When we think of government jobs, we often think of safe but low-paying jobs that will put food on the table, but never put you in a top tax bracket. So you may be surprised to find out that government jobs, when you include benefits, pay on average twice as much as jobs in the private sector. Throw in job security, and government service starts to look very good indeed.
“According to the United States Bureau of Economic Analysis, federal employees earn an average annual compensation of $106,871, including pay and benefits, compared to just $53,288 in the private sector,” says Dennis Damp, author of “The Book of U.S. Government Jobs,” citing statistics gathered in late 2005 and early 2006.
Damp adds that the average federal salary alone, not counting benefits, is more than $67,000.
The benefits, of course, are what many employees say make government employment so attractive. These perks include job security, good health insurance, a retirement plan and steady raises.
“The benefits at the federal level are much, much better than in the private sector,” says Nick Farr, a federal employee in Washington, D.C. “Every private-sector job I’ve had, even when moving up career and salary-wise, had a less generous benefits package.”
Plus, Damp says, “Each year, regardless of the economic situation, they receive substantial raises averaging approximately 3.5 percent.”
Of course, pay and benefits aren’t the only components to consider in selecting a career. Individuals who have worked for the government and the private sector say salary and benefits influenced their job choices, but weren’t the only factors weighed. Flexibility, responsibilities and creativity also played into their decisions.
Many government workers complain of the bureaucracy and regulation, finding it stifling.
“The prolific rules and regulations that govern every aspect of your work life can be frustrating … and that environment can suppress creativity,” Damp says.
Still, money is generally the first thing job-hunters consider when contemplating a change.
Just as in the private sector, pay and benefits are going to vary by position. Most government jobs are arranged in pay grades and steps, or levels, within each pay grade.
For example, the federal government uses a “general schedule,” or GS, pay grade for most of its white-collar workers. A little more than two-thirds of the federal civilian work force is classified under this system.
Senior executives have their own pay schedules, as do blue-collar workers, the foreign service and a number of federal agencies, such as the Securities and Exchange Commission.
There are 15 GS classifications. Each step within each grade has an automatic raise built into it, a structure many state and local employers have also adopted.
Added into the federal pay scale are cost-of-living adjustments. Extra cash is paid to employees who live in more expensive places. The basic range for a GS-5 (a classification held by 5.3 percent of the federal work force) without locality pay is $29,725 to $38,641.
A GS-5 in Sacramento, Calif., would have a pay range of $31,584 to $41,057. By comparison, the same GS-5 would make from $32,345 to $42,048 in Chicago, from $31,184 to $40,539 in Dallas-Fort Worth and from $31,750 to $41,275 in Washington, D.C.
In many cases, the government wages compare favorably to private-sector pay. But certainly not in all fields or locations.
According to the Bureau of Labor Statistics, the mean annual wage for an accountant in the private sector is $49,690. That is, half the accountants made more, half made less.
- Federal: $58,360.
- State: $46,320.
- Local: $37,050.
Mean wages for accountants vary from state to state. Connecticut’s mean salary is $66,110, while Hawaii’s pay for the same position checks in at $65,400. Alaska, New Jersey and Illinois, with salaries ranging from about $60,000 to $65,000, round out the top five, which all pay accountants more on the average than the federal government.
Of course, in many states accountants are paid less. Vermont, the least lucrative state for accountants, has a mean salary of $41,180. North Dakota, Idaho, Arkansas and South Dakota are next, ranging from $43,120 to $47,980.
But there’s another factor to consider when comparing jobs: benefits.
These things add up
Joe Koenig, 27, has worked in the information technology industry for a decade. He started in the private sector as a programmer. Then he went to work with the Missouri Department of Health and Senior Services, a government agency Koenig says has around 2,000 employees.
He started as a program efficiency coordinator, but within six months was named the agency’s chief information officer in charge of a staff of 130, as well as a $16 million budget.
Koenig, now an executive with a technology firm called Creative Anvil, says that he made around $75,000 a year. “An entry-level programmer with a college degree would earn about $35,000 a year,” he says. But the real draw wasn’t the pay — it was the benefits.
Employees paid a portion of their health and dental insurance. “However, the cost was very minimal,” Koenig says.
Liberal sick leave and vacation benefits folded into a package that included retirement (Missouri uses an “80 and out” system, which means any combination of the employee’s age plus years of service adding up to 80 makes the employee eligible for retirement).
“The pension is based on years of service and a few other factors. However, it can end up being as high as 88 percent of your pay while you were working,” Koenig says.
Scott Barer, a 50-year-old attorney, once worked for the Los Angeles Unified School District, and is now a private practitioner specializing in labor and employment law. Barer says he pulled in a salary that was “not so far from the private sector,” with defined benefits that included sick and vacation leave.
Now that Barer is on his own, taking a day off reduces his income-earning potential, but he says it’s worth it. He relishes the freedom afforded by private practice.
“What’s the price of being happy?” he says.
Number crunching by the hour
A 2002 benefits study conducted by the U.S. Chamber of Commerce said at that time, employers paid an average of about $18,000 per person in benefits — and that was the private sector, where benefits are generally not as generous as the government’s.
In December 2007, the Bureau of Labor Statistics put the average cost to a private-sector employer of an employee at $28.11 per hour. Wages accounted for $19.62, or 69.8 percent of the cost, meaning that $8.49 went to benefits.
In comparison, state and local governments incurred total compensation costs of $37.73. Of that amount, $25.04 went to actual wages (68.9 percent — less than a percentage point below the private sector), while $12.69 was spent on benefits, nearly 50 percent more.
Retirement contributions comprised one major difference between the two. While private-sector employers paid $1.24 per hour in retirement benefits (defined and contribution plans), state and local governments paid $2.86. That’s 4.4 percent for private employers versus 7.6 percent for state and local government.
Additionally, state and local government retirement plans are more heavily weighted toward defined retirement benefits (pension plans) than the private sector. Although the majority of civilian retirement plan dollars are spent on defined benefits, contribution plans such as
Payson Cooper, a managing member of Payson and Co. LLC, an upscale jewelry design company, once wrote grants for a consulting company that contracted with New York City.
Cooper, who turned down the city’s offer of a permanent job, says she chose not to make the employment switch because it would have meant a pay cut, but she recognized there were long-term benefits to the job.
“At age 55, I would have had guaranteed health insurance,” Cooper says.
“The long-term benefits were pretty good and more complex than the private sector,” she says.
Does she regret not taking that job? No, says Cooper.
She says she saw a lot of unhappiness in the city’s bureaucracy. “I followed my heart instead,” she says.
One man’s poison is another’s passion
Daniel Kohns is a 39-year-old former Capitol Hill staffer who has spent the majority of his working years punching one government time clock after another. Today he works Congress from the other side of the aisle, doing lobbying and strategic communications work.
Kohns’ experience includes various stints with the United Nations and as a domestic aid to New York Attorney General Andrew Cuomo (prior to Cuomo’s appointment to the attorney general’s office). Kohns says he loves what he does now, but says his former jobs, which paid much less than what he is earning in the private sector, were labors of love.
“On Capitol Hill, regardless of what side of the aisle we were on, we really believed and felt we were taking part in shaping history,” Kohns says.
Kohns categorizes the pay as “quite horrible considering what one would make in the private sector.” But, he admits, the benefits were good — from health insurance to retirement.
Nick Farr, 29, is a GS-10 level accountant. He prepares financial reports, reviews financial statements, disbursements and collections, and assists with preparing loans and budgets.
The base grade wages for a GS-10 range from $43,824 to $56,973. However, Washington, D.C., has a 20.89 percent geographic adjustment, which bumps the GS-10’s salary range to between $52,979 and $68,875 for agencies without separate wage schedules.
Farr says he’s making more in his federal capacity than he was in the private sector, but he points out that it’s very expensive to live in the nation’s capital and that federal cost-of-living increases are modest, but fairly consistent.
Farr says he is more satisfied with his federal job.
“I believe I am part of a team that actually makes a difference. I can’t say that about any private sector job I’ve had.”
Careers expert Shelley Canter, author of “Make the Right Career Move,” says the big difference between the public and private sectors comes down to money and style of operation. While the public sector may offer bankable peace of mind, “the private sector offers more freedom and balance. You have to look at the trade-off,” Canter says.
Public jobs tend to be more security-oriented, while private jobs are more rewards-oriented, according to Canter.
If you’re contemplating government employment, don’t expect to land a job overnight. “The employment process is very bureaucratic and very long,” she says.
As to whether or not government service is right for you, Damp says people who can’t follow rules and work within finite parameters don’t belong in government jobs. “The ones that learn to make the rules and regulations work for them are the ones who will succeed.”