Research Questions

  1. To what extent is compensation — both monetary and nonmonetary — of DoD civilian workers competitive with that of their private-sector counterparts?
  2. How does compensation differ among DoD civilian and private-sector workers, taking into consideration varying demographic characteristics, such as educational attainment, years of experience, race/ethnicity, locality pay area, agency, and subagency?
  3. How does income vary among DoD civilian workers covered by different pay plans, such as demonstration projects and the GS system?

Manning the U.S. Space Force, which was established in the 2020 National Defense Authorization Act, will require civilians with high-value skill sets. To ensure that it can attract and retain civilian talent for the Space Force, the U.S. Department of Defense (DoD) needs to understand how DoD civilian compensation compares with that in the private sector. In this report, the authors compare monetary and nonmonetary compensation between the DoD civilian and private sectors, focusing on workforces with high-value skill sets: aerospace engineering and four defense acquisition workforces — business and financial management, program management, procurement, and engineering and science.

The authors found that predicted average income among DoD civilians is competitive with or exceeds that in the private sector for three defense acquisition workforces: business and financial management, procurement, and engineering and science. However, DoD civilians in aerospace engineering or defense acquisition program management are predicted to earn less than private-sector workers. The authors also found that DoD civilians with less than a bachelor's degree generally earn more than their private-sector counterparts, whereas DoD civilians with a master's degree or more typically earn less than private-sector workers. Moreover, the authors found that predicted average income among DoD civilians covered by demonstration projects is in line with or even higher than that in the private sector, while the opposite is true for other pay plans, including the standard General Schedule (GS) system. Finally, the authors found that the federal government provides more-generous benefits in some cases and less-generous benefits in others.

Key Findings

DoD civilian income is competitive with or exceeds that in the private sector for three of the defense acquisition workforces: business and financial management, procurement, and engineering and science

  • For the other two workforces examined — aerospace engineering and defense acquisition program management — DoD falls short of the private sector.
  • Income among DoD civilians with less than a bachelor's degree generally exceeds that of their private-sector counterparts, but the opposite is true for those with a master's degree or more.
  • Income among DoD civilians covered by demonstration projects is in line with or even higher than that in the private sector, while income among individuals covered by other pay plans, including the GS system, is lower than in the private sector.
  • There is evidence that results vary by locality, but more research is warranted.

The federal government provides more-generous benefits in some cases and less-generous benefits in others

  • Survey data show that public-sector workers have less influence over their working arrangements and are less likely to take vacations than private-sector workers.
  • Employer case studies suggest that private-sector employers provide more-generous childcare and eldercare subsidies and certain health-related benefits, while the government provides more-generous education-related benefits and availability of life insurance.
  • Importantly, the government provides both defined-contribution and defined-benefit retirement programs, while private employers offer only defined-contribution plans; this benefit is the main reason why total compensation provided by the government exceeds that in the private sector.

Recommendations

  • DoD should investigate the merits of expanding the use of demonstration projects as a means to make DoD civilian compensation more competitive.
  • Researchers should explore using existing hiring and compensation authorities to recruit and retain DoD civilians with high-value skill sets.
  • Researchers should further investigate differences in monetary compensation at the local level.
  • Researchers should conduct studies to empirically demonstrate the extent to which recruiting and retaining DoD civilians with high-value skill sets is a problem.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Workforce Characteristics

  • Chapter Three

    Monetary Compensation

  • Chapter Four

    Nonmonetary Compensation

  • Chapter Five

    Authorities for High-Value Skill Sets

  • Chapter Six

    Conclusion

  • Appendix A

    Regression Coefficients

  • Appendix B

    Detailed Income Adjustment Factors

  • Appendix C

    Unadjusted and Adjusted Predicted Average Private-Sector Income

  • Appendix D

    STEM Occupations

  • Appendix E

    Detailed Information from Employer Case Studies

This research was sponsored by the Office of the Secretary of Defense, Cost Assessment and Program Evaluation, Economic and Manpower Analysis Division and conducted within the Forces and Resources Policy Center of the RAND National Security Research Division (NSRD).

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