You knew it all along: Compared to contractors, feds are a bargain
Most of you won't be surprised at this, but in general it costs the federal government a whole lot more to hire contractors than to pay federal employees to do the same jobs.
Most of you won’t be surprised at this, but in general it costs the federal government a whole lot more to hire contractors to do the same jobs done by federal employees.
Naysayers will be quick to point out that comparisons of federal employees and private-sector employees in comparable jobs do not take into account total compensation—which has become the monster point of contention in this ongoing public pay/private pay debate.
That’s why a good-government group, the Project on Government Oversight, decided to compare total compensation. But it compares three numbers rather than two: full federal annual compensation, full private-sector annual compensation, and … contractor annual billing rates.
Guess what they found?
In some cases, federal workers made more in total annual compensation than their private-sector counterparts.
In other cases, private-sector workers made more in total annual compensation than their federal counterparts.
But in 33 out of the 35 occupational classifications reviewed by POGO, the amount paid out under contractor annual billing rates exceeded the total annual compensation of both feds and private-sector workers. And far more often than not, that amount was a whole lot more .
In fact, POGO found that, on average, contractors may be billing the government about 1.83 times what the government pays feds to perform similar work.
And when it comes to those private-sector workers, the billing rates charged by contractors on average were more than twice the amount private-sector employers pay out for the same services.
In one instance—claims assistance and examining—contractor billing rates were nearly five times more than the full compensation paid to federal employees performing comparable services. In that case, total annual compensation for a fed was $57,292, compared to $75,637 for a private-sector worker, compared to a whopping $276,598 that a contractor would charge to fill that slot.
Moreover, private-sector compensation (to which feds’ salaries are often compared when anti-fed types howl) was lower than contractor billing rates in all 35 occupational classifications POGO reviewed.
If this has whetted your appetite for more information—and ammunition for the next time you hear someone griping about your salary—you can find the report right here.