Because the one thing that most people (especially fake people like corporations) have a greater amount of hate for than their love of money is taxes.
Government employees are paid mostly through taxes.
This is why they traditionally are paid lower than the private sector. The public sector traditionally appealed to employees for a variety of reasons, among them:
1) Stability. Your job isn't as prone to market upsets as the private sector.
2) Benefits. Because "the government" is a pretty big employer, they can get great returns on the economies of scale. Pensions and health care benefits are usually the result of this.
The "costs" to the employee are various, including:
1) Lower wages than the private sector. If you do a super job, you might get a pat on the back, but bonuses and/or raises are usually not going to happen.
2) Greater job stagnation. If you want more than the standard cost of living pay increases (which for some places hasn't happened in 5 years), you usually have to change jobs. If you want training, you're usually on your own.