How do salary and benefits for science, technology, engineering, and mathematics (STEM) workers in the federal government compare with those for private-sector STEM workers? Using a labor market analytic approach, the authors describe STEM workers in the two sectors, note differences from non-STEM counterparts, compare STEM salary and benefits, and make recommendations to improve data collection and evaluation for STEM hiring and retention.

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Compensation and Benefits for Science, Technology, Engineering, and Mathematics (STEM) Workers

A Comparison of the Federal Government and the Private Sector

by Kathryn A. Edwards, Maria McCollester, Brian Phillips, Hannah Acheson-Field, Isabel Leamon, Noah Johnson, Maria C. Lytell

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Research Questions

  1. What occupational, educational, and demographic differences or similarities exist between STEM workers in the federal government and those in the private sector?
  2. How do STEM workers in both sectors compare to their non-STEM counterparts?
  3. Is there a significant difference in income and other compensation (e.g., benefits) between STEM workers in the federal and private sectors?
  4. What other factors besides compensation might influence STEM workforce hiring and retention trends?
  5. What methods can be used to better understand the dynamics of STEM worker recruitment, retention, and compensation for the future?

In a companion report to the 2019 National Defense Authorization Act, the U.S. Senate Committee on Armed Services directed the Department of Defense, in consultation with the Office of Personnel Management and the Department of Energy, to conduct a comparison of salary and benefits for government professional engineers and scientists with those for workers in similar positions in the private sector. Asked to undertake this analysis, RAND researchers interpreted "engineers and scientists" as the science, technology, engineering, and mathematics (STEM) workforces in the public (federal civilian) and private sectors.

The authors compiled and analyzed workforce data from U.S. government sources and available literature to describe and compare trends in private- and public-sector STEM employment levels, unemployment rates, work hours, salary, and benefits. Where data were available, they also conducted subgroup analyses of these trends based on demographics, education levels, occupational categories, and geographic regions. In this report, the authors examine why STEM workers are of special interest to national defense and the civilian economy. They describe and compare the characteristics, employment trends, and pay levels of the private- and public-sector STEM workforces to their non-STEM counterparts. The report concludes with a discussion of how compensation is but one component of hiring and retaining qualified workers in the federal government and presents a set of policy and research recommendations.

Key Findings

There are notable differences between federal and private-sector STEM workers

  • There are more advanced degree holders among federal STEM workers than private-sector workers, but the federal STEM workforce skews older in age.
  • Overall, there is relatively more gender and racial/ethnic diversity in the federal STEM workforce, although the private sector has a larger share of Asian and foreign-born workers.
  • Women and minorities face pay disparities in both sectors, but somewhat less so in federal employment.

Comparing average income for private-sector and federal STEM workers indicates private-sector STEM workers earn more after controlling for observable differences

  • Private-sector STEM workers earn about $2,600 more in annual pay than federal STEM workers once observable differences are taken into account.
  • However, STEM workers in the federal government work shorter hours on average and are more likely to have access to benefits than STEM workers in the private sector.

Potential impediments to federal STEM hiring and retention merit further exploration

  • If federal job postings are not readily accessible and comprehensible, this may prevent prospective workers from applying.
  • If the hiring process is too lengthy or onerous, workers may turn to the private sector.
  • Federal shutdowns, pay freezes, and frequent leadership changes or lengthy vacancies may negatively affect hiring and retention.

Current data collection processes have limitations

  • Data limitations influenced how RAND's study was conducted, and, in some areas, impeded researchers' ability to draw definitive conclusions.
  • Notably, data sets with the best coverage for each sector differ in how they conceptualize, collect, and report income.

Recommendations

  • Explore the observed higher pay among certain groups in the private sector, especially to identify whether recruitment and retention challenges are acute for certain groups. Additional research could explore drivers of pay disparities and approaches to analyzing STEM workforce demand.
  • Explore motivations and values of STEM workers to help federal employers understand how to be competitive in key age groups. Future studies should supplement data-grounded methods with qualitative approaches, such as interviews, surveys, and focus groups, to understand what motivates workers, how compensation influences their decisions, and how this varies by age or other factors.
  • Investigate the causes and implications of federal STEM workforce gender and racial/ethnic disparities, including differences in pay.
  • Conduct a thorough implementation analysis of current alternative pay plans and why they are not more widely used.
  • Investigate the effectiveness of special hiring programs and authorities in attracting and hiring talented workers into the federal government.
  • Explore the relationship between specialized, occupation-specific labor market practices and the USAJOBS website, and identify whether federal agencies could use alternatives to USAJOBS that might be more effective in hiring STEM talent.
  • Examine causes and consequences of time-to-hire delays.
  • Determine whether hiring for certain positions and retaining certain categories of workers becomes more difficult in periods following shutdowns, pay freezes, hiring freezes, and/or during prolonged political appointee vacancies or high appointee turnover.
  • Consider approaches to systematically collect data on income both before and after federal employment.
  • Examine and tailor employment policies toward specific occupations or labor markets, not STEM in general.

Table of Contents

  • Chapter One

    Introduction to Science, Technology, Engineering, and Mathematics in the Workforce

  • Chapter Two

    The Private-Sector STEM Workforce

  • Chapter Three

    The Federal Public-Sector STEM Workforce

  • Chapter Four

    Comparing Federal and Private-Sector STEM Compensation

  • Chapter Five

    The Department of Defense STEM Workforce

  • Chapter Six

    Discussion

  • Appendix A

    STEM Occupations and Crosswalks

  • Appendix B

    Federal Policy Background

  • Appendix C

    Detailed Pay, Income, and Comparisons for Federal and Private-Sector STEM Workers

Research conducted by

This research was sponsored by the Deputy Assistant Secretary of Defense (Civilian Personnel Policy) and was conducted within the Forces and Resources Policy Center of the RAND National Security Research Division (NSRD).

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