The Differences Between Public Sector and Private Sector Employment

Working in the Public Sector

Public sector employment involves working for any local, state or federal agency. Working in the public sector can provide a great deal of satisfaction. Public employees are valued for the services they provide to the community. We see the impact of public services from the moment we wake up. The water we use, the cut grass along the interstate, road signs, pothole repair, and the parks we enjoy are all a product of public sector employment. Working for the public can be a challenge, but it can also be extremely rewarding. Public employees are commonly referred to as “public servants.” They serve the community, and their work is often overlooked unless there is a problem. A prime example is our postal services. The U.S. Postal Service probably processes millions of pieces of mail per day, but we often don’t notice it until our mail is late or we get the neighbor’s mail.

• Size and Scope - Postal Facts
  The USPS delivers more mail to more addresses in a large geographical area than any other post in the world. These numbers show the size and scope of our business.

Service Focused

The public sector is primarily focused on providing services to the citizens of that community. These services can range from trash pickup and social services to serving on the city council. Unfortunately, public sector employment often does not produce revenue and is dependent upon tax revenues and fees for their operational costs and employee salaries. Most departments in the public sector have limited budgets but are still expected to provide a high level of services. Most departments rarely have a surplus at the end of the fiscal year. In fact, most departments are encouraged to spend it all before the end of the year. The primary purpose of the public sector is to provide a service and not to gain a profit.

Public Scrutiny

Public sector employment is pretty much 100% funded through taxpayer dollars. For this reason, public employees have to be mindful of how they are perceived by the public. This is especially true for employees who tend to be widely visible and utilize city/state vehicles. Public employees are sometimes viewed in a negative light. We’ve all heard the joke about the one public works employee that’s actually working and the 10 employees watching him. Of course, the truth is that most public employees work hard and often have to stretch limited resources to get the job done.

Public Sector Salaries

Public employees usually enjoy good health insurance and retirement benefits. However, public employees typically (not always) earn less than employees in the private sector. Of course, this depends on who you ask. Many believe that public employees are overpaid. In general, public employees tend to have less negotiating power when it comes to salary. Salaries usually have a set pay range according to the type of position. These “pay bands” are not negotiable unless they are adjusted as a whole by a governing body. Pay raises are usually given across the board instead of individual performance.

This can be viewed as positive or negative, depending on your perspective. Pay raises at the local level are usually approved by the city council, and everyone receives the same increase in salary. For example, if the city government decides there is enough money to raise salaries by 3%, everyone receives that percentage. Many feel that this approach punishes those who perform well and rewards employees that perform at an average level. Unfortunately, this system does not encourage competition or a high level of performance. Many public employees have not had raises in years. These conditions usually don’t motivate one to do their best. In addition, pay raises in the public sector usually end up translating into increased fees and/or taxes. This tends to add to the public scrutiny.

What Is a Private Sector Employee?

Private employment consists of any work outside of local, state, and federal agencies. Private sector employees provide us with the products and services we use every day. Private sector employees are business owners, financial institutions, contractors, and the list goes on and on. The private sector is vital to our economy because it can produce more job opportunities than the public sector. The public sector also benefits from the private sector in the form of tax revenues. It’s no secret that when the private sector is doing well, everyone does well.

The private sector has more flexibility in just about every aspect of employment. Business owners can set their own hours and can hire employees without some of the strict guidelines of the public sector.

State and federal positions have very specific requirements for some positions. For example, some positions require a master’s degree in social work and will not accept anything else. Of course, someone with a master’s degree in counseling or any other human services field could easily do the same job as someone with a master's degree in social work. In the public sector, once the job description and requirements are set, there is little to no flexibility in the selection process.

Revenue Focused

The private sector is more focused on revenue than the public sector. Private sector businesses don’t have the luxury of raising taxes when they need to produce more revenue. Although the private sector provides a service, the customer usually pays for the service on the spot (i.e., restaurant, store, etc.). If the service is subpar, we don’t go back to that store or restaurant. The citizen doesn’t share the same choice when it comes to public services. We all pay our taxes even when we are displeased with our public services (at least I hope you do).

Private Sector Salaries

Private sector salaries tend to be more negotiable than in the public sector. Public sector employment usually has a standard hiring range, and there is little to no deviation. In most cases, private sector employment has more potential for salary growth than the public sector. Private enterprise has unlimited earning potential. Although high-ranking public servants make well into six figures, it still doesn’t compare to CEOs in the private sector that make millions per year.

Pros and Cons to Both

In summary, the public and private sector both have their advantages and disadvantages. However, they both play a vital role in our communities and our economy. If your goal is to be rich, I wouldn’t recommend public employment. If you are a service-driven person, then the public sector may be a good fit. Public servants provide the essential services we need every day. The private sector fuels our economy through taxes in addition to producing goods and services. In the end, both sides benefit from each other and need one another to keep our economy moving in the right direction.

• Football player turned restaurant owner: How did he do it? | Fox Business Video
  Former NFL player turned IHOP owner Tyoka Jackson on government versus private sector jobs.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2013 Martin D Gardner

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Comments

Martin D Gardner (author) from Virginia Beach on July 15, 2015:

Thanks for the feedback @antigravity. I appreciate it.

chelsea on November 17, 2014:

that is quiet true what the article is saying

Martin D Gardner (author) from Virginia Beach on September 28, 2014:

Yes. That’s often the case with large corporations. The front line employees are the backbone of the company and they barely make enough to survive. Thanks for stopping by.

Alison Williams on September 27, 2014:

I have worked in both. The one difference that comes to mind is GREED! I absolutely cannot stand the fact that many large private companies like the one I work for (a fast food chain) pay their employees minimum wage while the people at the top are getting rich off our hard work. How is that fair? But then, I consider myself a communist, which appears to be a dirty word in the Western world! I am thinking of going back to public sector because it's more suited to my way of thinking I guess.

Martin D Gardner (author) from Virginia Beach on April 09, 2014:

Hi Mandi, the answer is private sector. Even though your agency receives government funding, it is still considered private sector because the agency is not owned by the government. Basically, anything is not owned and operated by the local, state, or federal government is considered private sector. Hope that helps.

mandi m on April 09, 2014:

I'm confused. I do home care for a privately owned company that uses Medicaid and other government funding. so am private or public sector?I

Martin D Gardner (author) from Virginia Beach on September 09, 2013:

Thanks. I agree. You definitely should determine your career goals before making a choice.

Dora Weithers from The Caribbean on September 09, 2013:

Good article! The comparisons are really insightful. I think that a personal mission statement helps the decision to work in one sector or another. Thank you for the explanations.

Martin D Gardner (author) from Virginia Beach on September 08, 2013:

Thanks!!!

Elizabeth Parker from Las Vegas, NV on September 08, 2013:

Well-written and you explained the differences perfectly. Thank you for sharing this information and clarifying!

Martin D Gardner (author) from Virginia Beach on September 07, 2013:

Thanks. I appreciate the feedback. I've spent most of my time in the public sector and I really enjoy it.

Schoolmom24 from Oregon on September 07, 2013:

That was an interesting read...my husband just got a job in the public sector. (In the past, it's been mostly private.) Voted up! :)