The wage gap between federal and private sector employees is widening according to fresh data put before a meeting of the US Federal Salary Council.
Data produced by the US Bureau of Labor Statistics showed that federal workers earned on average 22.47% less than private sector workers with similar responsibilities last year, and that the disparity had increased to 24.09% since.
This finding has prompted union leaders to call on federal government to award a higher pay rise next year than the 4.6% – the biggest hike seen in 20 years – announced by president Joe Biden in February and confirmed in September.
Tony Reardon, president of the National Treasury Employees Union (NTEU) said: “It’s getting harder [for federal employees] to stretch their paycheck to keep up with the bills, and now we see that employers in the private sector have done a better job than the federal government in helping their workers support themselves and their families.”
Read more: Biden to propose the highest pay rise for US feds in 20 years, at 4.6%
Though declined in negotiations, Gerry Connolly, representative for Virginia’s 11th congressional district, had proposed a 5.1% average pay raise for federal staff – a move backed by the NTEU.
Reardon said that the Bureau’s data “supports our argument that federal employees deserve an average 5.1% federal pay raise starting this January [2023]”, adding that the raise would “immediately improve the standard of living for hundreds of thousands of federal employees and their families” across the US.
Checking the figures
The methodology for calculating the wage gap between the public and private sectors in the US has been the subject of intense debate.
Conservatives have pushed for the inclusion of non-salary benefits, such as retirement and health insurance programmes, into wage gap calculations. They argue that this would allow for comparison of ‘total compensation’ between sectors and claim the results of this model would reveal that federal workers are better off than their private sector counterparts.
In October, the Cato Institute think tank said it had used its own total compensation metric to show that the pay gap between federal workers and their peers in the private sector had narrowed in 2021. It said federal employees held a pay advantage over private sector workers but that high growth in private sector real wages – a 7.7% boost in 2020 and a 5.9% boost in 2021 – had reduced the overall pay gap.
Read more: Congress urged to prevent Trump bid to strip feds of HR protections
Testifying before the salary council, the Senior Executives Association (SEA), which represents career federal executives, said that the federal pay system needed to be overhauled if federal agencies were to be able to recruit and retain high-performing employees.
Jason Briefel, SEA’s director of policy and outreach, criticised the federal government’s general schedule pay system, which has been used for a quarter of a century.
He said the system could not match the pay incentives of the private sector, especially for the highest paid federal positions. Taking aim at federal employee unions’ opposition to ending the general schedule model, he said that union officials should stop “standing in the way of widely accepted reforms”.
“The federal government is not able to compete for professional talent with industry, which receives US$631bn in government contracts each year. A fraction of this money could be invested in the federal workforce itself to create lasting change in the competitiveness of the federal government.
“Both the Trump administration and Biden administration’s President’s Pay Agents have called for statutory reform to federal compensation. This is not a novel or partisan idea,” he said.
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FAQs
Federal employees earn 27.5% less on average than they would doing the same jobs in the private sector – and that situation has been getting worse for years.
How benefits and total compensation in the federal government and the private sector compared? ›
Biggs and Richwine found that total compensation (including benefits) for federal workers exceeded total compensation for private-sector workers by 37 percent, whereas federal wages exceeded private-sector wages by 14 percent. Those results imply a benefit differential of 86 percent.
How much do federal employees make compared to private sector employees? ›
WASHINGTON – Federal employees on average earned 27.54 percent less than private sector workers in similar jobs this year, according to an analysis released today by the Federal Salary Council. The disparity has grown significantly in just one year, from 24.09 percent in 2022.
What is the difference between public-sector and private sector employees? ›
The primary difference between public- and private-sector jobs is that public-sector jobs are generally within a government agency, while private-sector jobs are those where employees work for non-governmental agencies. This includes jobs within individual businesses and other types of company organizations.
Does the private sector pay better than the public sector? ›
Full-time private-sector workers in California received average total compensation of $62,475 in 2015. Both components of compensation, pay and benefits, are higher for government workers.
Does federal government pay more than private sector? ›
Government employees earn 40% more than private sector: 'It just isn't fair' WASHINGTON (TND) — On average government employees make 40% more than workers in the private sector according to the Bureau of Labor Statistics. On top of that benefits for government workers cost some 80% more.
What is the disparity between federal and non federal salaries? ›
It's more than a 3% increase in the pay disparity since the council's previous report of a 24.09% wage gap during 2022. The percentage-based pay gap has remained in the low- and mid-twenties for several years, and has stayed consistently above 20% since March 2007, the Federal Salary Council working group noted in its.
Do government employees get better benefits? ›
Federal Health, Retirement and Other Benefits. The government provides employees with a first-class benefits package. In fact, Bureau of Labor Statistics studies show the benefits gap between the private and public sectors has been growing—in favor of the public sector.
What percentage of salary are benefits worth? ›
Medical benefits, retirement contributions, and tuition reimbursem*nt programs have the potential to make up 20-40% of your annual income.
Who are the best paid federal employees? ›
The highest-paid open role is listed as deputy director of the Marshall Space Flight Center and has a starting salary of $211,584.
Medical officers have the highest average salaries at $269,735 per year, followed by securities compliance examiners ($210,689), dental officers ($202,333), administrative law judges ($192,546), and ship pilots ($183,500).
Is government job better than private job USA? ›
If job security and stability are the top priority, then a government job is the best choice. However, if an individual values career growth and a dynamic work environment, then a private job may be the better option. In the end, it is important to weigh the pros and cons of both options before making a decision.
What is the difference between the private sector and public sector give some examples? ›
Public sector in being financed from individuals, families or business. In other words, a private sector involves transactions from individuals, families or business. Examples of public sector are courts, government agencies, etc. Examples of a private sector are consulting firms, fast-food restaurants, hotels, etc.
What are the differences between public sector management and private sector management? ›
The main conventional distinction between public and private organizations is their ownership (Rainey et al., 1976). Whereas private firms are owned by entre- preneurs or shareholders, public agencies are owned collectively by members of political communities.
What is private vs public sector unionization? ›
Private unions tend to focus on job security and wages while public unions are more focused on improving work conditions. Public and private unions also differ in who they bargain with. Where a private union will bargain with an employer, a public union needs to bargain with state and local legislators.
Is it better to work for government or private? ›
Government jobs offer greater job security and benefits, but may pay less and have a more bureaucratic culture. Private sector jobs may offer higher pay and more opportunities for advancement, but may be less secure and offer fewer benefits.
What is the public sector wage gap in the United States estimated to be? ›
On average, government workers had been earning about 22% less than private sector workers in similar jobs, according to U.S. Bureau of Labor Statistics — but in 2022, the pay gap was up to 24%.
What is the largest pay gap job? ›
"Nonetheless, findings from this study also revealed that high-paying and prestigious roles like barristers, judges, and finance directors shockingly had the largest gender pay gaps in 2023.
