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Compensating: Do New Funds for Federal Employees Mean Raises for GovCon?

A recent study highlighted the fact that military service members are better compensated than 70% of their private-sector counterparts.  While base pay in the military might be less than the private sector, when you consider military perks like housing and food allowances, federal tax advantages, lucrative pensions and comprehensive healthcare, the military is the hands-down winner.

Also, with $6.4 billion in outlays for “specialty pay” in high-demand work areas and performance bonuses, a high-performing military employee in a high-demand area (for example, a dentist) could make almost twice as much as their private-sector friends.

Now, it looks like the civilian acquisition workforce is getting a boost as well.  GSA Administrator Martha Johnson requested a $24.9 million outlay in fiscal ’11 for the Federal Acquisition Workforce Initiatives Fund, a pilot program to improve federal contracting by boosting civilian acquisition workforce incentive pay.

Normally, the private sector has higher base pay and better performance incentives, while the public sector has better job security and retirement benefits.  This new program looks like the latest in a series of initiatives led by the Obama Administration to increase wages and benefits in the private sector.  The government plans “to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers,” from the New York Times. “Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class.”

Since the government is planning on increasing incentives and benefits for its own workers and using its purchasing power to drive up wages in the private sector, expect pay and benefits to increase at government contractors.

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