The belief is that federal worker pay has outstripped civilian sector pay, although that doesn't appear to be the case. Note the Congressional Research Service study from 2010 which examined Civil Service pay and increases, Social Security Average Annual Wage and Salaries, Congressional Salaries, and Consumer Prices (along with retirement pay/benefits for federal workers and Social Security compensation) over the period of 1969 to 2010. See: http://tinyurl.com/l7oqrta
Rather than using raw numbers, they indexed the values to 1969, increasing through 2010. While Consumer Prices (CPI-W) went to 577 over that time frame, Civil Service pay actually lagged somewhat behind at 528 while Social Security Average Annual Wage/Salaries far outstripped both CPI-W and federal Civil Service Wages at 732.3. Congressional pay was far behind the curve (409.2), but since most of them are millionaires, does that really matter? Social Security payments, being indexed to the Average Annual Wage or Salaries trailed only slightly behind that figure at 725.6 while federal civilian retirement (595.9) was above Civil Service wages but below Social Security (Social Security is not part of federal civilian (CSRS) retirement, unless the employee qualifies through other means such as non-federal employment for 40 quarters (10 years).)
NorthernHick's comment is right - using the Social Security Average Annual Wages figure for 1963 of $4,396.64, that would compound to a wage of only $11,833.94 today.
While efforts have been made to link performance to pay raises, the federal employee unions and Congress have combined to keep this from actually happening.