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Federal Employment Is Not So Bad

The author says that there are many perks that come with being a federal employee, including the almost guaranteed yearly grade and step increases for many employees.. He offers a detailed analysis of the positive impact the federal salary system can have on a federal worker’s pay over the course of a career.

I hear it all the time, “Young People Do Not Want to Work for Uncle Sam”, “Young People Can Do Better Elsewhere”, “No Federal Employment for Me”; or some variation of it.

But what young people do not realize is that federal employment has many perks; aside from working for the largest employer in the nation and collaborating with a mixture of personalities, the almost guaranteed yearly grade and step increases are reasonably rewarding.

Let me give you an example. Within USAJobs there are several internship announcements for what seems to be hundreds, if not thousands of positions throughout the country. These positions clearly describe the career field requirements as well as the pay schedule. Many times they start at the GS-07 as beginners, or fresh college graduates with little to no professional experience. These internships typically top out at GS-11, and in some cases GS-12 for engineering career fields.

What does this all mean? Well, if you are one semester from graduating with your Bachelor’s degree in a business or engineering field, you better add Uncle Sam to your upcoming employers list; maybe even bump him up to “numero uno”.

Let me further explain and kill the rumors of federal work not paying what industry offers. Let’s do this correctly and compare apples to apples, unlike some people who will compare apples to grapefruit and tell you federal work either pays six figures for a person with a high school diploma, or industry paying six figures to defense contractors straight out of college.

Jeremey and Amy are one semester away from graduating with a Bachelor’s in Business. Jeremey has been dreaming of hitting that six figure mark straight out of school and looking into Nicholas Defense Contractors (NDC) while Amy has been dreaming about working for Uncle Sam and bettering our nation.

Jeremey sees a job announcement at NDC. They advertise $50,000 annual, medical/dental, graduate school assistance, and a 3% matching 401K. Sounds good doesn’t it? Of course and in today’s economic jungle it is a very respectable proposal for someone with no professional experience and soon to have freshly-printed degree. Jeremey is excited and decides to take the offer. He moves to Oklahoma.

USAJobs has a slew of announcements for soon to graduate young professionals or recent grads and Uncle Sam makes sure to reward good talent appropriately. Amy searches USAJobs and sees hundreds of positions starting at either the GS-05 or GS-07 levels, with some automatically increasing to GS-11 or GS-12. She finds her dream job at the Department of the Interior in Oklahoma. They are looking for a Logistics Specialist and are offering a pay grade of GS-07/11, meaning she will start as a GS-07 with annual grade increases until reaching GS-11.

During her first year Amy will be a GS-07 and earn $39,179. Then upon successful completion of a 12-month training period, Amy will bump up to GS-09 and $47,923. And finally, upon another 12-month training term, she will move up to $57,982. She does the math; those are over 20% annual pay raises—not to mention she will have medical/dental, possible student loan repayment of her Bachelor’s degree (dependent on her career field), possible graduate school assistance and a 5% matching retirement (called Thrift Savings Plan (TSP)).

Let’s compare both positions for a three year period (Reference Table 1 below). It looks like working for NDC will gross Jeremey over $6,800 more than working for Uncle Sam; considering only salary and retirement matching benefits. For the first three years Jeremey will be making more than Amy, a federal employee. This is of course considering a guaranteed 3% annual salary increase which Jeremey will receive at Nicholas Defense Contractors (NDC).

Table 1 – “Jeremey” as Contractor versus “Amy” as Federal Employee. First three years of employment.

  “Jeremey” Nicholas Defense Contractors     “Amy” Federal Employee
Annual [email protected] 3% Raise 401K @ 3% Annual Salary TSP @ 5%
Year 1 $50,000.00 $1,500.00 GS07 $39,179.00 $1,958.95
Year 2 $51,500.00 $1,545.00 GS09 $47,923.00 $2,396.15
Year 3 $53,045.00 $1,591.35 GS11 $57,982.00 $2,899.10
$154,545.00 $4,636.35 $145,084.00 $7,254.20
$159,181.35 $152,338.20

Now, during these three years Jeremey and Amy have bettered themselves and invested in an MBA. Jeremey has been fortunate and NDC’s management decided to reward him with a promotion to Sector Supervisor, thus receiving a 10% salary increase. Table 2 below shows how a 10% increase bumped Jeremey to $58,349.50 from the prior year, but also note that Amy, the federal worker also bettered herself and was promoted to GS-12, thus making $69,497. However this time Amy is ahead by over $6,000 for her combined four years of government service, investment in education, integrity, service before self, and commitment to excellence in the workplace.

Table 2 – “Jeremey” as Contractor versus “Amy” as Federal Employee. Fourth year of employment.

  “Jeremey” Nicholas Defense Contractors     “Amy” Federal Employee
Annual [email protected] 10% Raise 401K @ 3% Annual Salary TSP @ 5%
Year 4 $58,349.50 $1,750.49 GS12 $69,497.00 $3,474.85
$212,894.50 $6,386.84 $214,581.00 $10,729.05
$219,281.34 $225,310.05

Now let’s assume Amy does not apply for any more promotions, therefore she does not receive grade increases. She will, however, receive within-grade increases or step increases and those add up over the years. explains how those are established and what stipulations Amy must meet.

Also, let’s assume NDC continues winning business and provides an annual 3% raise to Jeremey. Table 3 below shows the final gross comparison of both Amy and Jeremey working at their organizations for a complete 30 years.

Look at what has happened to both employees; an almost identical combined income over a 30 year career. This is of course in a perfect world and considers Jeremey’s company offers him a 3% annual raise year after year and isn’t laid off. In Amy’s perfect world, her organization doesn’t experience furloughs (work hour reduction due to Congress’s failure to pass budget) or reduction in force—the government’s version of layoffs.

Table 3 – “Jeremey” as Contractor versus “Amy” as Federal Employee. Years five through thirty of employment, with constant salary increases.

“Jeremey” Nicholas Defense Contractors    “Amy” Federal Employee
Annual Salary@ 3% Raise 401K @ 3% Annual Salary TSP @ 5%
Year 5 $58,349.50 1,750.49 52 weeks of creditable service in step 1 GS12/Step 2 $71,813.00 3,590.65
Year 6 $60,099.99 $1,803.00 52 weeks of creditable service in step 2 GS12/Step 3 $74,130.00 $3,706.50
Year 7 $61,902.98 $1,857.09 52 weeks of creditable service in step 3 GS12/Step 4 $76,446.00 $3,822.30
Year 8 $63,760.07 $1,912.80 ^ – ^ GS12/Step 4 $76,446.00 $3,822.30
Year 9 $65,672.88 $1,970.19 104 weeks of creditable service in step 4 GS12/Step 5 $78,762.00 $3,938.10
Year 10 $67,643.06 $2,029.29 ^ – ^ GS12/Step 5 $78,762.00 $3,938.10
Year 11 $69,672.35 $2,090.17 104 weeks of creditable service in step 5 GS12/Step 6 $81,079.00 $4,053.95
Year 12 $71,762.53 $2,152.88 ^ – ^ GS12/Step 6 $81,079.00 $4,053.95
Year 13 $73,915.40 $2,217.46 104 weeks of creditable service in step 6 GS12/Step 7 $83,395.00 $4,169.75
Year 14 $76,132.86 $2,283.99 ^ – ^ GS12/Step 7 $83,395.00 $4,169.75
Year 15 $78,416.85 $2,352.51 ^ – ^ GS12/Step 7 $83,395.00 $4,169.75
Year 16 $80,769.35 $2,423.08 156 weeks of creditable service in step 7 GS12/Step 8 $85,711.00 $4,285.55
Year 17 $83,192.43 $2,495.77 ^ – ^ GS12/Step 8 $85,711.00 $4,285.55
Year 18 $85,688.21 $2,570.65 ^ – ^ GS12/Step 8 $85,711.00 $4,285.55
Year 19 $88,258.85 $2,647.77 156 weeks of creditable service in step 8 GS12/Step 9 $88,028.00 $4,401.40
Year 20 $90,906.62 $2,727.20 ^ – ^ GS12/Step 9 $88,028.00 $4,401.40
Year 21 $93,633.82 $2,809.01 ^ – ^ GS12/Step 9 $88,028.00 $4,401.40
Year 22 $96,442.83 $2,893.28 156 weeks of creditable service in step 9 GS12/Step 10 $90,344.00 $4,517.20
Year 23 $99,336.12 $2,980.08 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
Year 24 $102,316.20 $3,069.49 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
Year 25 $105,385.69 $3,161.57 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
Year 26 $108,547.26 $3,256.42 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
Year 27 $111,803.68 $3,354.11 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
Year 28 $115,157.79 $3,454.73 ^ – ^ GS12/Step 10 $90,344.00 $  4,517.20
Year 29 $118,612.52 $3,558.38 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
Year 30 $122,170.90 $3,665.13 ^ – ^ GS12/Step 10 $90,344.00 $4,517.20
$2,462,445.24 $73,873.36 $2,417,596.00 $120,879.80
$2,536,318.60 $2,538,475.80

Bottom line is, do not rule federal employment out of your job search. Young people in today’s job market might pass on federal employment due to a lower starting salary or myths of the industry, yet when an apples-to-apples comparison is made, we see it as an equal option.

Vitaly Gnatyuk is a federal employee who specializes in Foreign Military Sales (FMS) and works with foreign partners to optimize their national defenses. He is a proud graduate of the University of Tennessee, earning his Bachelors in Finance and Economics as well as receiving an MBA in Organizational Leadership from the University of Findlay.