How Much Would You Make in Private Industry?
by Ralph Smith |
It is human nature to want to make more money. It is also apparently part of our human psyche to think others are making too much—or to think they make more than they really do.
Those of us who work with and for the federal workforce frequently see evidence of this human condition.
Comments on various articles regarding pay for federal employees often refer to the federal workforce being underpaid. The federal salary council agrees. Here is a statement from the organization: “The overall average pay gap in 2005, including the current average locality rate of 14.99 percent, is 13.37 percent.”
On the other hand, those outside of government see the situation differently. A study by the Cato institute referred to the federal workforce as an “elite island of secure and high-paid workers” and calculated that the federal employees are significantly over-paid—perhaps by as much as 50 percent. As noted by the report: "The average federal worker earned $100,178 in wages and benefits in 2004, which compared to $51,876 for the average private-sector worker, according to U.S. Bureau of Economic Analysis data."
Excerpts from the report were reprinted in newspapers around the country and, no doubt, contributed to a general public perception that federal employees are paid too much and have a benefits package that is disproportionate in genorosity compared with most taxpayers.
The reality is that whether a person is paid too much or too little depends on several factors. Geographic location certainly plays a role and the locality pay system for the federal general schedule employees recognizes this. The size of a company is also significant as employees in smaller companies tend to make less money and have fewer benefits. The nature of the job is also important. Other factors that are difficult to quantify include the benefits package and the responsibility and expectations required of an employee that performs successfully.
Readers sometime relay their own experience in their comments in response to articles on our site. To take an extreme example, one federal attorney noted that the pay in the private sector was much better in large law firms but returned to the federal sector despite the higher pay. Federal employees working in legal positions are not routinely expected to work 60-80 hours each week, they usually have weekends off and get to observe federal holidays. In at least some law firms, the legal professionals make considerably more money but work much longer hours and have much less job security and, in some instances, much less job satisfaction.
Having said that, is there a way a reader can check—perhaps just to satisfy his curiosity—what a similar position would pay in the private sector?
With the power of the internet, there is now a way to do this. It is hardly a perfect system but it may give you an idea of what your salary would be in your geographic location in a similar postion (assuming there are private sector jobs with your speciality in your area).
For example, what does a personnel director make in the private sector in the Washington, DC metropolitan area and what does a comparable job pay in the private sector?
Here is a portion of a private sector job description for this position.
“Directs personnel and carries out policies relating to all phases of human resources activity. This position normally reports to Head of Human Resources; however, in smaller organizations all levels of management may not be present and this position may report to the Chief Executive Officer. Typically supervises Personnel Manager.”
According to salaryexpert.com, a personnel director working in Washington, DC earns an average annual salary of $92,189. Half of those in this position would earn between $60,697 and $188,029.
In a different geographic location but one with a number of federal employees, a personnel director working in Huntsville, Alabama earns an average annual salary of $72,724. Half of those in this position would earn between $47,881 and $148,327.
In the federal sector? No doubt the pay will vary according to the skills and experience an individual brings to the job, the size of the agency and the structure of the organization (just as in the private sector). A GS-15, step 5 in Washington, DC makes $121,856.
A federal employee at the same step and grade in Huntsville, Alabama makes $117,552.
To come up with your own estimate and to make your own comparisons, go to the pay rate calculator to enter the grade, step and geographic location for the appropriate federal pay rate.
What would your job pay if you were working in the private sector? Instead of looking at the widely varying estimates of private vs. federal sector pay, check out salaryexpert.com. You may give you a more accurate indication of what your job is worth. This site and others such as mysalary.com also offer a more comprehensive salary analysis for a fee. The extra fee may be worth the money if you are seriously considering a job in the private sector.
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by Ralph Smith |