I Two studies, opposite answers, both correct
Start with the numbers, then with why they differ.
| Source | Finding | What it measures |
|---|---|---|
| Federal Salary Council (FY 2024 analysis, BLS data) | GS employees earn 24.72% less, improved from 27.54% | Salary only, comparable occupations |
| CBO (Pub. 59970, 2024 report using 2022 data) | Federal total compensation ~5% higher on average | Salary plus benefits |
The methodological difference is not a dispute about facts. OPM's comparisons rely on Bureau of Labor Statistics Employment Cost Index data covering salary. CBO builds a broader total-compensation comparison that includes the value of federal benefits, which run substantially higher than private-sector benefits — on the order of 43 percent higher by CBO's accounting.
Federal employees are paid less in salary and compensated more in benefits — so any comparison that stops at base pay overstates a private offer, and any comparison that ignores the salary gap dismisses a real and persistent grievance.
That reconciliation is also why the debate never resolves. An employee comparing their next paycheck to a private-sector peer's is correctly observing a gap. An analyst comparing lifetime compensation including a defined-benefit pension is correctly observing a premium. Both are describing the same system.
II The education gradient that decides your answer
The average is nearly useless for an individual, because CBO's findings break sharply by education level and have done so consistently across reports going back a decade.
- Lower educational credentials: federal employees receive higher total compensation than comparable private-sector workers, driven by stronger benefits.
- Advanced degrees: federal employees are paid substantially less than private-sector counterparts.
That single gradient explains a great deal about the federal workforce that otherwise looks puzzling. Agencies in science, law, medicine, and technology struggle to recruit and retain senior specialists, while entry-level administrative positions draw large applicant pools. It is not a mystery of culture or mission — it is the compensation structure doing exactly what its shape predicts.
For you personally, the practical question is which side of that gradient you sit on. A GS-9 administrative specialist and a GS-14 data scientist work for the same employer under the same pay system and face opposite market conditions.
III Why the gap never closes
The Federal Employees Pay Comparability Act of 1990, at 5 U.S.C. 5302 and following, set an explicit statutory target: federal pay should come within 5 percent of comparable private-sector pay. The mechanism is an annual formula splitting raises between across-the-board base increases and locality adjustments.
The law also includes an escape hatch. The President may submit an alternative pay plan to Congress if the full formula is considered unaffordable or inconsistent with the national interest.
Every president since 1994 has used the alternative pay plan override, every single year. The statutory 5 percent target has therefore never governed an actual pay adjustment in the modern era. The measured gap is not a failure of the formula — it is the predictable result of a formula that has never been allowed to run.
The 2026 adjustment illustrates the pattern: a 1.0 percent across-the-board increase to base rates, with every locality percentage held at its 2025 level. The full mechanics of how annual raises are set are covered in Topic 06.
IV Pricing the FERS pension
The pension is the whole argument. It is also the component federal employees are least able to value, because it arrives as an abstraction rather than a balance.
The cleanest translation is to ask what portfolio would be required to produce the same income.
What a FERS annuity is worth as a balance
A GS-13 Step 5 in the Washington-Baltimore locality area earns roughly $138,068 in 2026. After a full career, a High-3 near $155,000 with 30 years of service at the 1.1 percent multiplier produces an annuity of about $46,500 per year.
Generating $46,500 annually from a portfolio at a 4 percent withdrawal rate requires a balance of approximately $1,162,500.
Expressed as annual accrual, the pension is commonly valued in the range of 20 to 30 percent of salary per year of service, depending on grade and salary level. That is a large number and it does not appear anywhere on your LES, which is exactly why base-salary comparisons mislead.
Two honest caveats. The value is back-loaded — it depends on reaching retirement eligibility, and an employee who leaves at eight years captures far less of it than the annual accrual figure implies. And the FERS COLA is limited by the diet formula, so it does not track inflation fully. Both are covered in Benefits Topic 11.
V The FEHB employer share, including in retirement
The government pays a substantial share of your FEHB premium while you work — which many private employers also do. What almost no private employer matches is that it continues into retirement, for life, on the same terms.
Retiree health coverage has largely disappeared from the private sector. A private-sector employee retiring before Medicare eligibility typically faces the individual market at full cost. A federal retiree who satisfies the five-year rule carries FEHB into retirement with the government share intact and full coordination with Medicare at 65.
The five-year rule is the catch, and it is the single most expensive thing to get wrong when evaluating an offer: you must be continuously enrolled for the five years of service immediately before you retire, and retire on an immediate annuity. Leaving federal service and returning later can break that chain. The rule is covered in Topic 30 and Topic 04.
VI TSP match, leave, and the rest
The remaining components are individually smaller and collectively substantial.
| Component | Rough value | Private-sector comparison |
|---|---|---|
| TSP agency contribution | Up to 5% of basic pay (1% automatic + 4% match) | Comparable to a good 401(k) match; TSP expense ratios are far lower |
| Annual leave | 4, 6, or 8 hours per pay period by service length | Generally more generous at longer tenure; cashed out at separation |
| Sick leave | 4 hours per pay period, unlimited accumulation | Rarely matched; converts to FERS service credit at retirement |
| Federal holidays | 11 paid days | Typically more than private-sector standard |
| FEGLI Basic | Government pays one third of the premium | Broadly comparable to employer group life |
| Employment stability | Quit rate ~1/4 of private sector | No private equivalent to enforceable civil service protections |
The sick leave line deserves a note, because it is genuinely unusual. Federal sick leave accumulates without limit and converts to creditable service in the FERS annuity computation at 2,087 hours per year. It is deferred compensation that most employees think of as an absence policy.
VII Total Compensation Comparison Calculator
Enter your federal salary and the private offer. The tool prices each federal component, produces a total compensation figure, and tells you what the private offer would need to pay to match it.
What would the offer need to be?
Values the federal package against a private-sector offer. Pension accrual is the largest and least visible component.
Federal Total Compensation, Component by Component
Estimated annual value of each component of the federal package for a GS-13 Step 5 in the Washington-Baltimore locality area at $138,068 in 2026, using a 25 percent pension accrual assumption and a 5 percent job security premium. Base salary is the only component that appears on an offer letter.
VIII Valuing job security honestly
This is the component most easily overstated by federal employees and most easily dismissed by everyone else, so it deserves a careful treatment.
What is measurable: the annual quit rate for federal employees runs at roughly one quarter of the private-sector rate, and federal civil service protections are legally enforceable through MSPB in a way that at-will employment simply is not. Federal employment is also counter-cyclical — it holds up in downturns when private hiring contracts.
What is not measurable: how much that is worth to you. Some financial analyses assign a premium in the range of 5 to 10 percent of salary. That figure is a convention rather than a finding.
Job security is real and it is not absolute. Reductions in force, reorganizations, and position abolishments happen, and the protections are procedural rather than a guarantee of employment. Value it consciously — pick a number and apply it — but do not treat it as infinite, and weigh it against the volatility of the specific industry you would be entering. The RIF mechanics are in Workplace Topic 19.
IX Where the gap is worst and where it reverses
The 24.72 percent figure is a governmentwide average across every occupation and grade, which means it describes almost nobody accurately.
| Population | Direction |
|---|---|
| Technology professionals, GS-13 to GS-15, major tech markets | Gap frequently well above the 24.72% average |
| Federal attorneys vs. large law firms | Similar large disparities |
| Physicians, scientists with advanced degrees | Substantially below private-sector pay |
| Administrative and clerical, GS-5 to GS-9 | Frequently ahead of comparable private roles, especially with benefits |
| Law enforcement officers | Enhanced retirement (1.7% for first 20 years), availability pay, and overtime provisions materially raise total compensation |
Two structural features work in favor of federal employees at the lower and middle grades. Federal pay is transparent and formula-driven, which compresses the arbitrary variance that private-sector negotiation produces. And locality pay adjusts automatically to geography, which many private employers handle inconsistently or not at all.
Special rate schedules exist precisely to address the occupations where the gap is widest, and many technology, medical, engineering, and acquisition series carry them. Employees frequently do not know their series is eligible — see Topic 05.
X When leaving actually makes sense
The case is strongest when several of these hold together:
- You hold advanced credentials in a high-premium field. This is where the education gradient runs hardest against federal service.
- You are early in your career. The pension you forfeit is small in absolute terms, and you have decades to build a private retirement.
- The offer exceeds your full federal total compensation, not just your salary. Run the number before deciding.
- The private role offers something the federal role structurally cannot — equity, a market you cannot access in government, or a trajectory that does not exist inside the GS scale.
- You have realistically assessed the volatility of the industry and priced it.
One planning note that changes the arithmetic considerably: if you have five or more years of federal service, you are vested in a deferred FERS annuity even if you leave. It is smaller and it starts later, but it does not evaporate. Whether to take a refund of contributions instead is a consequential and largely irreversible decision — see Benefits Topic 16.
XI When it does not
- You are within a few years of retirement eligibility. The pension is back-loaded; leaving at 27 years forfeits an enormous amount of value that arrives in the final stretch.
- You would break the five-year FEHB rule. Retiree health coverage for life has no private-market equivalent at any price.
- The offer looks bigger only on base pay. This is the most common error and the reason this article exists.
- You are near the age 62 with 20 years threshold. Crossing it raises your multiplier from 1.0 to 1.1 percent across your entire career — a permanent 10 percent pension increase. Leaving just short of it is expensive in a way that does not show up in any offer comparison.
- You are in a lower- or middle-grade administrative role, where CBO's data suggests federal total compensation is already competitive or ahead.
What would the private offer need to pay to leave you indifferent? Compute your full federal total compensation, then compare. If the offer clears it, the decision is about the work and the risk. If it does not, the offer is a pay cut wearing a larger number — and the gap is usually larger than people expect once the pension is priced.
XII The playbook
| Situation | What to do |
|---|---|
| Evaluating a private offer | Compute full federal total compensation first. Never compare base salaries. |
| GS-13+ in technology or law | Your personal gap likely exceeds the 24.72% average. Check whether a special rate schedule applies to your series. |
| GS-5 to GS-9 administrative | CBO data suggests you may already be ahead once benefits are counted. Verify before assuming otherwise. |
| Under 5 years of service | You are not vested. Understand what you forfeit before leaving. |
| Within 5 years of retirement | Weigh the back-loaded pension and the FEHB five-year rule heavily. |
| Near age 62 with 20 years | Crossing that line is a permanent 10% pension increase. Do not leave just short of it. |
| Staying but underpaid | Pursue promotion, a desk audit, or a special rate series move — those raise basic pay permanently. |
Before you compare anything
- Compute your full federal total compensation — salary, pension accrual, FEHB employer share, TSP contribution, leave value, and holidays.
- Price your FERS pension as the 401(k) balance that would replicate it. It is usually the largest single number in the comparison.
- Check whether your occupational series carries a special rate schedule you are not being paid under.
- Establish which side of the education gradient you are on — it determines the direction of your personal gap far more than the headline average.
- Verify your years of service against the five-year vesting threshold and the five-year FEHB rule.
- Check your distance from age 62 with 20 years of service before making any move.
- Pick a job-security premium consciously — 0, 5, or 10 percent — and apply it rather than ignoring the question.
- If you leave with five or more years, understand the deferred annuity you retain and do not take a refund without modeling it.
- Ask what the private offer would need to be to leave you indifferent, then compare against that figure rather than against your salary.
Frequently asked questions
Both claims come from credible sources measuring different things. The Federal Salary Council, using Bureau of Labor Statistics data, reported that General Schedule employees earned an estimated 24.72 percent less than private-sector workers in comparable occupations in its FY 2024 analysis, down from 27.54 percent the prior year. The Congressional Budget Office, comparing total compensation including benefits, found federal compensation roughly 5 percent higher on average using 2022 data. The Council measures salary; CBO measures salary plus benefits. Both figures can be accurate simultaneously because they are not measuring the same quantity.
The answer tracks education level, and it is consistent across CBO reports going back a decade. Federal employees with lower educational credentials receive higher total compensation than comparable private-sector workers, driven largely by stronger benefits. Federal employees with advanced degrees are paid substantially less than private-sector counterparts. That gradient explains why federal agencies struggle to recruit and retain senior talent in science, law, medicine, and technology while having no difficulty filling entry-level administrative positions.
The cleanest way to value it is to ask what 401(k) balance would be required to produce the same income. A federal employee retiring with a High-3 of roughly $155,000 after 30 years receives about $46,500 per year at the 1.1 percent multiplier. Generating $46,500 annually from a portfolio at a 4 percent withdrawal rate would require a balance of approximately $1,162,500 — and the FERS annuity is guaranteed for life, partially inflation-adjusted, and continues to a surviving spouse if elected. A private-sector worker without a defined benefit plan must accumulate that entire sum themselves.
The Federal Employees Pay Comparability Act of 1990, at 5 U.S.C. 5302 and following, set a statutory target that federal pay should come within 5 percent of comparable private-sector pay, through an annual formula splitting raises between across-the-board increases and locality adjustments. The law includes an escape hatch permitting the President to submit an alternative pay plan to Congress if the full formula is considered unaffordable. Every president since 1994 has used that override every year, which is the direct reason the measured gap has never closed to the statutory target.
Five components at minimum. The FERS pension accrual, which is the largest and typically the hardest to value. The government share of your FEHB premium, which continues into retirement — something almost no private employer matches. The TSP agency contribution, which is one percent automatic plus up to four percent matching. The dollar value of your annual leave, sick leave, and eleven federal holidays. And a premium for employment stability, given that the federal quit rate runs at roughly a quarter of the private-sector rate. Comparing base salary alone systematically overstates the private offer.
Most clearly when you hold advanced credentials in a field where the private premium is large, when you are early enough in your career that the pension accrual you forfeit is small, and when the offer exceeds your full federal total compensation rather than just your salary. It makes least sense when you are within a few years of retirement eligibility, when you would break the five-year continuous enrollment required to carry FEHB into retirement, or when the offer looks larger only because the comparison stopped at base pay.
Substantially. The 24.72 percent figure is a governmentwide average across all occupations and grades. Federal technology professionals at GS-13 through GS-15 in major technology markets frequently face gaps well above that average, and federal attorneys face similar disparities against large law firms. Meanwhile federal administrative and clerical employees at GS-5 through GS-9 frequently earn more than comparable private-sector positions, particularly once benefits are counted. Your personal gap depends on your occupation, your grade, and your locality far more than on the headline number.
There is no single correct figure, but the underlying difference is real and quantifiable in one respect: the annual quit rate for federal employees runs at roughly one quarter of the private-sector rate, and federal civil service protections are legally enforceable in a way that at-will employment is not. Some financial analyses assign a premium in the range of 5 to 10 percent of salary to that stability. Whatever number you use, apply it consciously rather than ignoring it, and weigh it against your own risk tolerance and the volatility of the specific industry you would be entering.