Private vs Government Pay Myth

[ArmorPierce]

I'm sure that plenty of us have heard and have it drilled into our heads that private industry pay is better than one would get through the government. This is balanced by the fact that Government work has very good benefits. As I have long suspected, it is largely a myth.

http://www.usatoday.com/news/nation/201 ... -pay_N.htm

Federal pay ahead of private industry
Updated 3/8/2010 3:03 PM | Comments 1,894 | Recommend 123 E-mail | Save | Print | Reprints & Permissions | Subscribe to stories like this
Federal pay has become a hot political issue in recent months because of concerns over the federal budget deficit and recession-battered wages in the private sector.
Enlarge image Enlarge By Melissa Golden, Getty Images
Federal pay has become a hot political issue in recent months because of concerns over the federal budget deficit and recession-battered wages in the private sector.

PAYCHECK

The typical federal worker is paid 20% more than a private-sector worker in the same occupation. Median annual salary:
Federal Private Difference
$66,591 $55,500 $11,091

By Dennis Cauchon, USA TODAY
Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.

Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.

Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.

CHART: Federal salaries compared to private-sector

These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.

Federal pay has become a hot political issue in recent months because of concerns over the federal budget deficit and recession-battered wages in the private sector.

Sen. Scott Brown, R-Mass., made federal pay an issue in his successful campaign to fill Edward Kennedy's seat and is fighting for a pay freeze.

The federal government spent about $224 billion in 2008 on compensation for about 2 million civilian employees.

"The data flip the conventional wisdom on its head," says Cato Institute budget analyst Chris Edwards, a critic of federal pay policy. "Federal workers make substantially more than private workers, not less, in addition to having a large advantage in benefits."

But National Treasury Employees Union President Colleen Kelley says the comparison is faulty because it "compares apples and oranges." Federal accountants, for example, perform work that has more complexity and requires more skill than accounting work in the private sector, she says.

"When you look at the actual duties, you see that very few federal jobs align with those in the private sector," she says. She says federal employees are paid an average of 26% less than non-federal workers doing comparable work.

Office of Personnel Management spokeswoman Sedelta Verble, says higher pay also reflects the longevity and older age of federal workers.

USA TODAY used Bureau of Labor Statistics data to compare salaries in every federal job that had a private-sector equivalent. For example, the federal government's 57,000 registered nurses — working for the Veterans Administration and elsewhere — were paid an average of $74,460 a year, $10,680 more than the average for private-sector nurses.

The BLS reports that 216 occupations covering 1.1 million federal workers exist in both the federal government and the private sector. An additional 124 federal occupations covering 750,000 employees — air-traffic controllers, tax collectors and others — did not have direct equivalents, according to the BLS.

Federal jobs have more limited salary ranges than private-sector jobs, some of which have million-dollar payouts.

Key findings:

• Federal. The federal pay premium cut across all job categories — white-collar, blue-collar, management, professional, technical and low-skill. In all, 180 jobs paid better average salaries in the federal government; 36 paid better in the private sector.

•Private. The private sector paid more on average in a select group of high-skill occupations, including lawyers, veterinarians and airline pilots. The government's 5,200 computer research scientists made an average of $95,190, about $10,000 less than the average in the corporate world.

•State and local. State government employees had an average salary of $47,231 in 2008, about 5% less than comparable jobs in the private sector. City and county workers earned an average of $43,589, about 2% more than private workers in similar jobs. State and local workers have higher total compensation than private workers when the value of benefits is included.

[bobalot]

The Federal government in Australia pays well compared to their State counterparts. The Federal police get paid a good premium despite being a total joke compared to their State Police counterparts.

[Lonestar]

It's a bit more complicated than that. There are many, many more IT contractors in government emply than there are federal IT workers, for example, and we(IT contractors) almost certainly make more money across the board than federal IT goons.

[Temujin]

In my personal experience this has been very true. When I was in DC getting my graduate degree, everyone talked about how contractors always make more. But I'm not even getting paid close to what I should be based on my level of education and experience according to the GS schedule. And yet my douchebag employers, who all did very well making their careers doing gov't work (and yet are ultra libertarians), keep harping about how well they're paying me. Of course, as I inadvertently found out, they pay themselves rather well.

[ArmorPierce]

I've been thinking about this topic since Bernard Kerik, former chief of pollice and Interim Minister of Interior of Iraq. When he was convicted for I believe tax evasion. The judge commented that he sympathised because he 'It's tough working for lower government pay when all you're friends and associates are getting higher pay from the private sector.' He was making well over 100k. Not bad for someone who was a high school drop out (though went on to get his GED).

[Temujin]

There are certainly some contractors that make a killing pay wise, but it certainly depends not only on the field in question, but the specific organization, and of course as I mentioned, who you are in the organization. My place is an old boys club that takes care of their own while making money off of the backs of the people doing the lions share of the actual work. One of their selling points is that its a growing organization, and hence plenty of room for advancement. Of course, the only advancement is for the old boys (and girls). I'm not sure how well organizations like KBR actually pay their people in relation to gov't employees, but they certainly are making plenty of money of off the gov't.

[Scottish Ninja]

I thought that the comparison was always between much more highly-placed government officials, such as those taking 100k/yr salaries as Cabinet secretaries, and their previous jobs as lobbyists being paid millions - usually in the same breath as the "revolving door" between the government and the private sector.

[Phantasee]

From what I understand (and this is mostly through a cousin who worked for the Provincial Government), you start out at a higher pay-rate in the entry level positions, so a government accountant makes more than a private sector accountant. However, at some point in their career, the private sector accountant makes more than the public sector one, and by retirement makes a bunch more than the guy who's worked for the government his whole life. It was his original plan to start out with the government, and switch to private sector work when the time came and he had built up enough experience. Of course, the boom before the bust netted him a very nice job doing not-accounting, which he discovered he didn't enjoy, and he makes quite a bit more money than he planned on at this point in his career.

This may just be Canada (or even Alberta), though.

[ArmorPierce]

I thought that the comparison was always between much more highly-placed government officials, such as those taking 100k/yr salaries as Cabinet secretaries, and their previous jobs as lobbyists being paid millions - usually in the same breath as the "revolving door" between the government and the private sector.

That may be true, but I have seen people using it to refer to much lower, average joe positions.

[Master of Ossus]

That may be true, but I have seen people using it to refer to much lower, average joe positions.

For my part, I always thought it was that low-level government staffers were highly over-paid, but that people with professional degrees (especially lawyers, engineers, and doctors) were hugely underpaid compared to the private sector.

[Veramocor]

In addition to not standardizing for longevity, experience/education, and actual work product another factor the study neglected was location of work.

The federal government is relatively concentrated in a higher cost of living area of DC (15% http://www.bls.gov/oco/cg/cgs041.htm) perhaps skewing averages higher as compared to a more geographically diverse private sector averages.

On the other categories take for instance the chemist one:
Federal Private difference
Chemist $98,060 $72,120 $25,940

What are the amount of PhD's/Masters/BS differences between the two? Does the federal government have workers who have more experience/older and thus higher paid?

[aerius]

From what I understand (and this is mostly through a cousin who worked for the Provincial Government), you start out at a higher pay-rate in the entry level positions, so a government accountant makes more than a private sector accountant. However, at some point in their career, the private sector accountant makes more than the public sector one, and by retirement makes a bunch more than the guy who's worked for the government his whole life.

There's the potential to make a lot more in the private sector if you're real good at your job or lucky & well-connected. In government jobs there's a pay ceiling of $100k or so unless you get into the executive track whereas in the private sector there's not as much of limit to how much you can make. It's not that uncommon for private industry workers to pull in 1/4 million salaries while still working in the field or doing hands-on work as opposed to executive management stuff, I knew quite a few people doing that when I was working in the electronics industry. But you do have to be damn good or damn well-connected and work silly hours to pull in that kind of pay. I'm not gonna work 80 hour weeks at RIM for my 1/4 mil, fuck that, I'd much rather do banker's hours for 1/4 of that pay.

[General Zod]

In addition to not standardizing for longevity, experience/education, and actual work product another factor the study neglected was location of work.

The federal government is relatively concentrated in a higher cost of living area of DC (15% http://www.bls.gov/oco/cg/cgs041.htm) perhaps skewing averages higher as compared to a more geographically diverse private sector averages.

On the other categories take for instance the chemist one:
Federal Private difference
Chemist $98,060 $72,120 $25,940

What are the amount of PhD's/Masters/BS differences between the two? Does the federal government have workers who have more experience/older and thus higher paid?

It depends. Most jobs don't explicitly take degrees into account of your pay, while a lot of legal jobs (lawyers especially) will. There's a lot of different breakouts comp people can use to figure out someone's salary, but from what I've seen degree breakouts are the most common for legal jobs with big law firms. I think the only other place I've seen them broken out for non legal fields was for teaching or research positions in universities. Usually they're just lumped in with the qualifications for a given level of a job and don't explicitly determine your pay though.

[CmdrWilkens]

Accounting, which is where my Dad spent 20+ years in the Federal Government working, pays significantly less at the experienced and senior levels but slightly better for entry-level. What happened routinely within his division (and the SEC as a whole) is that young accountants fresh off their CPA exam would come onboard, work for five or so years learning all about how the filing, comment, and enforcement systems work then go work for a private company citing their years of familiarity with SEC filing procedures as a leg up which would get them better paying fast-track positions.

The thing is with many, though not most, private sectors there is some degree of interaction with the federal government and a new employee who has spent years on the "other" side of the process brings a lot of value over someone who hasn't, thus they make more. So at the equivalent skill and duty levels federal workers make less than private sector counterparts...but across the whole job field they make more as their comparable duty levels tend to start at mid-grade rather than entry (and there are a lot of entry level positions to drop the private sector median).