is returned to the US Treasury, resulting in higher federal budget deficits that must be funded by taxpayers.

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