Comparing a 2014 Federal Pay Raise to Private Sector Raises

By on January 11, 2014 in Current Events, Pay & Benefits with 218 Comments

Federal employees recently saw the end of a multi-year pay freeze with an across-the-board one percent pay raise for general schedule employees.

For those who follow the subject, it is to be expected that the announcement of a pay increase will be accompanied by comments from federal employees that there is a discrepancy in the pay between those that work for the federal government and those working in the private sector.

Different groups have come up with wildly different conclusions, usually depending on their own agendas. The Federal Salary Council, which is largely composed of federal employee unions, has concluded that federal employees are seriously underpaid by about 35%. Other organizations, such as the Heritage Foundation, have concluded that federal employees are often paid considerably more than those in the private sector and often get better benefits as well. (See The Politics of Federal Pay Rates and Federal Pay Raises Hard to Justify)

We will let readers debate the topic in the comments section about the fairness of federal salary levels. But, in a more objective way, it is possible to compare the pay raise for 2014 with the pay raises for private sector employees.

While we know that the average federal employee makes considerably more than the average private sector employee (about 57% more according to Heritage but without regard for the jobs  being performed), what about the average pay raise for 2014? How does the federal sector stack up with the private sector workforce?

Private Sector Raises for 2014

According to a recent article in Kiplinger’s, most private sector employees will get a raise in 2014. Private sector employers are planning wage increases that will average about 2.9% in 2014. That is up slightly from the 2.8% raises that were received in 2012 and 2013.

But there is a difference between federal and private sector in this regard. Raises are better for the best performing employees. Those employees are being the best performers will receive increases of 4.6% in 2013. Those who are rated below average will get about 1.3%.

There is also a difference in raises depending on the industry. In professions that are in high demand, companies are boosting starting salaries. Starting pay will increase by about 3.7% for new employees in a profession that is in high demand. These fields include technology, accounting and finance, marketing and those in the legal profession.

And, reports Kiplinger’s, senior accountants, financial analysts and lawyers with 4-9 years of experience will probably see salaries that are at least 4% higher than the previous year with pay up to $77,000 for senior accountants, $70,000 for financial analysts and $187,500 for lawyers. For those who may be curious, you can search individual employee salaries and also search by occupation in FedSmith’s employee salary database.

In general, pay raises in the private sector often depend on performance ratings. The 1% across-the-board federal pay raise does not depend on an employee’s performance rating as everyone will get the same percentage increase. However, the average salary increase for federal employees does not take into account the amount of an increase some employees will receive through promotions and within-grade increases (WIG). While a within-grade increase depends largely on seniority, promotions are, hopefully, given to those employees who are the best performers.

So, while there is an ongoing and raucous debate about the fairness of federal employee salaries, the average pay raise for many private sector employees will be higher than for many in the federal government.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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