Federal Government Pay Explodes For 6-Figure Jobs

It used to be that the public sector couldn't compete with the private sector in terms of paying their employees.  However, that's not the case anymore according to a recent USA Today article "For Feds, More Get 6-Figure Salary."

Now, the best advise for job seekers appears to be to go to work for the Federal government. Federal workers are reaping the employment boom in both terms of pay and the sheer number of added jobs.  More jobs have been added between December, '07 through June,'09 (source: Office of Personnel Management) at a rate of 10,000 jobs per month than anytime since the creation of Medicare and Medicaid in the 1960's.

Their experience directly contrasts the private sector's employment picture during the same time frame, in which 7.3 million jobs have been lost.

Yet, not only has the number of jobs risen dramatically in Federal government, their pay has exponentially increased as well.  According to the Office of Personnel Management, employees earning $100,000 or more equaled 382,758 people in June, or a 46% increase from December of '07. Those who make more than $150,000 per year numbered 66,538 in June, or a 119% increase.  And for the highest tier reported in the article who make more than $170,000 per year, they numbered 22,157 representing a 93% increase since December of 2007 through June of this year. 

This apparent turnaround in Federal jobs and compensation is simply stunning! 

When I graduated from college several decades ago, none of my classmates went to work for the public sector, unless it was to do a gig in the Peace Corps or to work as a teacher for the State.  And later, when I worked as a HR Director for several companies in the State capitol, it was our biggest competitor for our employees because of their rich benefits package and promise of job security.  But Federal jobs weren't even on the radar screen for most people I knew.

According to the USA Today article, "when the recession started, the Transportation Department had only one person earning a salary of $170,000 or more.  Eighteen months later, 1,690 employees had salaries above $170,000." 

This trend is repeating itself throughout the Federal government, in large agencies and small agencies, with technical and non-technical jobs.  Jessica Klement, government affairs director for the Federal Managers Association, says the federal workforce is highly paid because they employ highly skilled employees such as lawyers, scientists, and physicians. 

USA Today analyzed the Office of Personnel Management's database that tracks salaries of more than 2 million federal workers, excluding the White House, the Postal Service, intelligence agencies and uniformed military personnel.  Their study showed that the average federal worker's annual pay is $71,206 as compared to the private sector's average at $40,331. 

Granted, I don't know whether that's a legitimate comparison using salary only or total compensation, or their methodology. Even so, it appears to demonstrate the huge ramp up in pay that the Federal workers have realized over the past few years.

The key reasons cited for the dramatic increase in Federal pay rates include:

1. Pay hikes.  Federal employees received across-the-board raises of 3% in January of 2008 and 3.9% in January of 2009.
2. New pay system.  Merit increases using a new National Security Pay Scale for the Defense Department began in January of 2008 in addition to the pay hikes mentioned in #1.
3. Pay caps were eased.  Many top civil servants cannot earn more than an agency's leader, but if Congress raises the leader's salary, others get raises too.  Example: When the Federal Aviation Administration Chief's salary rose, nearly 1,700 employees had their salaries lifted above the $170,000 limit too.

I wonder what the Pay Czar, Kenneth Feinberg has to say about the pay rates of Federal employees?

Becky Regan is the founder and President of Regan HR, Inc., a human resources consulting firm specializing in compensation consulting for California employers and purveyor of online HR products. A former Corporate Human Resources Director (10,000+ employees) with more than 25 years of HR work experience in many industries, her team works with private, public and non-profit clients.  Becky is passionate about designing HR programs and compensation plans that build organizations.

Flickr photo courtesy of autodetailer.

Comments

[working girl]

Maybe that's how the government plans to end the recession, create jobs and give everyone health care: hire everyone in government at really high salaries. It does have a certain elegant simplicity.

[Paul Weatherhead]

Becky,

Thank you for the recap of the USA Today article. But for the benefit of our readers I must point out two major fallacies of the USA Today article.

First, USA Today's methodology in your 4th paragraph showing that "pay has exponentially increased" is highly misleading. The paragraph shows a change in headcount for people making over $100,000-$150,000-$170,000 during a 2-year period. The resulting dramatic percentages of 46%-119%-93%, respectively, reflect an increase in employment at those levels, NOT an increase in incremental pay!

USA Today did not bother to investigate why those headcounts increased over the past two years. Note that the time period under review is the end of one president's term and the beginning of a new president's term. Perhaps that is the real story worth investigating by USA Today.

The second major fallacy is in the 9th paragraph of your blog. USA Today observes that the average federal pay is $71,206 compared to the average private sector pay of $40,331.

Becky, you were quite right to caution that you "don't know whether that's a legitimate comparison using salary only or total compensation, or their methodology."

The USA Today did not do a job matching or job evaluation comparison to see if they were comparing apples to oranges when making their average pay comparison. In fact, the federal government's own studies of pay comparability show them 20% to 30% BEHIND comparable private sector jobs. And that's for the General Schedule employees. The gap to the private sector is even farther behind for the federal Executive Schedule which has rates ranging from $143,500 to $196,700 for top agency heads.

Since this USA Today "expose" now appears to be an annual article, maybe I'll ask WorldatWork's new DC office to share with them how true compensation professionals do pay comparisons.

Again, thanks Becky for sharing USA Today's annual article.

Paul

[E. James (Jim) Brennan]

Federal pay is measured by the BLS OES survey which is actually a headcount of people in 801 broad occupational groups rather than "jobs," asking how many fall into 12 broad pay brackets. The top pay bracket surveyed is L for $187,200 and above.

When people move from bracket I ($94K to $118K) to J ($118K to $149K), it's simply a demographic shift in population distributions and not a pay increase. If a lot of federal workers were at $117,950 and got few hundred dollars increase to bump them into the next higher category, it wouldn't mean much.

The article is one of characteristic hysterical journalism, run for effect without regard for accurate meaning.

[Frank Giancola]

I have no problem with reports of "well paid" federal employees, and their salaries really don't seem that bad to me. No reason why these employees should be second class citizens when it comes to compensation.

[Becky Regan]

Thanks to all of you for your additional clarification & input. I do have a "jaded eye" when reading, and tend to take bias into account one way or another. None of you commented on the tremendous upswing in hiring by the Feds, so I'm assuming you have no issue with those facts as reported. Hopefully the upswing in these jobs can help many of our unemployed people.

In reference to Frank's comment specifically, I don't have an issue with federal employees being paid on a competitive basis with the private sector. But their benefits and retirement package are richer than those found in the private sector, and in my opinion, financially unsustainable in the long run.

In most systems, there are unintentional loopholes in plan design that allow exploitation. Whether we're working in the public or private sector we need to ensure the integrity of our compensation plans to insure our investor or taxpayers dollars are being spent judiciously.