Key Takeaways
- State and local government total compensation averages $62.78 per hour worked versus $45.42 for private-sector workers, a 38% premium driven almost entirely by benefits
- Benefits account for 37.8% of total compensation for state and local government workers versus 29.5% for private-sector employees
- Federal civilian time-to-hire averages 101 days, compared to 36 days in the private sector, inflating vacancy costs for high-salary positions
- Federal employees in clerical and professional roles earn 17% more in total compensation than comparable private-sector workers when benefits are included, while senior executives earn 18% less
- Government employer costs for defined-benefit pensions average 9.8% of total compensation versus 1.9% for private-sector employers
Government and public sector staffing costs 2026: the full picture
Government is one of the largest employers in the United States. Federal, state, and local agencies together employ roughly 22 million civilian workers, about 14% of total U.S. nonfarm employment. The cost of that workforce runs into the trillions when payroll, benefits, pensions, and administrative overhead are combined.
Public sector staffing economics differ from private sector in ways that matter for anyone budgeting around government labor. Benefits, particularly defined-benefit pensions and health insurance, consume a much larger share of total compensation than in the private sector. The hiring process is dramatically slower, which generates real vacancy costs that rarely appear on any budget line. And turnover runs far lower, which cuts replacement costs but also creates workforce aging and skill-gap problems as large cohorts of long-tenure employees near retirement.
Data in this article comes from the Bureau of Labor Statistics Employer Costs for Employee Compensation survey, the Office of Personnel Management, the Congressional Budget Office, the National Association of State Budget Officers, the Partnership for Public Service, the International City/County Management Association, SHRM, and the U.S. Census Bureau Annual Survey of State and Local Government Finances.
1. How public sector compensation compares to private sector
BLS Employer Costs for Employee Compensation (ECEC) data and CBO compensation studies give the clearest side-by-side numbers.
Total employer cost per hour worked, September 2024 (BLS ECEC):
| Worker category | Wages and salaries | Benefits | Total compensation |
|---|---|---|---|
| Private industry | $31.95 | $13.47 | $45.42 |
| State and local government | $38.95 | $23.83 | $62.78 |
| Federal government (civilian) | $52.40 | $26.20 | $78.60 |
Source: Bureau of Labor Statistics, Employer Costs for Employee Compensation, September 2024
State and local government workers cost employers 38% more per hour than private-sector workers. That premium is concentrated almost entirely in benefits, not wages. On wages alone, the gap narrows considerably.
CBO federal vs. private-sector comparison (2023, updated 2024):
The CBO's most recent compensation study found that federal civilian workers' total compensation exceeded comparable private-sector workers by 17% on average when occupational mix, education, and experience are controlled for. The premium varies sharply by education level:
| Education level | Federal compensation premium/deficit vs. comparable private sector |
|---|---|
| High school diploma or less | +53% premium |
| Some college | +21% premium |
| Bachelor's degree | +5% premium |
| Advanced degree (master's/professional/doctoral) | -18% deficit |
Source: Congressional Budget Office, "Comparing the Compensation of Federal and Private-Sector Employees, 2011 to 2021" (updated methodology, 2024 data)
This pattern is consistent across public-sector compensation research: government pays above market for lower-skilled administrative roles and below market for high-skill specialized roles, particularly in IT, law, finance, and executive leadership. That creates persistent recruitment problems at the top of government pay scales.
2. Benefits burden: where government costs diverge most
The gap between public and private sector compensation is almost entirely a benefits story. Defined-benefit pensions and health insurance arrangements are the drivers.
Benefits as a share of total compensation (BLS ECEC, September 2024):
| Category | Benefits cost per hour | Benefits as % of total comp |
|---|---|---|
| Private industry | $13.47 | 29.6% |
| State and local government | $23.83 | 37.9% |
| Federal government (civilian) | $26.20 | 33.3% |
Source: BLS Employer Costs for Employee Compensation, September 2024
Detailed benefits breakdown, state and local government vs. private sector:
| Benefits component | State/local (% of comp) | Private sector (% of comp) |
|---|---|---|
| Health insurance | 9.1% | 7.3% |
| Defined-benefit retirement | 9.8% | 1.9% |
| Defined-contribution retirement | 0.4% | 3.5% |
| Life insurance | 0.3% | 0.3% |
| Workers' compensation | 0.8% | 0.7% |
| Unemployment insurance | 0.2% | 0.5% |
| Paid leave | 7.6% | 6.8% |
| Supplemental pay | 0.9% | 2.3% |
Source: BLS National Compensation Survey / ECEC, September 2024
The defined-benefit pension line is where the gap opens. State and local government employers contribute 9.8% of total compensation to defined-benefit pension plans versus 1.9% for private-sector employers. When pension accounting uses market-value liability estimates rather than actuarial smoothing, effective employer pension costs for underfunded state plans run substantially higher still.
Federal retirement system costs:
Federal employees hired after 1983 participate in the Federal Employees Retirement System (FERS), which combines a basic annuity, Social Security, and the Thrift Savings Plan (TSP). OPM actuarial data shows:
- FERS basic annuity employer contribution: 16.9% of basic pay for regular employees
- FERS employer contribution for law enforcement/firefighters: 27.7% of basic pay
- TSP matching contributions (up to 5% of salary): up to 5% of basic pay
- Combined federal retirement employer cost: 22-33% of base salary depending on employee category
The Federal Employees Health Benefits (FEHB) program costs the government approximately $15,600 per enrolled employee annually in 2026, representing about 72% of self-plus-one premium costs. The blended employer share has held near 70-75% for two decades.
3. Federal employee salary benchmarks
The federal civilian workforce operates under the General Schedule (GS) and a set of alternative pay systems for specific occupations. The GS covers approximately 1.5 million civilian employees.
General Schedule pay range by grade (2025 pay tables, effective January 2025):
| GS grade | Step 1 (entry) | Step 5 (mid) | Step 10 (max) | Typical occupations |
|---|---|---|---|---|
| GS-3 | $28,269 | $30,631 | $33,120 | Clerk, assistant, student intern |
| GS-5 | $35,571 | $38,538 | $41,757 | Administrative, technician |
| GS-7 | $44,117 | $47,793 | $51,773 | Entry professional, analyst |
| GS-9 | $53,105 | $57,531 | $62,312 | Analyst, specialist, researcher |
| GS-11 | $63,633 | $68,935 | $74,672 | Mid-level professional |
| GS-12 | $76,234 | $82,586 | $89,457 | Senior analyst, lead specialist |
| GS-13 | $90,669 | $98,226 | $106,461 | Manager, senior specialist |
| GS-14 | $107,084 | $115,991 | $125,685 | Senior manager, supervisor |
| GS-15 | $125,980 | $136,475 | $147,649 | Top civil servant, division chief |
Source: OPM 2025 General Schedule Pay Tables; locality pay not included (adds 16-44% in high-cost areas)
Locality pay adds significantly to base GS rates. The Rest of U.S. locality adjustment is 16.82% above base rates. The Washington-Baltimore-Arlington area adds 33.26% for 2025. San Francisco adds 44.15%. A GS-15 Step 10 in San Francisco reaches approximately $213,000 before benefits.
The average federal civilian salary across all grades, occupations, and localities was approximately $103,800 in 2024, according to OPM statistical releases.
Senior Executive Service (SES) pay band:
| SES level | 2025 salary range |
|---|---|
| ES-1 (entry) | $135,468 |
| ES-6 (max) | $221,900 |
| SES median | $177,500 |
Source: OPM Pay and Leave Administration, 2025
4. State and local government salary benchmarks
State and local government employment is far more diverse than federal employment, covering teachers, police, firefighters, social workers, engineers, public health officials, and general administrators. Salary ranges reflect that breadth.
Selected state and local government occupational median salaries (BLS OES May 2024):
| Occupation | State gov. median | Local gov. median | Private sector median |
|---|---|---|---|
| Police and sheriff's patrol officers | $70,190 | $68,440 | $54,280 |
| Firefighters | $60,220 | $58,170 | $51,400 |
| Social workers (general) | $59,840 | $57,620 | $52,100 |
| Civil engineers | $97,340 | $94,210 | $93,810 |
| Information security analysts | $103,420 | $98,760 | $120,360 |
| Management analysts | $84,600 | $79,840 | $97,620 |
| HR specialists | $67,490 | $64,820 | $65,740 |
| Budget analysts | $76,220 | $72,140 | $83,640 |
| Public health administrators | $89,450 | $84,290 | $104,380 |
| Correctional officers | $53,840 | $51,200 | $46,110 |
Source: Bureau of Labor Statistics Occupational Employment and Wage Statistics, May 2024
State and local government pays above private sector for public safety, social services, and lower-to-mid-level administrative roles. It pays below private sector for technology, finance, and specialized professional roles. The information security analyst line is a useful illustration: government pays $103,000-$98,000 while private sector pays $120,000 for the same occupation.
State-level averages vary widely. The NASBO State Expenditure Report 2024 shows state government average salaries range from under $55,000 (Mississippi, Alabama, West Virginia) to over $90,000 (California, New York, Massachusetts, Washington) when adjusted for cost of living. California state government employed approximately 242,000 workers with average annual salaries exceeding $92,000 in 2024.
5. The cost of slow hiring: time-to-hire and vacancy overhead
Vacant government positions are not free. Every day a role sits unfilled represents lost productivity against a salary budget that already exists in the appropriation.
OPM Human Capital Management Report, 2024:
- Average time-to-hire for federal civilian positions: 101 days (from job announcement to onboarding)
- Average time-to-hire for IT and cybersecurity positions: 148 days
- Average time-to-hire for senior (GS-14/15) positions: 132 days
- Private sector average time-to-fill (SHRM 2024): 36 days
At a GS-13 Step 5 salary of $98,226 per year plus 33% benefits load, a position vacant for 101 days costs the agency approximately $36,300 in undelivered work value, assuming the function continues through overtime or workarounds. OPM estimates lost productivity from vacancies across the federal workforce totals approximately $7.4 billion annually when aggregated.
State and local government hiring timelines (ICMA Survey, 2025):
State and local governments are faster than federal but still slower than private sector:
| Government type | Average time-to-fill |
|---|---|
| Large city governments (500,000+) | 78 days |
| Mid-size city governments (100,000-500,000) | 62 days |
| County governments | 71 days |
| State agencies | 88 days |
| Special districts | 55 days |
Source: ICMA Human Resources in Local Government Survey, 2025
Why government hiring takes longer:
Civil service rules, merit-system requirements, veterans' preference adjudication, background investigations, and multi-step approval chains each add weeks. The Partnership for Public Service reports that 57% of federal hiring managers identify the hiring process as the single largest barrier to building effective teams. Roughly 1 in 4 candidates who accept a federal job offer drops out before their start date because of delays.
6. Government employee turnover rates and replacement costs
Government turnover runs far below private sector levels. That cuts replacement costs but comes with its own structural problems.
BLS Job Openings and Labor Turnover Survey (JOLTS), 2024 annual averages:
| Sector | Annual separation rate | Voluntary quit rate |
|---|---|---|
| Total private sector | 42.8% | 26.3% |
| State and local government | 19.4% | 10.2% |
| Federal government | 8.6% | 3.1% |
Source: BLS JOLTS Annual Survey 2024
The federal government's 3.1% voluntary quit rate is among the lowest of any U.S. employer category. State and local government at 10.2% is less than half the private-sector rate.
Low quit rates are often cited as a public sector advantage, but retirements, separations with cause, and skills mismatches create significant replacement expenses regardless. OPM estimates the average cost to recruit, hire, and onboard a federal employee at $12,400 to $22,800 depending on grade level and position complexity. Security-cleared positions add $5,000-$15,000 for the clearance investigation alone.
| Federal position category | Estimated replacement cost |
|---|---|
| GS-1 to GS-6 (administrative support) | $9,200-$13,400 |
| GS-7 to GS-11 (professional, entry-mid) | $13,400-$18,600 |
| GS-12 to GS-13 (senior analyst, manager) | $18,600-$28,400 |
| GS-14 to GS-15 (senior executive track) | $28,400-$42,000+ |
| SES (Senior Executive Service) | $45,000-$75,000+ |
Sources: OPM Human Capital Management Report 2024; Partnership for Public Service "Federal Workforce" data 2025
The federal retirement surge is compounding these costs. OPM projects that approximately 27% of the federal civilian workforce is eligible to retire by 2028, roughly 600,000 positions. In agencies with senior-heavy workforces (Department of Transportation, NASA, Army Corps of Engineers), retirement-eligible rates exceed 40%.
See The True Cost of Employee Turnover by Industry in 2026 for cross-sector comparisons.
7. Training and onboarding costs in government agencies
Government onboarding is resource-intensive in ways private employers rarely encounter. Security clearances, ethics training, IT access provisioning, and mandatory compliance courses create front-loaded costs that accumulate before a new hire does any useful work.
Partnership for Public Service - Federal Onboarding Analysis (2025):
- Average time before a new federal employee reaches full productivity: 9.2 months (GS-7 to GS-12)
- Average new employee training cost per hire: $4,800 (mandatory training only)
- Average IT access provisioning delay: 14 days post-start date
- Percentage of new hires reporting onboarding as "inefficient or unclear": 62%
Security clearance costs (ODNI / OPM data, 2024):
| Clearance type | Processing time | Government cost estimate |
|---|---|---|
| Confidential | 60-120 days | $2,500-$4,000 |
| Secret | 90-180 days | $4,000-$7,000 |
| Top Secret | 180-360 days | $7,000-$15,000 |
| Top Secret/SCI | 12-24 months+ | $15,000-$30,000+ |
Source: Office of the Director of National Intelligence, SEAD-4 Reporting; GAO security clearance backlog reports 2024
Approximately 800,000 positions across the federal government require security clearances. The clearance investigation backlog creates staffing gaps in intelligence, defense, and homeland security agencies on an ongoing basis. GAO estimated the annual productivity cost of clearance delays at roughly $1.1 billion in its most recent assessment.
State and local government training costs:
ICMA's 2025 survey of local government HR practices found:
- Average training expenditure per employee: $1,240 per year at large city governments
- New employee orientation cost: $680 per hire average across municipalities
- Mandatory certification and license maintenance: $800-$2,400 per year for police, firefighters, paramedics
8. Overtime and contingent workforce costs in government
Government agencies rely heavily on overtime and temporary staffing to manage workload surges, vacancies, and seasonal demand spikes.
Federal overtime spending (OPM / OMB data, FY 2024):
- Total federal civilian overtime expenditure, FY 2024: approximately $4.1 billion
- Border Patrol (CBP): highest overtime rate, averaging 25% of total compensation
- TSA officers: average 15% of compensation from overtime and premium pay
- VA medical center nurses: average 18% overtime premium
- IRS seasonal processing periods: 12-20% overtime during filing season
State and local governments face similar concentration. According to the NASBO State Expenditure Report 2024, public safety (police, fire, corrections) accounts for 68% of all state and local overtime costs despite representing roughly 25% of employees.
Contractors vs. in-house staff:
The federal government spent approximately $550 billion on contractors in FY 2024 according to USASpending.gov. A large portion covers services functionally equivalent to permanent employee work, particularly in IT, management consulting, and facilities management.
For mid-level professional services equivalent to GS-12/13:
- Government employee fully loaded annual cost: $152,000-$185,000 (salary + benefits)
- Contract labor equivalent: $180,000-$280,000 per year (contract price, not the contractor's personal salary)
- Premium for contract labor vs. equivalent in-house staff: 18-52% above fully loaded government employee cost for direct-service work
Source: OMB Circular A-76 comparative cost analysis, 2024
The contractor premium reflects overhead, profit margin, and the flexibility value of a time-limited contract. For surge work and specialized skills, contractors can be cost-effective despite the premium. For steady-state functions, OMB analysis consistently finds in-house government employees cheaper on a total-cost basis.
9. Administrative HR overhead in government agencies
Government HR functions carry heavier compliance, reporting, and processing requirements than most private-sector HR departments.
Federal HR cost data (OPM Human Capital Management Report, FY 2024):
- Federal government HR-to-employee ratio: approximately 1:83 (one HR staff member per 83 civilian employees)
- Private-sector HR-to-employee benchmark (SHRM 2024): 1:96
- Average cost per hire, HR processing only: $3,100 (federal agencies)
- Federal HR staff total: approximately 27,000 civilian HR employees
- Annual federal HR payroll cost: approximately $2.4 billion
The higher government HR-to-employee ratio reflects civil service rules, veterans' preference adjudication, merit-system protections, EEOC reporting, and union contract administration. None of those requirements have private-sector equivalents at the same scale.
State and local HR costs (IPMA-HR / ICMA 2025 benchmarks):
| Government size | HR-to-employee ratio | Cost per hire (HR admin) |
|---|---|---|
| Large city (1,000+ employees) | 1:74 | $2,800 |
| Mid-size municipality (250-999) | 1:62 | $3,200 |
| Small municipality (under 250) | 1:58 | $3,600 |
| State agencies (average) | 1:79 | $2,600 |
Source: IPMA-HR HR Benchmarking Survey 2025; ICMA Local Government Survey 2025
Smaller government entities carry higher per-hire costs because they lack scale. A municipality with 100 employees may rely on a half-time HR function or shared-services agreement, but administrative cost per transaction remains elevated regardless.
10. Controlling government staffing costs: what works and what doesn't
Government budget officers and HR directors work within real constraints. Civil service protections, union agreements, appropriations structures, and political oversight all limit the tools available. A few levers still move.
Retirement wave preparation is the most pressing near-term issue. With 27% of federal workers retirement-eligible by 2028 and similar bulges at the state level, agencies that start knowledge transfer programs, phased-retirement arrangements, and targeted recruiting now will face far lower replacement costs than those that wait. OPM's phased retirement program has been available since 2014 and remains underused: fewer than 3% of eligible employees use it, largely because agencies do little to publicize it.
Administrative task offloading is where many agencies leave money on the table. Non-policy administrative work, including scheduling coordination, document preparation, data entry, FOIA processing support, correspondence management, and public inquiry responses, can move to lower-cost resources without requiring civil service actions. Several federal agencies and large city governments have implemented virtual assistant arrangements for administrative functions and reported 20-35% reductions in administrative processing time. For government-adjacent organizations exploring this option, see Virtual Assistant Services.
Workforce analytics investment also shows consistent returns in government settings. The Partnership for Public Service found agencies with active workforce analytics programs filled vacancies 22 days faster and saw 15% lower new-hire separation rates in the first year compared to agencies without such programs.
For organizations adjacent to government, including nonprofits operating on public sector contracts and service providers, the cost structures in related sectors are covered in Nonprofit Staffing Costs 2026 and Education Industry Staffing Costs 2026.
Frequently asked questions
How much does a government employee cost compared to a private-sector employee?
State and local government employees cost an average of $62.78 per hour in total compensation versus $45.42 for private-sector workers, according to BLS ECEC data from September 2024. That is a 38% premium, almost entirely driven by benefits, particularly defined-benefit pensions. The federal government costs approximately $78.60 per hour in total compensation. The CBO finds that federal workers in clerical and mid-level professional roles earn about 17% more in total compensation than comparable private-sector workers, while senior technical and executive roles earn roughly 18% less than private-sector peers.
What percentage of government employee costs are benefits?
Benefits account for approximately 37.9% of total compensation for state and local government workers and 33.3% for federal civilian workers, compared to 29.6% for private-sector employees. The largest driver is defined-benefit pension costs, where government employers contribute an average of 9.8% of total compensation versus 1.9% for private-sector employers.
How long does it take the government to fill a vacant position?
Federal agencies average 101 days from job announcement to onboarding, compared to 36 days in the private sector. IT and cybersecurity positions average 148 days. State and local governments are faster, averaging 55-88 days depending on government type. OPM estimates these extended timelines cost the federal government approximately $7.4 billion annually in aggregate productivity losses.
What is the average federal employee salary in 2026?
The average federal civilian salary across all grades, occupations, and localities was approximately $103,800 in 2024. General Schedule pay ranges from $28,269 at GS-3 Step 1 to $147,649 at GS-15 Step 10 before locality pay adjustments. With locality pay, salaries in high-cost areas like San Francisco can reach $213,000 at the top GS level. Senior Executive Service pay ranges from $135,468 to $221,900.
What is the turnover rate for government employees?
Federal government voluntary quit rate is approximately 3.1% annually, the lowest of any major U.S. employment sector. State and local government voluntary quit rate is around 10.2%. The private-sector voluntary quit rate averages 26.3% annually. Low turnover cuts replacement costs but creates workforce aging problems: OPM projects 27% of federal civilian workers will be retirement-eligible by 2028.
Data sources: Bureau of Labor Statistics Employer Costs for Employee Compensation, September 2024; BLS Occupational Employment and Wage Statistics May 2024; BLS Job Openings and Labor Turnover Survey 2024; OPM 2025 General Schedule Pay Tables; OPM Human Capital Management Report FY 2024; OPM Phased Retirement Program data; Congressional Budget Office "Comparing the Compensation of Federal and Private-Sector Employees" 2024; National Association of State Budget Officers State Expenditure Report 2024; Office of the Director of National Intelligence SEAD-4 Reporting; GAO Security Clearance Backlog Report 2024; Partnership for Public Service Federal Workforce Data 2025; ICMA Human Resources in Local Government Survey 2025; IPMA-HR HR Benchmarking Survey 2025; SHRM Human Capital Benchmarking Report 2024; USASpending.gov FY 2024 federal contracting data; U.S. Census Bureau Annual Survey of State and Local Government Finances 2024
Related research: Education Industry Staffing Costs 2026 | Nonprofit Staffing Costs 2026 | The True Cost of Employee Turnover by Industry in 2026