CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

A

PAPER

AUGUST 2005

Comparing

 the Pay of 

Federal and

Nonfederal

Law Enforcement

Offi cers

CBO

© StockDisc
The Congress of the United States O Congressional Budget Office

CBO

Comparing the Pay of

Federal and Nonfederal 

Law Enforcement Officers

August 2005

A

PAPER
Note

Numbers in the text and tables may not add up to totals because of rounding.
Preface

As lawmakers consider changes in the federal personnel system for law enforcement

officers, one issue to be considered is whether the compensation of such personnel across the 

government is adequate to achieve recruitment and retention goals. Some observers argue that

in a number of cities, compensation for federal law enforcement officers is less than that for

their state and local counterparts, which may place the federal government at a relative disadvantage in some local labor markets.

This Congressional Budget Office (CBO) paper compares the pay (wages and salaries) of federal law enforcement officers with the pay of nonfederal officers in the national and regional

labor markets and in selected federal locality-pay areas. (CBO’s analysis excludes comparisons

of employment benefits.) The paper was prepared at the request of the Subcommittee on

Oversight of Government Management, the Federal Workforce, and the District of Columbia

of the Senate Homeland Security and Governmental Affairs Committee and the Subcommittee on the Federal Workforce and Agency Organization of the House Committee on Government Reform. In accordance with CBO’s mandate to provide impartial analysis, this paper

makes no recommendations.

Cary Elliott of CBO’s Microeconomic Studies Division wrote the paper under the supervision

of Roger Hitchner, Joseph Kile, and David Moore. (Roger Hitchner has since left CBO.) The

author received valuable comments and assistance from Molly Dahl, Ellen Hays, Arlene

Holen, William Randolph, Ralph Smith, and Sean Sullivan of CBO, as well as Barbara

Schwemle of the Congressional Research Service, Kevin Hallock of Cornell University, and

Mark Musell, formerly of CBO. (The assistance of external reviewers implies no responsibility

for the final product, which rests solely with CBO.)

Leah Mazade edited the paper, and John Skeen proofread it. Angela Z. McCollough prepared

early drafts of the manuscript; Maureen Costantino designed the cover and prepared the

report for publication. Lenny Skutnik produced the printed copies, and Annette Kalicki and

Simone Thomas prepared the electronic version for CBO’s Web site (www.cbo.gov).

Douglas Holtz-Eakin

Director

August 2005

Summary vii

Overview of Federal and Nonfederal Law Enforcement

Systems 1

Comparing Federal and Nonfederal Law

Enforcement Jobs and Requirements 1

Comparing Federal and Nonfederal Pay Structures 4

Pay Comparisons Using the Human Capital Approach 7

CBO’s Analysis 9

Data 9

Comparing Unadjusted Earnings 9

Comparing Individuals’ Personal and Job 

Characteristics 10

Comparing Adjusted Differentials 12

Results for Selected Localities 14

Explaining Differences That Remain After CBO’s

Adjustments 14

Appendix: CBO’s Analytic Method 17

CONTENTS
vi COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

Tables

S-1. Estimated Federal Earnings Differentials as Nationwide Averages

After Adjusting for Officers’ Personal and Job Characteristics x

1. Major Employing Agencies of Federal Law Enforcement Officers,

June 2002 4

2. Number of Federal Law Enforcement Officers in Selected

Occupations by State, March 2004 5

3. Number of Law Enforcement Officers in CBO’s Sample by

Occupation and Employer 9

4. Estimated Federal Earnings Differentials by Region Without

Adjusting for Law Enforcement Officers’ Personal and Job

Characteristics 10

5. Personal and Job Characteristics and Average Earnings of

Law Enforcement Officers 11

6. Estimated Federal Earnings Differentials by Region After

Adjusting for Law Enforcement Officers’ Personal and Job

Characteristics 13

7. Estimated Federal Earnings Differentials in Selected Large

Localities After Adjusting for Officers’ Personal and Job

Characteristics 15

A-1. Annual Log Wage Earnings Regressions for Selected Law

Enforcement Job Categories 18

Figures

S-1. Estimated Federal Earnings Differentials for Police Officers in

Selected Localities xi

S-2. Estimated Federal Earnings Differentials for Detectives and

Criminal Investigators in Selected Localities xii

1. Duties of Federal Law Enforcement Officers 3

Box

S-1 Analyzing Total Compensation for Law Enforcement Jobs viii
Summary

The Office of Personnel Management (OPM) estimated in 2004 that roughly 106,000 law enforcement officers were employed in various federal agencies, such as 

the Department of Homeland Security (DHS), the Federal Bureau of Investigation, and the Federal Bureau of 

Prisons.1

 The September 2001 terrorist attacks have 

heightened policymakers’ concerns about the federal government’s ability to recruit and retain high-quality personnel for those positions. Central to those concerns is 

the level of federal pay for law enforcement jobs in comparison with that offered by state and local governments, 

particularly in metropolitan areas where the cost of living 

is high. This Congressional Budget Office (CBO) analysis compares the pay (wages and salaries) of federal law 

enforcement officers with the pay of similar nonfederal 

officers (those employed by state and local—including 

county —governments).2 CBO’s study was restricted to 

cash compensation, for which comprehensive data are 

available. It did not address total compensation—earnings plus benefits. (See Box 1 for a brief discussion of total compensation.)

The federal government competes in various labor markets with state and local governments—and to a lesser extent, those public-sector employers compete with private 

providers of protective services—for people with law enforcement skills. To compare the pay of federal officers 

with that of state and local officers, CBO used data from 

the 2000 decennial census. Its analysis focused on five of 

the census’s classifications of law enforcement jobs: police 

officers; detectives and criminal investigators; corrections 

officers (including bailiffs and jailers); police supervisors; 

and corrections supervisors.3

A number of factors may account for observed differences 

in pay in addition to the pay structure of an officer’s employer. Those factors include nonwage employment benefits—for example, contributions by employers for retirement and health insurance; differences in the skills and 

abilities of the people in law enforcement jobs, important 

aspects of which are education and previous experience; a 

particular job’s requirements; and individuals’ preferences 

—for instance, whether people are willing to move often, 

as some federal jobs demand, and how much risk they are 

willing to tolerate.

CBO used statistical techniques—based on a human capital approach to pay determination—to account for officers’ personal and job characteristics that affect their pay. 

After taking those characteristics into account, CBO 

found that federal pay tended to be higher than state and 

local pay when compared on the basis of national averages. Federal police officers, investigators, and corrections 

officers on average earned more than their state and local 

counterparts. However, those average results do not take 

into account possible differences between federal and 

nonfederal employment benefits. Moreover, the national 

averages mask important differences among regions and 

localities. As an example, for police officers in several major metropolitan areas (such as New York and Los Angeles), federal salaries are below the salaries paid by state 

and local law enforcement agencies.

1. Office of Personnel Management, Federal Law Enforcement Pay 

and Benefits: Report to the Congress (July 2004). That report compared job classifications, pay, and benefits among federal law 

enforcement officers. 

2. CBO’s previous pay comparison analyses include Comparing Federal Salaries with Those in the Private Sector (July 1997), which 

used a human capital approach similar to the one employed in this 

analysis; Comparing Federal Employee Benefits with Those in the 

Private Sector (August 1998); and, most recently, Comparing the 

Pay of Federal and Nonprofit Executives: An Update (July 2003) and 

Measuring Differences Between Federal and Private Pay (November 

2002).

3. Private-sector law enforcement officers, such as private security 

officers and private detectives, were excluded from CBO’s analysis 

since they lack the arrest powers that distinguish federal and state 

and local officers. However, private employment remains an 

option for both law enforcement recruits and veteran officers.
viii SUMMARY

Those findings are consistent with some observers’ criticism of the federal pay structure for law enforcement officers as too inflexible to allow federal employers to be 

competitive in the labor market for law enforcement officers. The approach that has been taken in legislation introduced in the 108th and 109th Congresses attempts to 

ensure that pay for federal law enforcement officers is 

comparable with pay for state and local officers. Specifically, in many geographic job markets in which the federal government employs law enforcement officers, those 

bills would increase locality adjustments for officers—

rather than change their across-the-board pay—in an attempt to enhance the federal government’s competitiveness in hiring and retention.4

Policymakers have also responded by authorizing the Departments of Homeland Security and Defense to create 

separate pay systems to replace the general pay schedule 

Summary Box 1.

Analyzing Total Compensation for Law Enforcement Jobs

The Congressional Budget Office’s (CBO’s) pay 

comparison of federal and state and local law enforcement officers focused on cash compensation. 

Total compensation includes not only earnings from 

salaries and wages but also the value of employment 

benefits, such as retirement, health care, and life insurance benefits; holiday and vacation pay; and subsidies for transportation, housing, and uniforms. 

Benefits are a significant part of employees’ remuneration. A 1998 analysis by CBO found that, depending on employees’ age, salary, length of service, and 

retirement plan, benefits for federal employees accounted for 26 percent to 50 percent of their total 

compensation.1 For employees of large private firms, 

benefits made up 24 percent to 44 percent of compensation. (Law enforcement retirement falls under 

the governmentwide Federal Employees Retirement 

System, or FERS—and for certain older officers, under the Civil Service Retirement System—but it has 

additional enhancements.)

In 1990, the National Advisory Commission on Law 

Enforcement (NACLE) compared the employment 

benefits provided to state and local law enforcement 

officers with those received by federal law enforcement officers.2

 The commission determined that, 

relative to state and local governments, “[t]he federal 

government more often provides fewer benefits in 

the areas of life insurance, paid holidays, cash allowances, employee cost and some aspects of coverage of 

health insurance, and disability benefits.” The commission also concluded that federal law enforcement 

retirement benefits generally “compare favorably to 

those provided by state and local employers, but the 

cost to the federal employee is higher than that of the 

state and local employee.”3

 NACLE’s report was 

based on the results of a nationwide survey of law enforcement agencies and officers. No comparable data 

on benefits have been collected since that 1990 

survey.

Information is available concerning federal as well as 

state and local retirement plans for law enforcement 

officers.4 However, the complexity of those plans’ 

provisions makes comparison difficult and subject to 

a large number of assumptions. Such an analysis is 

beyond the scope of this report. Nevertheless, the 

data generally indicate a high degree of variability 

among state retirement plans.

1. See Congressional Budget Office, Comparing Federal 

Employee Benefits with Those in the Private Sector (August 

1998).

2. National Advisory Commission on Law Enforcement, 

Report of the National Advisory Commission on Law Enforcement, OCG-90-2 (Comptroller General of the United 

States, April 1990), p. 72.

3. Ibid.

4. For a summary of the provisions of state police plans, see, 

for example, Workplace Economics, Inc., State Police Retirement Plans, 2004 (Washington, D.C.: Workplace Economics, Inc., 2004).

4. For an example of such bills, see H.R. 556, introduced in the 

109th Congress, which provides “special pay adjustments” in specific metropolitan areas.
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS ix

now being used. DHS, which employs about one-quarter 

of all federal law enforcement officers, has adopted a new 

personnel system that will set separate pay schedules for 

each group of officers (and for other occupational 

groups), a move designed to allow more flexibility in responding to specific recruitment and retention needs 

both nationally and by locality.5

 The Department of Defense (DoD) is developing a similar system of compensation.6 In addition, OPM, in a recent report to the Congress, recommended that it be given broad authority, in 

consultation with the employing agencies, to establish a 

governmentwide framework for law enforcement pay and 

employment benefits. The approach would be similar to 

that of the new DHS and the proposed DoD systems.

Federal and Nonfederal Employment

In conducting its pay comparisons, CBO examined several dimensions of federal and nonfederal law enforcement employment that could lead to differences in pay 

between officers employed at different levels of government. That assessment yielded both similarities and differences. The federal government, as noted earlier, employs about 106,000 law enforcement officers located in 

every state and territory of the United States. According 

to the Bureau of Justice Statistics, as of June 2000, state 

and local law enforcement agencies employed about 

700,000 officers with general arrest powers. The personal 

and job characteristics of officers working for federal and 

nonfederal employers differ, according to the data CBO 

examined. (For example, federal law enforcement officers 

are more likely than nonfederal officers to have served in 

the armed forces.) Differences are apparent as well in the 

amount of training that federal and nonfederal officers 

undergo. All law enforcement recruits attend police academies or training courses typically for a few months, but 

federal investigators may train for as long as two years before their employment becomes permanent. In addition, 

recruits to both federal and nonfederal jobs receive jobspecific training, although many of the skills they acquire 

are transferable to other law enforcement jobs.

There are also important differences between federal and 

nonfederal jobs’ duties and requirements. Federal law enforcement agencies employ a larger proportion of detectives or criminal investigators than do state and local law 

enforcement agencies; nonfederal agencies employ proportionately more police officers. Within those broad job 

categories, the duties of federal and nonfederal jobs—and 

thus the jobs’ comparability—may also differ (for example, in terms of risk or scope of responsibility). Those 

variations may lead to associated differences in the education and experience required for a job. In general, federal 

law enforcement jobs require officers to have more education than state and local governments demand; indeed, 

some positions require bachelor’s degrees or professional 

degrees in non-law-enforcement disciplines. Such differences make it important to take into account the “human 

capital” of law enforcement officers in comparing the 

wages paid by federal and nonfederal employers for similar jobs.

A major difference between the federal government and 

state and local governments lies in the way pay is set. 

Many people argue that the centralized system that is 

used to set pay for most federal officers is not sufficiently 

flexible for the needs of law enforcement and leads to 

noncompetitive pay. By law, federal pay is to be comparable with pay in the private sector within local areas (where 

“pay” is defined as income from salaries and wages and 

does not include employment benefits, such as health insurance and retirement benefits).7 To date, however, 

those statutes have not been fully implemented. Moreover, most federal law enforcement pay is determined by 

using the same basic pay schedule that is used to set pay 

for many other federal jobs and thus does not take the 

hazardous nature and irregular scheduling of police and 

investigative work into account.

By contrast, pay for the majority of state and local law enforcement jobs is set by collective bargaining. That process is inherently decentralized inasmuch as nonfederal 

5. DHS and OPM jointly published final rules in February 2005 

(Federal Register, vol. 70, no. 20, February 1, 2005, pp. 5271-

5347) to implement a pay system that links pay more closely to 

performance yet allows more flexibility in establishing geographically based payments. Jobs will be organized into major occupational clusters (with large pay bands and no steps) for which 

annual pay adjustments, supplemented by a locality-pay rate or a 

special pay rate, will be provided to employees who meet or exceed 

expectations about their performance. Locality pay may receive a 

bigger emphasis in some occupational clusters than in others.

6. DoD and OPM jointly issued proposed regulations for the 

National Security Personnel System in February of this year (Federal Register, vol. 70, no. 29, February 14, 2005, pp. 7552-7603).

7. The Salary Reform Act of 1962, the Pay Comparability Act of 

1970, and the Federal Employees Pay Comparability Act of 1990 

(FEPCA) provided authority for salary increases to achieve full 

comparability for federal white-collar employees.
x SUMMARY

wages and salaries are determined separately for each state 

or locality and are thus responsive to local labor-market 

conditions, the job’s environment (for example, the level 

of risk officers must assume to perform a particular job), 

and the local cost of living. Incentive pay—such as that 

for hazardous duty, merit, and tuition reimbursement—is 

common at the state and local levels. At the federal level, 

special pay is used in certain cases to compensate officers 

for irregularly scheduled overtime work or to provide an 

incentive for recruitment or retention.

CBO’s Analysis

The human capital approach that CBO used in its analysis allowed it to account for the effects on pay of personal 

and job-related characteristics of law enforcement officers. There may also, however, be unobservable attributes 

and job requirements that could not be factored into 

CBO’s analysis. Thus, care is warranted in interpreting 

the specific findings in the following discussion. Also indicative of the need for caution is that the pay differentials (percentage differences between federal and nonfederal officers’ earnings) that CBO presents below are estimated averages; some differentials may vary from those 

averages.

CBO found that, on average, federal law enforcement officers earned more in annual wages than did comparable 

state and local law enforcement officers, even after taking 

into account education, experience, demographic factors, 

and work hours (see Summary Table 1). On a nationwide average basis, federal police officers earned about 4 

percent more than their state and local counterparts, and 

federal corrections officers earned 11 percent more. The 

pay differential between federal and nonfederal earnings 

was larger for detectives and criminal investigators: federal investigators earned about 19 percent more. The 

biggest pay differential—that between federal and nonfederal corrections supervisors—was about 25 percent. 

Differences between the responsibilities that federal and 

nonfederal jobs entail may partially account for those pay 

differentials. For example, the large differential that CBO 

found for corrections supervisors may reflect the fact that 

federal supervisors, relative to their state and local counterparts, are responsible for larger facilities. Similarly, the 

differences in the pay of federal and nonfederal investigators may reflect differences in duties and responsibilities 

or other unobservable characteristics.

Summary Table 1.

Estimated Federal Earnings

Differentials as Nationwide Averages 

After Adjusting for Officers’ Personal 

and Job Characteristics

Source: Congressional Budget Office.

Note: The earnings differential is the percentage difference 

between federal officers’ earnings and state and local government officers’ earnings. 

The adjustment removed the effects of officers’ personal and 

job characteristics (specifically, education, experience, gender, race, marital status, veteran status, working a nonstandard shift, usual hours worked, number of weeks worked in 

1999, and geographic location).

Moreover, CBO’s analysis focused on cash compensation—it did not include the value of retirement and other 

employment benefits. For example, federal law enforcement officers’ employment benefits may be more modest 

than those offered by some states and localities, which 

may offset federal pay differentials. As described in Box 1, 

the National Advisory Commission on Law Enforcement 

(NACLE) reported in 1990 that, in general, federal benefits might be lower than those offered by state and local 

governments.8

Those national averages, however, do not illuminate important regional and local variation in pay. In the case of 

police officers, for instance, after adjusting for personal 

and job characteristics, CBO found little evidence of a 

pay difference between federal and nonfederal officers in 

most of the localities selected for analysis (see Summary 

Figure 1). Where there was a disparity, the findings were 

mixed. In Washington, D.C., federal police officers 

earned about 6 percent more than nonfederal officers, a 

8. See National Advisory Commission on Law Enforcement, Report 

of the National Advisory Commission on Law Enforcement, OCG90-2 (Comptroller General of the United States, April 1990).

Percentage

Occupational Category Differential

Police Officers 3.7

Detectives and Criminal Investigators 18.6

Corrections Officers 10.9

Police Supervisors 2.6

Corrections Supervisors 25.4
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS xi

Summary Figure 1.

Estimated Federal Earnings Differentials for Police Officers in Selected Localities

(Percent)

Source: Congressional Budget Office using data from the 2000 decennial census.

Notes: The earnings differential is the percentage difference between federal officers’ earnings and state and local government officers’ 

earnings. See Table 7 for additional detail.

The differentials remove the effects of officers’ personal and job characteristics (specifically, education, experience, gender, race, 

marital status, veteran status, working a nonstandard shift, usual hours worked, number of weeks worked in 1999, and geographic

location).

Solid shading indicates that the estimate is statistically unreliable. Cross-hatching indicates that the estimate is statistically different 

from zero at the 90 percent level of confidence.

a. The federal locality-pay area designated by the Office of Personnel Management that comprises those portions of the continental United 

States that are outside the other 31 locality-pay areas.

little above the estimated nationwide average differential. 

In the “rest of U.S.” locality-pay area, federal police officers earned about 11 percent more than nonfederal officers. However, in Los Angeles and New York, federal police officers were paid about 11 percent less, and in San 

Diego about 8 percent less, than state and local police 

officers.

In contrast to the findings for police officers, adjusted 

federal pay for detectives and criminal investigators is 

higher than nonfederal pay for those jobs in most large 

localities. However, CBO estimates that substantial variation exists among the selected localities (see Summary 

Figure 2). In Atlanta, Dallas, and Houston, federal pay 

was more than 40 percent higher than pay for comparable state and local detectives and criminal investigators, 

followed by the “rest of U.S.” locality-pay area (about 30 

percent), Seattle (27 percent), Washington, D.C. (23 percent), and Boston (19 percent). In the case of Chicago, 

Detroit, and San Diego, the estimated differences were 

large but not statistically reliable. Other localities also 

showed little difference between federal and nonfederal 

pay. However, CBO found that in Philadelphia, federal 

investigators were paid about 14 percent less than their 

nonfederal counterparts.

Atlanta Boston Chicago Dallas Los

Angeles

New

York

Phila. San

Diego

San

Fran.

Wash.,

D.C.

Rest of

U.S.

-15

-10

-5

0

5

10

15

20

25

a
xii SUMMARY

Summary Figure 2.

Estimated Federal Earnings Differentials for Detectives and Criminal

Investigators in Selected Localities

(Percent)

Source: Congressional Budget Office using data from the 2000 decennial census.

Notes: The earnings differential is the percentage difference between federal officers’ earnings and state and local government officers’ 

earnings. See Table 7 for additional detail.

The differentials remove the effects of officers’ personal and job characteristics (specifically, education, experience, gender, race, 

marital status, veteran status, working a nonstandard shift, usual hours worked, number of weeks worked in 1999, and geographic

location).

Solid shading indicates that the estimate is statistically unreliable. Cross-hatching indicates that the estimate is statistically different 

from zero at the 90 percent level of confidence.

a. The federal locality-pay area designated by the Office of Personnel Management that comprises those portions of the continental United 

States that are outside the other 31 locality-pay areas.

Additionally, CBO found little evidence of a pay difference between federal corrections officers and comparable 

state and local corrections officers in four of the six localities it studied. However, CBO estimates that in New 

York, federal pay was about 11 percent less, and in the 

“rest of U.S.” locality-pay area, federal pay was about 

11 percent more. There were insufficient data on police 

and corrections supervisors to explore potential localitybased differences in pay for those categories of jobs.

-20

-10

0

10

20

30

40

50

60

70

Atlanta Boston Chicago Dallas Los

Angeles

New

York

Phila. San

Diego

San

Fran.

Wash.,

D.C.

Rest of

U.S.

Detroit Houston Seattle a
Comparing the Pay of

Federal and Nonfederal 

Law Enforcement Officers

Overview of Federal and Nonfederal 

Law Enforcement Systems

Federal law enforcement officers perform a number of 

duties: they investigate crimes, apprehend and detain suspected or convicted criminals, protect federal property 

and officials, patrol in vehicles and on foot, and conduct 

entry and exit screening at federal facilities. Many of their 

duties are comparable with the duties performed by law 

enforcement officers who are employed by state and local 

governments.

Some observers are concerned that the federal government may be at a disadvantage in the labor market for 

law enforcement officers because the compensation of 

federal officers may not be competitive with that for state 

and local officers, particularly in areas that have a high 

cost of living.1

 A few studies have suggested that differences in both pay and benefits might give a hiring edge to 

state and local employers and make it difficult for federal 

agencies to attract and retain qualified officers. A 2003 

analysis by the Government Accountability Office 

(GAO) found that most officers who left one of 13 federal police forces in the Washington, D.C., metropolitan 

area in 2002 remained in law enforcement, and some 

took state or local law enforcement jobs.2 The Office of 

Personnel Management (OPM), in a 2004 report to the 

Congress, stated that recruitment was not a major problem.3

 OPM acknowledged, however, that agencies might 

be experiencing some recruitment problems “in high-cost 

cities such as New York, San Francisco, and Los Angeles 

for lower-graded law enforcement officer (LEO) jobs, especially if those jobs are filled on a local labor market basis (e.g., correctional officers).”4 The Congress has also 

heard testimony from various groups that have suggested 

that the federal government loses investigators to state 

and local employers because of differences in salaries and 

benefits.5

The Congressional Budget Office’s (CBO’s) comparison 

of the pay of federal and nonfederal law enforcement officers employed a human capital approach designed to 

take into account many of the factors associated with job 

performance and pay (such as age, experience, and education) and in so doing attempt to isolate the effect of 

working for a federal or nonfederal employer. As a preliminary to its statistical analysis, CBO examined federal 

and nonfederal law enforcement employment, considering jobs, requirements, and pay structures.

Comparing Federal and Nonfederal Law

Enforcement Jobs and Requirements

Federal and nonfederal law enforcement jobs differ in important ways. More than half of federal jobs are at the in1. The federal government does not gather the type of data needed 

to address the overall effectiveness of recruitment efforts by agencies—that is, information on agencies’ recruitment goals and data 

on whether or not those goals were met.

2. In that year also, a large number of federal police officers transferred to join the newly created Federal Air Marshal Service. 

See Government Accountability Office (formerly the General 

Accounting Office), Federal Uniformed Police: Selected Data on 

Pay, Recruitment, and Retention at 13 Police Forces in the Washington, D.C., Metropolitan Area, GAO-03-658 (June 2003).

3. Office of Personnel Management, Federal Law Enforcement Pay 

and Benefits: Report to the Congress (July 2004), Appendix D, 

p. 8.

4. Ibid.

5. See, for example, the statement of Richard J. Gallo with Timothy 

Danahey, Federal Law Enforcement Officers Association, before 

the Subcommittees on Civil Service and Agency Reorganization 

and on Criminal Justice, Drug Policy, and Human Resources of 

the House Committee on Government Reform, July 23, 2003.
2 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

vestigator level, whereas more than half of state and local 

law enforcement personnel are police officers. And even 

within those broad categories, the duties and responsibilities of federal and nonfederal jobs—and thus their comparability—differ. A private firm that contracted with 

the National Advisory Commission on Law Enforcement 

(NACLE) to evaluate the work of federal versus state and 

local officers found that for uniformed officer, probation 

officer, and correctional officer positions, the jobs at all 

three levels of government were “essentially equivalent” 

but the “[d]uties and responsibilities of federal nonuniformed officer positions [that is, detectives and investigators] generally exceeded [those of ] state and local 

non-uniformed officer positions.”6

 Federal investigators 

differ from their state and local counterparts in the 

scope and complexity of the crimes they investigate; the 

duties required of federal and nonfederal police officers 

may differ as well. Federal police officers generally have 

less physical area to patrol, but they have more responsibility for securing and limiting access to buildings and 

installations.

Along with some of those differences in duties are differences between federal and nonfederal employers in their 

jobs’ education and training requirements. In general, the 

federal government requires law enforcement officers to 

have more education than state and local governments require. For example, federal criminal investigator jobs usually demand a college degree and previous experience; by 

comparison, a smaller percentage of state and local positions require a college degree—and then, usually a twoyear associate’s degree. In general, the education requirements of federal and nonfederal employers for police officer jobs are more similar than those employers’ requirements for investigative jobs.

Requirements for training tend to be job specific at 

both the federal and the state and local government levels; in many cases, recruits must complete formal agencyspecific training courses. Many of the skills they acquire, 

however, are transferable among law enforcement jobs 

both within or among particular levels of government. 

For some law enforcement job categories, federal and 

nonfederal employers compete for people with law enforcement skills. (In a more limited number of instances, 

governmental employers of law enforcement officers 

compete for personnel with private-sector providers of 

protective services.) For other categories, the pools of candidates that federal and nonfederal employers draw from 

may differ. For police officers, the education and training 

required are similar for federal and nonfederal positions, 

although the duties such officers perform may differ significantly. For detective and investigator positions, federal 

and nonfederal employers draw from different groups. 

The federal government generally hires investigators either from the ranks of senior detectives at the state or local level or—as suggested by differences in the education 

required for some federal jobs—from among professionals in careers outside of law enforcement (such as lawyers 

and accountants).7 By contrast, state and local detectives 

and investigators generally rise to their positions through 

the police officer ranks. 

Federal Law Enforcement. According to OPM, the federal government currently employs about 106,000 law 

enforcement officers. A 2002 Justice Department survey 

examined the duties and responsibilities of 93,000 fulltime officers; according to those data, criminal investigation and noncriminal investigation and inspection accounted for 54 percent, corrections and court operations 

accounted for 22 percent, and police and security and 

protection accounted for 23 percent (see Figure 1).8 At 

that time, the largest employing agencies were the Immigration and Naturalization Service, with about 19,000

6. National Advisory Commission on Law Enforcement, Report of 

the National Advisory Commission on Law Enforcement, OCG-90-2 

(Comptroller General of the United States, April 1990), p. 45.

7. In testimony before the Subcommittees on Civil Service and 

Agency Reorganization and Criminal Justice, Drug Policy, and 

Human Resources of the House Committee on Government 

Reform, July 23, 2003, Nancy Savage of the FBI Agents Association commented on the variety of disciplines from which the 

bureau draws its personnel.

8. Department of Justice, Bureau of Justice Statistics, Federal Law 

Enforcement Officers, 2002, NCJ 199995 (2002). The bureau’s 

survey, which covered about 93,000 full-time federal officers, nevertheless excluded a number of law enforcement personnel, such 

as those stationed in foreign countries, those in the armed forces, 

and those in classified positions (for example, federal air marshals 

and officers in the Central Intelligence Agency’s Security Protective Service).
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 3

Figure 1.

Duties of Federal Law Enforcement 

Officers

Source: Congressional Budget Office using data from the Bureau 

of Justice Statistics.

Note: Under the census’s categorization of law enforcement jobs, 

the duties of criminal and noncriminal investigation and 

inspection would be handled by detectives and criminal 

investigators. Similarly, the duties of corrections officers 

would include court operations, and those of police officers 

would encompass security and protection.

full-time officers (see Table 1); the Federal Bureau of 

Prisons, with 14,000; the U.S. Customs Service, with 

12,000; and the Federal Bureau of Investigation (FBI), 

with 11,000.9

 Federal officers work in every state and territory of the United States, although they may be concentrated in some geographic areas (see Table 2). For example, a large number of border patrol agents (numbering 

almost 10,000) work in the four states that border Mexico, and federal criminal investigators are concentrated in 

the District of Columbia. 

Federal agencies establish hiring requirements for law enforcement jobs on the basis of their needs and in compliance with laws governing the federal law enforcement retirement systems.10 In addition, most federal agencies 

require that an applicant pass a written entrance examination. OPM administers such a test for the majority of 

federal employers, although some agencies administer 

their own test. 

Prerequisites for formal education and previous law enforcement experience also vary by agency and type of job. 

Criminal or noncriminal investigator positions tend to 

require more of both. For instance, to become an FBI 

agent requires a four-year college degree and work experience. By contrast, for an entry-level park ranger position, 

recruits need not have a degree but may qualify with one 

year of experience related to the management and protection of natural or cultural resources.

Most federal officers are trained through the Federal Law 

Enforcement Training Center, or FLETC. (Officers hired 

by the FBI and the Drug Enforcement Administration, 

however, are trained in those agencies’ facilities at Quantico, Virginia.) More than 70 federal agencies train personnel at various FLETC locations. In fiscal year 2002, 

32,000 officers—including 2,600 state and local personnel and some international law enforcement officers—

completed training through the FLETC.11

Basic training requirements differ by job and agency. For 

criminal investigators, classroom training commonly 

ranges from about eight to 22 weeks; for police officers, 

training lasts between four and 26 weeks. Field training 

requirements range from two weeks to six months for police officers, whereas for investigators, training can be as 

long as two years.

For some federal law enforcement jobs, agencies hire at 

the national level and require candidates to accept assignment anywhere in the nation. FBI recruits, for example, 

must be willing to work in any of the bureau’s more than 

50 field offices. Once employed, the officers are transferred relatively often—typically, at least three times, according to anecdotal evidence. That feature of employ9. Ibid. The Homeland Security Act of 2002 transferred the Immigration and Naturalization Service and the Customs Service to the 

Department of Homeland Security.

Criminal

Investigation

 (40%)

Police

 (22%)

Corrections

 (18%)

Court

Operations

 (4%)

Security and

Protection

 (1%)

Noncriminal

Investigation

and Inspection

 (14%)

10. To qualify for enhanced law enforcement retirement coverage 

under the Federal Employees Retirement System, law enforcement positions must meet a rigorous-duty standard. The statute—

at 5 U.S.C. §8401 (17)(A)(ii)—requires a law enforcement officer 

position to be limited to “young and physically vigorous individuals.” OPM regulations under the law—at 5 C.F.R. §842-802—

further require the affected agency to establish a maximum entry 

age (usually set at 37) for the position as well as physical fitness 

and medical standards.

11. Department of Justice, Bureau of Justice Statistics, Federal Law 

Enforcement Officers, 2002.
4 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

Table 1.

Major Employing Agencies of Federal Law Enforcement Officers, June 2002

Source: Congressional Budget Office using data from the Bureau of Justice Statistics.

a. Now part of the Department of Homeland Security.

b. Does not include a number of officers, such as those stationed in foreign countries, those in the armed forces, and those in classified positions (for example, federal air marshals and officers in the Central Intelligence Agency’s Security Protective Service).

ment at the FBI is one that requires the federal government in some way to compensate the officers.

State and Local Law Enforcement. As of June 2000, state 

and local law enforcement agencies employed about 

700,000 law enforcement officers.12 Larger municipal 

police departments (those with 100 or more officers) employed 22 full-time law enforcement personnel for every 

10,000 residents; county police departments, sheriff’s offices, and state agencies employed 11, 10, and two officers per 10,000 residents, respectively.13 Most of those 

personnel (72 percent for state agencies and 61 percent 

for county and municipal police departments) were uniformed police officers. (The breakdown for law enforcement officers employed in sheriff’s offices differed: 47 

percent were police officers, 19 percent performed jail 

duty, and 8 percent handled court security.)

Education prerequisites for police officer positions differ 

among jurisdictions. In 2000, 12 percent of state agencies 

required a two-year college degree, but only 2 percent 

required a four-year degree. One in 10 municipal and 

county police departments required a college degree, and 

about one in seven sheriff’s offices had a college degree requirement. Six percent of county and 2 percent of municipal police departments required a four-year college

degree.

Comparing Federal and Nonfederal Pay Structures

A concern that has been raised about the federal government’s ability to recruit and retain high-quality law enforcement officers involves the flexibility of the federal 

pay structure. State and local employers can respond to 

local labor-market conditions more readily than federal 

Immigration and Naturalization Servicea 19,101 20.5

Federal Bureau of Prisons 14,305 15.4

Customs Servicea 11,634 12.5

Federal Bureau of Investigation 11,248 12.1

Secret Servicea 4,256 4.6

Drug Enforcement Administrationa 4,020 4.3

Postal Inspection Service 3,135 3.4

Internal Revenue Service Criminal Investigation 2,885 3.1

U.S. Marshals Service 2,646 2.8

Bureau of Alcohol, Tobacco, and Firearmsa 2,335 2.5

National Park Service 2,139 2.3

Capitol Police 1,225 1.3 _____ ____

Total 78,929 84.9

Memorandum:

Total Full-Time Personnelb 93,000 100.0

Number of

Officers

Percentage of

Total

12. Out of more than 1 million full-time-equivalent personnel, about 

700,000 were so-called sworn officers with general arrest powers; 

the remainder were people with duties other than those of making 

arrests and carrying weapons. See Department of Justice, Bureau of Justice Statistics, Census of State and Local Law Enforcement Agencies, 2000, NCJ 194066 (October 2002), available

at www.ojp.usdoj.gov/bjs/pub/pdf/csllea00.pdf.

13. Department of Justice, Bureau of Justice Statistics, Law Enforcement Management and Administrative Statistics, 2000: Data for 

Individual State and Local Agencies with 100 or More Officers, NCJ 

203350 (March 2004), available at www.ojp.usdoj.gov/bjs/pub/

pdf/lemas00.pdf.
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 5

Table 2.

Number of Federal Law Enforcement Officers in Selected Occupations by State, 

March 2004

Continued

employers can, whereas the federal government relies 

more on the uniformity inherent in its basic pay systems. 

The sections that follow describe aspects of the paysetting mechanisms of federal and nonfederal law enforcement employers.

The Federal Pay System for Law Enforcement Officers. 

The pay of about 80 percent of federal law enforcement 

officers is based on the government’s General Schedule 

(GS), a framework of base salaries and step increases that 

is used to set pay for a variety of government jobs.14 In 

general, federal white-collar jobs are assigned a GS grade 

on the basis of a number of factors, including a job’s duties and responsibilities and the knowledge, skills, and 

abilities or competencies required of the person who fills 

that job. Pay varies within a grade level on the basis of 

10 steps; employees receive step increases within a grade 

if they perform acceptably and have satisfied the waitingperiod requirement established for each step. The pay of 

federal law enforcement officers is set by law and is higher 

than that for other GS employees for grades 3 through 

10.15

Alabama 128 7 165 61 15 85

Alaska 86 0 0 146 1 41

Arizona 432 2,350 322 263 23 96

Arkansas 73 2 138 162 7 41

California 2,132 2,613 1,314 566 65 774

Colorado 249 0 677 183 12 114

Connecticut 123 0 102 17 3 60

Delaware 25 0 0 1 1 11

District of Columbia 5,270 38 0 157 101 434

Florida 1,219 61 1,112 212 45 578

Georgia 653 40 529 215 25 229

Hawaii 136 0 122 66 4 373

Idaho 61 18 0 42 3 11

Illinois 640 0 578 89 30 202

Indiana 121 0 230 47 12 128

Iowa 62 0 0 66 13 31

Kansas 70 0 274 42 8 53

Kentucky 110 0 756 101 6 40

Louisiana 267 27 490 69 11 90

Maine 43 117 0 20 2 112

Maryland 421 0 141 125 7 566

Massachusetts 341 0 205 230 7 108

Michigan 313 127 157 40 8 101

Minnesota 130 46 341 73 11 42

Mississippi 96 7 126 137 7 125

Missouri 244 0 218 160 17 82

Montana 79 130 15 78 2 44

Nebraska 59 0 0 33 7 26

U.S.

Marshal Officer

Corrections

 Officer

Park

 Ranger

Criminal Police

 Investigator

Border Patrol

 Agent

14. Pay for other law enforcement jobs is established by the Federal 

Wage System (a uniform pay-setting system that covers blue-collar 

employees who are paid by the hour), through separate pay schedules for senior executive and professional personnel, or directly by 

law, administrative action, or collective bargaining. More information on the Federal Wage System is available at www.opm.gov/

oca/wage/. According to OPM, of the roughly 106,000 federal 

law enforcement officers, about 91,000 are covered by standard 

basic pay systems (86,000 fall under the General Schedule, and 

4,500 under the Federal Wage System). See Office of Personnel 

Management, Federal Law Enforcement Pay and Benefits, p. 27.

15. Section 403 of the Federal Law Enforcement Pay Reform Act of 

1990, 5 U.S.C. §5305 note.
6 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

Table 2.

Continued

Source: Congressional Budget Office based on data from the Office of Personnel Management’s Central Personnel Data File.

Note: The data are restricted to employees covered by pay plans that use the General Schedule grade structure to classify jobs.

a. For purposes of security, detailed information is not available for the Federal Bureau of Investigation; Drug Enforcement Administration; 

Bureau of Alcohol, Tobacco, and Firearms; Secret Service; and Bureau of the Mint.

Many observers maintain that the federal government 

should use specialized systems and schedules rather than 

the General Schedule to determine pay for law enforcement officers. Their primary argument is that the General Schedule, with its grade-level system that is common 

to other federal occupations and its standard method of 

step-based increases in salary, is not flexible enough to 

help agencies meet their law enforcement recruiting 

goals. For example, the factors used to evaluate typical 

white-collar jobs for placement on the GS scale may not 

be appropriate for law enforcement because the unique 

risks and responsibilities of law enforcement officers are 

not taken into account.

Pay Setting by Nonfederal Employers. Pay setting for 

state and local police forces is by its very nature decentralized. A substantial number of nonfederal employers allow 

collective bargaining; it is used to set pay for about 70 

percent of municipal police forces and 50 percent of 

county and state law enforcement agencies. (Forty-two 

percent of sheriff’s offices allow collective bargaining.)16

Police officers are legally prohibited from striking; they 

may nevertheless achieve their contract demands through 

arbitration, statutes for which are in place in a number of 

Nevada 118 0 44 57 5 44

New Hampshire 32 0 0 20 2 10

New Jersey 406 0 404 49 7 239

New Mexico 151 548 4 121 13 98

New York 1,186 188 734 157 41 379

North Carolina 240 0 435 122 11 85

North Dakota 45 69 18 43 2 44

Ohio 297 0 146 82 17 166

Oklahoma 114 0 320 98 12 145

Oregon 124 0 176 130 11 37

Pennsylvania 473 0 1,228 327 20 354

Rhode Island 51 0 0 10 3 40

South Carolina 126 51 308 57 19 150

South Dakota 56 0 41 65 5 41

Tennessee 195 0 151 128 17 101

Texas 1,633 4,386 1,694 265 82 490

Utah 103 2 4 119 14 48

Vermont 62 64 0 14 4 9

Virginia 693 0 486 232 17 667

Washington 382 185 146 159 14 196

West Virginia 63 0 420 101 4 64

Wisconsin 87 0 148 39 6 103

Wyoming 35 0 4 139 3 32

Unavailable Dataa 17, 590 0 0 0 0 86 ______ ______ ______ _____ ___ _____

Total 37,845 11,076 14,923 5,935 782 8,225

Corrections Park Police

Officer

U.S.

 Investigator Agent Officer Ranger Marshal

Criminal Border Patrol

16. Department of Justice, Bureau of Justice Statistics, Law Enforcement Management and Administrative Statistics, 2000, p. vi.
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 7

states.17 (Arbitration allows for the settling of disputes—

especially labor disputes—between two parties by an impartial third party, whose decision the contending parties 

agree to accept.) In setting or negotiating pay, state and 

local employers may consider a number of factors, including the following:

B Competition for recruits. In urban areas that have many 

police forces at the local level and a large federal law 

enforcement presence, officers will demand higher salaries. Private-sector employers may also compete for 

recruits in those areas.

B Local cost of living and housing costs. Some local jurisdictions set pay to account for local cost-of-living factors, particularly the cost of housing. That kind of 

flexibility helps attract new recruits and discourages 

highly skilled officers from moving.

B Relative risk of a job. Some duties of a law enforcement 

job may put an officer in danger, whereas other duties 

(perhaps in different locations) are less risky. Some 

state and local governments provide hazard pay for selected duties.

State and local police pay scales are generally similar in 

structure—they have steps and grades, although the pay 

levels are not the same—to the federal GS schedule and 

to military-rank pay systems. Police officers are ranked 

to set their base pay; within those ranks, step increases

are granted largely on the basis of an officer’s time in 

service.18

Special Pay. One of the reimbursement tools that gives 

some pay flexibility to agencies that compete in hiring 

law enforcement officers is special pay provided in addition to base salaries. State and local government agencies 

commonly offer incentive pay for additional education as 

well as reimbursement for tuition. For example, among 

large nonfederal employers (those employing 100 or 

more officers), 61 percent provide education incentive 

pay, and 69 percent reimburse tuition expenses.19 (When 

considered according to the type of nonfederal employer, 

the data show that 20 percent of county police and 27 

percent of state police provide incentive pay; for tuition 

reimbursement, the proportions range from 59 percent of 

sheriff’s offices to 73 percent of municipal police forces.) 

More than a third of large state and local law enforcement 

agencies provide some type of merit pay or increased pay 

for special skills or proficiency. Twenty-seven percent of 

those agencies provide hazardous-duty pay, and 44 percent provide a differential for a nonstandard shift (for example, night work).20

The federal GS system also allows law enforcement officers to receive extra compensation in some instances, notably when a job involves hazardous duty. In addition, 

many federal law enforcement officers receive a substantial percentage increase on top of their base pay for a category of duties known as irregularly scheduled overtime 

work.21 Those payments considerably increase an officer’s take-home pay, although the sum of base pay and 

differential pay is subject to a pay cap.22 Some federal officers are also eligible for overtime pay, a night-shift differential, Sunday pay, and holiday pay. Moreover, OPM 

has the authority to give special locality payments to certain occupational groups under various circumstances 

that include problems with recruitment and retention.23

Pay Comparisons Using the Human 

Capital Approach

How much more or less would a federal law enforcement 

officer be paid if he or she were to leave the federal government for a state or local law enforcement job? Addressing that question is central to pay comparisons such 

17. See R.G. Valletta and R.B. Freeman, “The NBER Public Sector 

Collective Bargaining Law Data Set,” Appendix B in Richard B. 

Freeman and Casey Ichniowski, eds., When Public Employees 

Unionize (Chicago: National Bureau of Economic Research and 

University of Chicago Press, 1988). The data used were updated 

and are available at www.nber.org/publaw/.

18. See www.policepay.net for examples of pay scales by city.

19. Department of Justice, Bureau of Justice Statistics, Law Enforcement Management and Administrative Statistics, 2000, Table C.

20. Ibid.

21. That category encompasses administratively uncontrollable overtime pay, which is a discretionary payment of 10 percent to 25 

percent for Border Patrol agents and certain other law enforcement officers, and law enforcement availability pay (LEAP), 

which is a fixed 25 percent supplement for criminal investigators 

and some other law enforcement personnel. LEAP recipients are 

not eligible for overtime pay.

22. 5 U.S.C. §5307.

23. That authority is provided in 5 U.S.C. §5305(a). According to 

OPM, fewer than 2 percent of federal law enforcement officers 

receive those special rates.
8 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

as CBO’s. Some pay comparisons for law enforcement 

personnel have used a job-matching approach.24 That 

method draws on administrative data to match the base 

pay of federal jobs at specific GS grades and steps with 

the base pay of corresponding nonfederal jobs at equivalent state and local grades and steps. (For example, a 

GS-12 federal criminal investigator might be matched 

with a police sergeant or detective in a particular metropolitan area.) The job-matching approach, however, has 

several significant drawbacks: 

B Matching jobs requires analysts to make subjective 

choices about which grades and steps and which experience profiles to use for the comparisons.

B Both federal and nonfederal law enforcement officers 

receive pay above their base levels that cannot be 

quantified with the available data.

B The distribution of skills among federal law enforcement officers may differ from the distribution among 

nonfederal officers within the matched positions, thus 

diminishing the jobs’ comparability. (For example, 

federal criminal investigator jobs require a different 

mix of skills than state or local investigator positions 

require.)

Pay comparisons that employ job matching are more informative than simple comparisons of all law enforcement jobs. But unless the job matches are identical, 

differences that an analysis reveals may be caused by differences in the jobs and the people who hold them rather 

than by the pay structures of the employing governments. 

To improve estimates of the differences between federal 

and nonfederal law enforcement officers, CBO used a human capital approach to make pay comparisons.25 That 

approach relied primarily on statistical analysis using data 

from the 2000 decennial census related to individuals’ 

personal and job characteristics and earnings (including 

pay provided in addition to law enforcement officers’ 

base wages and salaries) rather than on the matching of 

jobs between the federal GS system and various state and 

local pay schedules. Moreover, in relating individuals’ 

characteristics to their earnings, the human capital approach that CBO used relies on a labor-market framework. In such markets, in which individuals may move 

from job to job and employers may choose among them, 

it is the productive potential and preferences of those 

people—rather than schedules, steps, and grades—that 

for the most part determine differences in earnings.

Law enforcement officers who are more highly educated 

and more experienced than otherwise similar individuals 

are generally more productive (with more knowledge and 

skills) and therefore more valuable to an employing 

agency. Independent of whether an officer is employed by 

the federal government or by a state or locality, officers 

with more experience will generally be paid more than officers with less experience. Likewise, officers with more 

formal education will generally command a higher salary 

than officers with less education to compensate for lost 

wages and the cost of schooling and to reflect the greater 

productivity likely to result from that education. 

In addition to education and experience, individual tastes 

or preferences are a factor in determining wages. As discussed earlier, law enforcement jobs at the federal and at 

the state and local levels of government differ in a number of respects. For example, some federal officers are subject to regular reassignments, which demands that they be 

willing to move or travel frequently. And federal jobs differ from state or local jobs in terms of risk and levels 

of responsibility and complexity. Any of those attributes 

may be a factor in a law enforcement recruit’s choice of 

whether to work for the federal government or for a state 

or local government. In some cases, those preferences 

may be partially driven by demographic factors, such 

as marital status, gender, or race. Therefore, pay comparisons must necessarily take such characteristics into 

account.

To sum up, differences in human capital and individual 

preferences lead to differences in earnings. A pay comparison that failed to adjust for the personal and job characteristics of individuals might erroneously associate differences in their earnings with the level of government at 

which they were employed. CBO’s analysis thus used a 

24. See the statement of Richard J. Gallo with Timothy Danahey, 

July 23, 2003, and National Advisory Commission on Law 

Enforcement, Report of the National Advisory Commission on 

Law Enforcement.

25. The human capital approach is the dominant theory of wage 

determination in the field of economics. For useful discussions of 

that approach, see Robert J. Willis, “Wage Determinants: A Survey and Reinterpretation of Human Capital Earnings Functions,” 

in O. Ashenfelter and R. Layard, eds., Handbook of Labor Economics, vol. 1 (London: Elsevier Science Publishers, 1986); and Congressional Budget Office, Comparing Federal Salaries with Those in 

the Private Sector (July 1997).
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 9

regression framework (described in more detail in the appendix) to compare the annual earnings of federal and 

nonfederal officers after adjusting for differences in individual officers’ personal and job characteristics.

CBO’s Analysis

CBO’s study compared the pay of federal and nonfederal 

law enforcement officers in five broad job categories at 

the national and regional levels and for selected metropolitan areas. The pay data were adjusted to account for factors, aside from that of an officer’s employer, that might 

affect his or her pay. (CBO presents below descriptive statistics related to those factors, or characteristics, for the 

analyzed sample of law enforcement officers.) Specifically, 

CBO applied the statistical technique of regression analysis to the raw earnings data to account for the determinants of pay and allow the effect of whether an individual 

officer is employed by the federal government or a state 

or local government to be isolated from other pay determinants. National-level results are presented as well as results for selected geographic areas.

Data

CBO drew the data for its analysis from the 2000 decennial census, which collected information on the personal 

and job characteristics and earnings of all respondents, 

including law enforcement officers.26 (CBO’s analysis 

covered only public-sector officers and did not extend to 

such personnel employed in the private sector.) The sample of officers that CBO used was restricted to individuals 

aged 21 to 57 who received pay for work for at least 40 

weeks in 1999, earned between $10,000 and $175,000, 

were not on active duty in the military, and worked for either the federal or a state or local government.27 (Age 21 

was used as the lower bound because it corresponds to the 

minimum age requirement for many federal and nonfederal law enforcement jobs; age 57 was used as the upper 

bound because it corresponds to the mandatory retirement age for federal law enforcement officers.) CBO

analyzed five categories of law enforcement jobs (see 

Table 3): police officers (including police and sheriff’s patrol officers and transit and railroad police); detectives 

Table 3.

Number of Law Enforcement Officers 

in CBO’s Sample by Occupation and 

Employer

Source: Congressional Budget Office using data from the 2000 

decennial census.

Notes: CBO’s sample was restricted to officers aged 21 to 57 who 

had worked at least 40 weeks in 1999, had annual earnings 

that year between $10,000 and $175,000, and were not on 

active duty in the military.

Nonfederal = state and local government.

and criminal investigators; corrections officers (including 

bailiffs and jailers); police supervisors (that is, first-line 

supervisors or managers of police and detectives); and 

corrections supervisors (first-line supervisors or managers 

of corrections officers). 

Comparing Unadjusted Earnings

Before performing its regression analysis to adjust for human capital factors (such as officers’ personal characteristics and experience), CBO compared the raw earnings of 

federal and nonfederal law enforcement officers (see 

Table 4). If earnings are considered as an overall (nationwide) average, federal law enforcement officers earn more 

than state and local officers. CBO found the smallest raw 

differences (less than 10 percent) between federal and 

nonfederal police officers, corrections officers, and police 

supervisors. By contrast, the earnings of federal detectives 

and criminal investigators were more than 30 percent 

greater than those of their state and local counterparts, 

and federal corrections supervisors made about 26 percent more than their nonfederal counterparts. 

The unadjusted federal earnings differentials varied by region for all job categories.28 For example, CBO’s analysis

26. Specifically, CBO used the 5 percent public-use microdata sample, a 1-in-20 sample of U.S. households.

27. Ninety percent of those individuals reported that they were paid 

for work for all 52 weeks in 1999, including paid time off. 

28. The earnings differential is the percentage difference between federal officers’ earnings and state and local government officers’ 

earnings.

Police Officers 1,626 24,533 26,159

Detectives and Criminal

Investigators 1,311 3,421 4,732

Corrections Officers 1,024 16,093 17,117

Police Supervisors 168 4,475 4,643

Corrections Supervisors 155 2,072 2,227

Federal Nonfederal Total
10 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

Table 4.

Estimated Federal Earnings Differentials by Region Without Adjusting for Law 

Enforcement Officers’ Personal and Job Characteristics

(Percent)

Source: Congressional Budget Office using data from the 2000 decennial census.

Note: The earnings differential is the percentage difference between federal officers’ earnings and state and local government officers’ 

earnings. 

showed that federal police officers in the South made 

about 30 percent more than their state and local counterparts. (One explanation of that large differential may be 

that the South encompasses the Washington, D.C., metropolitan area, where a large number of federal police officers are assigned.) In the Midwest, federal police officers 

earned about 5 percent more than their state and local 

counterparts. By contrast, in the other two regions, no 

significant difference was observed.

Among detectives and criminal investigators, federal officers earned significantly more than state and local officers in all four regions, in CBO’s estimation. In the South, 

federal investigators earned in excess of 60 percent more, 

and in the Midwest, almost 50 percent more—both well 

above the national average unadjusted earnings differential for investigators. In the Northeast and West, the differentials were less than the overall average, with federal 

investigators earning 12 percent and 15 percent more, respectively. For the other occupational categories, pay differentials for federal officers in the South and Midwest regions were larger than the nationwide average differential. 

Otherwise, the pay differential for corrections officers was 

less positive for federal personnel in the West than it was 

in other regions and less positive for corrections supervisors in both the West and Northeast. By contrast, the 

earnings differential favored state and local corrections officers in the Northeast (that is, the differential was negative) and state and local police supervisors in the Northeast and West.

Those data suggest that positive federal earnings differentials are more pronounced in the Midwest and South 

than they are in the Northeast and West—with state and 

local officers in some job categories in the Northeast and 

West earning more than their federal counterparts. Those 

differences may be driven in part by the distribution of 

federal jobs and the location of more highly paid senior 

staff across the country.

Comparing Individuals’ Personal and Job 

Characteristics 

In terms of age, gender, and race, federal officers are similar to state and local officers among the various job categories with only a few exceptions, some of which may be 

related to the geographic location of federal agencies (see 

Table 5). More federal than nonfederal police officers are 

Hispanic, and more corrections officers at the federal 

level are black and fewer are female than are corrections 

officers at the state and local levels. Federal police supervisors are twice as likely as their state and local counterparts to be black. Also more likely to be black are federal 

corrections supervisors. State and local police supervisors 

are more likely than their federal counterparts to be married, but the opposite is true for corrections supervisors.

Among all job categories, federal law enforcement officers 

are more likely than nonfederal officers to have served in 

the armed forces. The differences are quite large: for example, 44 percent of federal police officers are veterans, 

compared with 25 percent of state and local police officers. The smallest difference is among corrections supervisors: 35 percent of federal officers are former service

Nationwide 9.3 33.3 9.5 7.2 26.4

Midwest 4.9 48.5 19.4 14.1 40.1

Northeast -1.0 12.2 -4.0 -16.1 6.1

South 29.2 62.6 23.2 34.8 51.1

West -1.8 15.2 6.3 -8.0 5.4

 Supervisors

Police

Criminal Investigators

Corrections Police Corrections

Officers

Detectives and 

Officers Supervisors
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 11

Table 5.

Personal and Job Characteristics and Average Earnings of Law Enforcement 

Officers

Source: Congressional Budget Office using weighted data from the 2000 decennial census.

Note: Nonfederal = state and local government.

a. Based on the number of respondents who reported leaving home for work after 1 p.m. and before 5 a.m.

Age (Mean) 37 36 40 41 36 38 42 43 42 42

Sex—Female (Percent) 13 13 21 20 22 25 10 12 24 24

Black (Percent) 14 12 10 10 28 23 21 10 28 21

Hispanic (Percent) 13 8 10 10 10 8 12 6 17 8

Veteran (Percent) 44 25 33 24 44 28 46 26 35 30

Married (Percent) 68 68 72 74 63 63 75 79 74 69

Education

High school or less 15 16 4 11 33 38 18 14 26 27

Some college but 

no degree 35 41 11 37 37 40 36 36 33 36

Associate's degree 10 16 4 15 9 11 9 16 8 12

Bachelor's degree 34 23 60 31 18 9 28 25 25 19

Graduate degree 6 3 21 5 3 1 8 9 8 7

Earnings (Dollars)

Annual earnings 

from wages 48,360 44,237 65,195 48,923 37,801 34,532 58,965 55,028 51,620 40,841

Earnings other 

than wages 2,275 1,420 2,931 2,625 1,461 1,325 1,461 2,643 1,048 2,001 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Total 50,636 45,656 68,125 51,548 39,263 35,857 60,426 57,671 52,668 42,841

Job-Related Factors

Number of hours

worked per week 47 43 50 44 42 42 46 44 44 43

Percentage who

worked a non32 41 9 13 38 46 27 29 24 36

Detectives and

Personal Characteristics

Average Earnings and Job Characteristics

Criminal

Fed. Nonfed. Nonfed. Fed.

Supervisors Supervisors

Corrections Police Corrections

Officers

Police

standard shifta

Nonfed.

Investigators Officers

Fed. Nonfed. Fed. Fed. Nonfed.
12 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

members compared with 30 percent of state and local officers. One explanation for the size of that discrepancy is 

that preferences are given to some veterans in federal hiring.29 In addition, veterans may prefer federal employment because military service counts toward service years 

in calculating federal civilian retirement benefits.

Among all categories, federal law enforcement officers 

have more formal schooling than their state and local 

counterparts. That difference is most distinct among detectives and criminal investigators: an overwhelming majority (81 percent) of such federal personnel have a fouryear college or advanced degree, but only 36 percent of 

state and local investigators have such credentials. The 

wide disparity suggests that comparisons of detective and 

investigator personnel may be problematic even after 

controlling for officers’ personal and job characteristics. 

(For example, the census data do not specify the field of 

the degree.) As noted earlier, many federal criminal investigators work for agencies such as the FBI and the Drug 

Enforcement Administration and may have formal training in diverse disciplines. In those instances, it is likely 

that the federal government hires from a different labor 

pool than the one from which state and local agencies 

draw their recruits, which may make direct comparisons 

inappropriate.

Estimated annual wage earnings are consistently higher 

for law enforcement officers employed by federal agencies 

among all occupational categories, although the difference is most distinct for investigators, at $16,000 (see 

Table 5). The next largest dollar difference is about 

$11,000 for corrections supervisors; the other differences 

are less than $5,000. Earnings other than wages are a 

small part of law enforcement officers’ total earnings. 

However, the data show that except among corrections 

officers, federal law enforcement officers tend to have 

more nonwage earnings than nonfederal officers have.

Among police officers and investigators, federal officers 

usually work more hours than nonfederal officers do. 

Among other types of law enforcement job categories, 

federal and nonfederal officers work similar hours. However, state and local law enforcement officers are more 

likely than federal officers to work nonstandard shifts.

Comparing Adjusted Differentials

Measurable differences exist between the personal and job 

characteristics of federal and nonfederal law enforcement 

officers, and those differences may help explain some of 

the raw earnings differentials. Thus, although it may not 

be possible to identify all of the factors that lead to differences in pay, it is important to take into account—control for—those differences that can be measured. CBO 

applied statistical techniques to the raw earnings data 

from the 2000 census to account for the determinants of 

pay and allow the effect of whether an individual officer 

was employed by the federal government or a state or local government to be separated from other factors. CBO 

presents results both on a nationwide basis and for selected geographic areas.

When the census data were adjusted for individuals’ 

backgrounds (measured human capital) and other factors that influence wages and salaries, the positive nationwide raw earnings differentials that CBO found were 

significantly reduced for federal police officers, detectives 

and criminal investigators, and police supervisors (see 

Table 6). (For corrections officers, the differential actually increased by a small amount. For corrections supervisors, the reduction resulting from the adjustment was 

very small.) Those findings demonstrate that differences 

in the backgrounds of law enforcement officers explain a 

large amount of the difference in earnings between federal and nonfederal officers. 

Among federal police officers, those earnings differences 

are small; CBO estimates that on a national average basis, 

federal police officers earn about 4 percent more after 

controlling (adjusting) for education and other demographic factors. Among police supervisors, CBO finds no 

evidence that federal pay is any higher or lower than nonfederal pay for comparable officers. For the other three 

categories, CBO finds that after controlling for personal 

and job characteristics, federal officers on a nationwide 

average basis earn significantly more than state and local 

officers. For instance, federal investigators earn almost 20 

percent more than nonfederal investigators, whereas federal corrections officers earn about 11 percent more.

29. The Veterans’ Preference Act of 1944, as amended, is the primary 

source of veterans’ preference authorities within the federal government. The law gives preference to veterans who are disabled or 

who served on active duty during specified periods or in military 

campaigns when they compete with nonveterans in being hired 

for certain federal positions and in being retained during reductions in force. For instance, in competitive hiring for certain 

positions in the executive branch, a preference-eligible veteran 

who meets the minimum qualifications of the position will have 

10 points added to his or her passing score on the civil service 

exam. (For more information, see VetsInfo Guide at www.opm.

gov.veterans.html/vetsinfo.pdf.)
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 13

Table 6.

Estimated Federal Earnings Differentials by Region After Adjusting for Law 

Enforcement Officers’ Personal and Job Characteristics

(Percent)

Source: Congressional Budget Office using data from the 2000 decennial census.

Notes: The earnings differential is the percentage difference between federal officers’ earnings and state and local government officers’ 

earnings.

The adjustment removed the effects of officers’ personal and job characteristics (specifically, education, experience, gender, race, 

marital status, veteran status, working a nonstandard shift, usual hours worked, number of weeks worked in 1999, and geographic

location).

a. The estimate is not statistically different from zero at the 90 percent level of confidence.

CBO found the largest adjusted differential—about 25 

percent—for federal corrections supervisors.

The varying size of the differences among the categories 

may be partly explained by differences in the federal and 

nonfederal jobs within each category. That is, although 

the regression controlled for measurable individual differences, differences in skills and job requirements may remain that cannot be measured in CBO’s analysis. For 

instance, the large earnings differentials found for corrections supervisors may reflect the fact that federal supervisors are responsible for larger facilities than those their 

state and local counterparts oversee. Additionally, the differences between federal and nonfederal investigators suggest that a number of those federal jobs require more specific expertise not related to law enforcement than the 

state and local jobs generally demand—for many federal 

investigators, law enforcement is a second career. (However, controlling for education will in part take that factor 

into account.) In addition, inherent differences between 

federal and nonfederal investigative jobs in their duties 

and responsibilities—which the regression cannot control 

for—may lead to pay differences. Thus, the same officer 

might be paid less by a state and local government than 

by the federal government because of differences in the 

jobs’ demands.

Another important factor that may affect earnings comparisons and that this analysis does not include is differences in employment benefits. If the federal government 

provides less than state and local employers offer in retirement benefits, leave allowances, and health benefits, for 

Nationwide

Adjusted 3.7 18.6 10.9 2.6 a 25.4

Nonadjusted 9.3 33.3 9.5 7.2 26.4

Midwest

Adjusted -1.7 a 20.9 18.4 16.5 20.7

Nonadjusted 4.9 48.5 19.4 14.1 40.1

Northeast

Adjusted -7.1 -0.6 a -1.1 a -10.8 17.7

Nonadjusted -1.0 12.2 -4.0 -16.1 6.1

South

Adjusted 12.8 33.5 18.0 15.8 35.1

Nonadjusted 29.2 62.6 23.2 34.8 51.1

West

Adjusted -1.8 a 9.7 4.4 -13.9 14.1

Nonadjusted -1.8 15.2 6.3 -8.0 5.4

Officers Criminal Investigators

Detectives and 

 Officers

Police Corrections Corrections

 Supervisors Supervisors

Police
14 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

example, that difference might help explain the comparatively higher level of annual wages and salaries that federal law enforcement officers receive. (See the brief discussion of total compensation in Summary Box 1 on 

page viii.)

National average earnings differentials mask substantial 

regional differences (see Table 6). For instance, the finding that federal police officers earn about 4 percent more 

than state and local officers is driven in large part by the 

differential in the South, where federal police officers 

earn 13 percent more than nonfederal officers. By contrast, in the other three regions, state and local police officers earn more than their federal counterparts.

Results for Selected Localities

The significant geographic differences suggested above 

between the wage earnings of federal law enforcement officers and those of state and local officers may be further 

explored by separately considering various metropolitan 

areas in which officers work. CBO separately analyzed the 

adjusted federal earnings differentials for police officers, 

detectives and criminal investigators, and corrections officers for each metropolitan area for which its sample included 20 or more federal officers (see Table 7).30 Those 

metropolitan areas correspond to federal pay localities. 

The effect of CBO’s statistical adjustment varied by 

locality. In most localities, the adjusted differential was 

smaller than the unadjusted differential. In a few others, 

the difference in earnings between federal and nonfederal 

law enforcement officers increased after adjusting for individuals’ backgrounds. 

CBO’s analysis suggested a different picture for police officers than for detectives and criminal investigators. In 

some areas, federal police officers earned less than state 

and local police officers, although in most, no measurable 

difference was apparent. Similarly, CBO found no evidence that federal corrections officers were paid more or 

less than nonfederal corrections officers in four of the six 

localities studied. By contrast, federal detectives in most 

locations apparently earned more than state and local 

detectives.

Police Officers. In some major metropolitan areas, federal 

police officers earn less than their state and local counterparts after an adjustment for human capital factors. According to CBO’s estimates, in Los Angeles, New York, 

and San Diego, federal police officers earned 11.4 percent, 11.3 percent, and 7.5 percent less, respectively. 

CBO also found that police officers in Atlanta, Boston, 

Chicago, and San Francisco earned less than their nonfederal counterparts; however, those estimates were not 

statistically significant. (That is, there was not enough evidence to conclude that federal police officers in those 

areas were paid less than comparable state and local officers.) Federal police officers stationed in areas outside of 

the 31 federal pay localities that coincide with metropolitan areas—that is, officers stationed in mostly rural areas 

that fall into the “rest of U.S.” federal locality-pay area—

earned 11.2 percent more than state and local police officers in those locations, in CBO’s estimation. In the 

other metropolitan areas that CBO analyzed, federal police officers earned more than nonfederal officers, but except for Washington, D.C., the estimated difference between earnings was not statistically significant.

Detectives and Investigators. Federal detectives and criminal investigators in most localities earned more than 

their state and local counterparts, and in some areas, the 

differences were large. Estimated differences that were 

statistically significant ranged from 43.8 percent for Atlanta to 19.1 percent for Boston. In Philadelphia, however, federal investigators earned 13.8 percent less than 

nonfederal investigators, and that differential was also statistically significant.

Corrections Officers. For this job category, CBO found 

that in the New York locality area, federal officers were 

paid less than nonfederal officers (the percentage difference was -10.9 percent). By contrast, in the “rest of U.S.” 

locality-pay area, federal officers were paid about 11 percent more than state and local officers.

Explaining Differences That Remain After CBO’s 

Adjustments

CBO’s analysis to this point has revealed mixed results after controlling for individuals’ personal and job characteristics. However, large federal earnings differentials remain 

for some law enforcement jobs in some locations—and 

especially for detectives and criminal investigators. Those 

results have several possible interpretations. Some observers might point to the inadequacies of the analysis: CBO 

was unable to include the effects of some important de30. The samples for police officers, detectives and criminal investigators, and corrections officers were sufficiently large to permit that 

type of analysis. In addition, because the metropolitan area estimates were independent of one another, the marginal effects of 

the human capital and demographic factors were allowed to differ 

by location.
COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS 15

Table 7.

Estimated Federal Earnings Differentials in Selected Large Localities After 

Adjusting for Officers’ Personal and Job Characteristics

Source: Congressional Budget Office using data from the 2000 census.

Notes: A locality was selected for analysis if CBO’s sample indicated 20 or more federal officers in that metropolitan area. The earnings differential is the percentage difference between federal officers’ earnings and state and local government officers’ earnings. 

The adjusted differentials remove the effects of officers’ personal and job characteristics (specifically, education, experience, gender, 

race, marital status, veteran status, working a nonstandard shift, usual hours worked, number of weeks worked in 1999, and geographic location).

a. The estimate is statistically different from zero at the 90 percent level of confidence.

b. The federal locality-pay area designated by the Office of Personnel Management that comprises those portions of the continental United 

States that are outside the other 31 locality-pay areas.

Locality

Atlanta -0.2 7.3 22 346

Boston -6.9 -10.4 32 502

Chicago -4.4 8.9 24 914

Dallas 8.8 18.8 20 465

Los Angeles -11.4 a -5.1 60 1,256

New York -11.3 a -2.9 96 2,769

Philadelphia 10.0 19.1 20 582

San Diego -7.5 a -5.8 87 305

San Francisco -5.3 2.8 28 583

Washington, D.C. 5.7 a 14.5 234 990

Rest of U.S.b 11.2 a 18.5 877 14,048

Atlanta 43.8 a 58.2 31 96

Boston 19.1 a 16.4 27 56

Chicago 11.7 23.3 56 152

Dallas 42.5 a 57.0 32 99

Detroit 15.1 16.2 24 57

Houston 41.3 a 47.8 25 73

Los Angeles 4.6 7.7 63 261

New York -2.8 7.1 128 620

Philadelphia -13.8 a 14.2 41 136

San Diego 9.9 9.1 31 72

San Francisco 1.6 4.9 36 105

Seattle 26.6 a 46.5 20 72

Washington, D.C. 22.9 a 35.3 168 250

Rest of U.S.b 30.5 a 47.2 507 2,232

Dallas 6.6 25.3 24 102

Los Angeles -7.4 3.9 36 348

New York -10.9 a -11.2 65 1,059

Philadelphia -9.9 -5.7 31 322

Washington, D.C. 8.5 14.9 27 348

Rest of U.S.b 11.3 a 13.7 722 12,638

 Sample Size

Differential (Percent)

Detectives and Criminal Investigators

Corrections Officers

Total

Sample Size

Police Officers

Adjusted Unadjusted

Federal
16 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

terminants of pay. Others might suggest that federal law 

enforcement jobs, especially those of detectives and criminal investigators, are so different from their counterparts 

at the state and local levels as to preclude meaningful 

analysis of earnings comparisons.

One factor that might be contributing to the earnings 

differentials is differences in the value of employment 

benefits that federal and nonfederal law enforcement officers receive. Employers who provide more compensation in the form of such benefits may need to pay less in 

wages and salaries to attract qualified recruits. Thus, a 

positive federal differential could be explained in part by 

a relatively less attractive federal benefit package. Differences between the pay structures of federal and nonfederal employers (for example, the presence or absence of 

unrestricted overtime pay and incentive payments) could 

have an effect on federal differentials, but many of those 

factors should already be taken into account by the use of 

the census’s annual earnings measure.31 (Some benefits, 

such as uniform allowances, are not included in the census measure, but their value is small and unlikely to affect 

the statistical analysis.)

Differences between federal and state and local retirement 

benefits have the potential to exert a large effect. The 

value of the benefits offered by nonfederal employers (for 

instance, some states have sizable public employee retirement benefit packages) could help explain some of the 

geographic diversity in federal pay differentials. The remaining unexplained part of the differentials may be in 

some measure the result of how federal and state and local 

governments value human capital—either because of inherent differences in the type of work that a job requires 

or differences in the type of education or experience necessary to perform it. 

Additional analysis of the census data that CBO performed suggests that the federal government tends to 

value education, advanced degrees, and work experience 

more than state and local governments do. As a result, a 

federal law enforcement officer may earn a higher return 

on the investment he or she made in education than an 

otherwise similar nonfederal law enforcement officer 

may.32 Further, the earnings of federal law enforcement 

officers in general rise faster with experience than those of 

nonfederal officers.33

31. That measure includes wages, salaries, commissions, bonuses, and 

tips from all jobs.

32. See the supplemental data from CBO’s analysis, available at 

CBO’s Web site (www.cbo.gov).

33. Ibid.
Appendix: CBO’s Analytic Method

Raw differences in the pay of law enforcement officers who perform jobs that are relatively similar but who 

are employed at different levels of government (federal 

versus state or local) may in part reflect differences in the 

socioeconomic backgrounds of those officers. To clarify 

the effect of the employing agency on those pay differentials, the Congressional Budget Office (CBO) adjusted 

those differences as suggested by the human capital theory of wage determination. Consider the following regression model:1

where logyi gives the natural logarithm of annual earnings 

from wages of law enforcement officer i in 1999; Xi

 is a 

vector of socioeconomic characteristics (described below); 

Fi

 is an indicator variable set to equal one if the worker is 

a federal employee; and Lij and Sik are indicators set to 

equal one if the officer is in locality j or state k, respectively. The main parameter of interest in CBO’s study was 

, which gives the difference in log earnings between 

federal officers and state and local officers after controlling for the influence of the other variables. A positive 

number represents a pay difference that favors federal officers. To estimate the percentage of that federal differential, CBO exponentiated and subtracted one.

The decennial census contains information about the 

metropolitan areas in which law enforcement officers 

work. CBO used areas that corresponded to the federal 

government’s locality-pay areas to create 31 locality indicator variables. (Areas outside those 31 localities were assigned to the “rest of U.S.” locality area.) There were 

some exceptions: in a number of cases, the census identified an area as being within two different metropolitan 

areas. To control for the presence of those cases, CBO included special indicators. The regression model also included locality and state effects (Lij and Sik), which took 

into account factors that have the same effect on the level 

of earnings of each officer within a locality or state—for 

example, the value of fringe benefits, the effect of local 

competition for law enforcement services, and the local 

cost of living.

The variables in Xi

 that CBO used in its analysis were 

age, gender, ethnicity, marital status, education, years of 

experience, veteran status, a night-shift indicator, usual 

hours worked in a week, and number of weeks worked in 

1999. The explanatory variables were generally found to 

have the expected effect on wage earnings as predicted by 

the empirical literature on wage determination (see 

Table A-1).2 The justification for including each variable 

follows.

Education

Human capital theory suggests that individuals are paid 

according to their value to employers, which is indicated 

by such characteristics as their level of education.3

 An individual will forgo earnings and pay tuition to obtain 

more schooling to the extent that he expects to be compensated with sufficiently higher lifetime earnings. In addition, workers who are more highly educated must be 

sufficiently more productive to justify a higher wage than 

otherwise similar workers receive.

Law enforcement agencies differ in their education requirements. For police officers, some state and local agencies require only a high school diploma, whereas other 

law enforcement jobs demand a college degree. Officers

1. The model was estimated using CBO’s pooled sample of federal 

and nonfederal (state and local) law enforcement officers and the 

ordinary least squares method available in STATA statistical software.

yi log α Xib βFi φkSik δjLij εi +

j

+ 

k

= +++ 

β

β

2. Table A-1 presents selected findings; the full regression results are 

available as supplemental data at CBO’s Web site (www.cbo.gov).

3. That premise implies that education increases the productivity of 

the average worker. People may also obtain education to signal to 

employers that they are highly skilled.
18 COMPARING THE PAY OF FEDERAL AND NONFEDERAL LAW ENFORCEMENT OFFICERS

Table A-1.

Annual Log Wage Earnings Regressions for Selected Law Enforcement 

Job Categories

Source: Congressional Budget Office using data from the 2000 census.

Note: Standard errors appear in parentheses.

a. The following covariates were included in CBO’s analysis but are not shown in the table: usual hours worked, number of weeks worked in 

1999, and working a nonstandard shift. Among the set of educational indicators, “high school or less” is the omitted category.

Covariatesa

Federal Employee 0.037 0.170 0.104

(0.010) (0.014) (0.012)

-0.119 -0.182 -0.108

(0.007) (0.013) (0.006)

-0.026 -0.043 0.020

(0.007) (0.019) (0.007)

-0.005 -0.007 -0.009

(0.008) (0.018) (0.010)

0.116 0.105 0.052

(0.006) (0.019) (0.005)

0.151 0.129 0.067

(0.007) (0.022) (0.008)

0.258 0.235 0.140

(0.007) (0.019) (0.009)

0.347 0.274 0.172

(0.014) (0.025) (0.032)

0.332 0.352 0.243

(0.033) (0.040) (0.053)

0.043 0.049 0.030

(0.001) (0.003) (0.001)

-0.001 -0.001 -0.001

(0) (0) (0)

0.064 0.044 0.036

(0.005) (0.012) (0.005)

-0.020 -0.033 0.004

(0.005) (0.012) (0.006)

8.614 9.225 8.778

(0.087) (0.255) (0.086)

26,159 4,732 17,117

0.4458 0.466 0.458

Corrections Officers

Police and Sheriff's Detectives and Criminal 

Patrol Officers Investigators

Gender

Black

Hispanic

Some College But No Degree

Associate's Degree

Bachelor's Degree

Master's Degree

Professional/Doctoral Degree

Number of Observations

Adjusted R-Squared

Experience

Experience Squared

Married

Veteran

Constant
APPENDIX 19

with more formal education may be relied on to fill leadership roles or be placed in more technical jobs. (For instance, investigative agencies often hire individuals with 

degrees at the master’s level or higher.) Over the long 

run, law enforcement officers who attained more schooling would be expected to earn more than less educated 

officers.

Experience

Workers become more proficient at a specific job the 

longer they perform it (that is, they learn on the job). In 

the course of their careers, law enforcement officers receive both formal and on-the-job training that over time 

improves their skills. To retain well-trained officers, agencies must compensate them more for the experience they 

gain. For example, before police trainees are hired permanently, they are paid a lower rate while they attend a 

training academy. After such training, officers receive a 

pay raise and over their careers can expect increases in 

their earnings as they advance. The coefficient in the regression corresponding to years of experience should be 

positive, other things being equal.

Military Service

Various aspects of military training, such as proficiency 

with firearms, allow military service members to make a 

relatively easy transition to a career in law enforcement. 

Moreover, in the federal sector, military service is counted 

as federal employment, and service members with three 

or more years of continuous military service are given 

preferential treatment in filling federal vacancies. To the 

extent that skills are transferable from the military to civilian law enforcement, the coefficient related to military 

service should be positively related to the wages of law enforcement officers. Yet studies of the pay of military retirees who enter the civilian labor market find that retirees 

initially are paid lower salaries than otherwise similar 

nonveterans.4

Nonstandard-Shift Indicator

It is common in law enforcement for agencies to pay an 

overtime differential for work after 6 p.m. and before 

6 a.m. CBO thus included an indicator of such work in 

its analysis to control for the possibility that those jobs are 

systematically different from daytime law enforcement 

work. 

Usual Hours and Weeks Worked

The census data include usual hours worked in a week 

and the number of weeks for which an officer received 

wages, including paid time off, during 1999. CBO included those indicators as control variables in the earnings regressions to adjust for part-time work, unpaid 

leave, and partial-year employment. 

Demographics

In many empirical labor-market studies, demographic 

factors (such as race, gender, and marital status) have 

been found to be correlated with wage earnings. Thus, in 

trying to isolate the effects of federal employment on 

wages and salaries, CBO controlled for demographic factors along with the variables discussed above. Such factors 

may influence results either on the demand side or the 

supply side. (For instance, demographic factors may be 

correlated with individuals’ tastes and preferences and 

consequently with their choice of career and employer.)

One approach in the labor economics literature is to treat 

any differences in earnings that are attributable to the effects of race or gender—after controlling for other human 

capital factors—as reflecting labor-market discrimination. The validity of that interpretation is open to debate, 

particularly when it is not possible to accurately control 

for all aspects of human capital. CBO’s analysis was not 

intended to measure any labor-market discrimination but 

rather to control for demographic factors and thus isolate 

the effect on individuals of being employed at the federal 

level of government. For comparison purposes, the results 

of the basic regression models that exclude those demographic factors are available as supplemental data at 

CBO’s Web site (www.cbo.gov).

4. For a discussion of that literature, see David S. Loughran, Wage 

Growth in the Civilian Careers of Military Retirees (Santa Monica, 

Calif.: RAND Corporation, 2002), reprinted in Other Measures of 

Financial Well-Being, vol. 5 of Department of Defense, Report of 

the Ninth Quadrennial Review of Military Compensation (March 

2002), pp. 293-350.