Government vs. Private Sector Pay: Are You Getting Screwed?


When people think of “government jobs,” they usually imagine relatively low pay in exchange for good benefits and light hours.  But that’s not always the case, especially lately.

In fact, government workers in a variety of jobs make significantly more cash than their private sector counterparts, on top of generous benefits, job security and guaranteed pensions.  Want to know whether you’re getting a raw deal compared to government workers?  Read on to find out.

Legislating equal private and federal pay

Before getting into whether private sector workers are total schmucks, let’s go over a very important law that should be making federal government and private sector pay roughly equal: The Federal Employees’ Pay Comparability Act of 1990.  This Act has a two part scheme for making sure Federal pay stays competitive with private sector pay.

First, it gives a yearly increase across the board to all white-collar federal workers (on the GS pay scale).  This increase is supposed to be  one-half percentage point less than private sector wage increases, as measured by the ECISecond, it calculates yearly locality increases for various cities and metro areas.  The original objective of this second step was to bring federal salaries to within 5% of private sector salaries over a nine-year period (1994 through 2002). Once pay parity is achieved, locality pay adjustments are no longer to be made unless the gap subsequently widens to more than 5% (see more on page 4 here).

So is government pay roughly comparable to private pay? You be the judge: