[ The Money Side of Lifeā„¢ ]

Job Sector Diversity: Public vs. private employment

By Cody Wetmore on November 1st, 2009 •

Someday, we're all going to be like our parents. That doesn't mean we're going to wear socks with sandals or have an 8 p.m. bedtime. Rather, at some point we're all going to have to join the working world.

Since the recession began in December 2007, unemployment has gone as high as 9.8% nationally. However, total government employment actually increased during this time, which should make job seekers pay extra attention to job openings in the public sector. On the outside, it seems like a job is just a job, but in this case, it's important to know a few things about employment in private and government sectors before you jump into a gig with both feet.

Underlying goals

The most fundamental distinction between public and private jobs is what they work toward. Private companies aim to make a profit; the government focuses on providing services to the public. On the other hand, the government may generate a profit, and private companies may provide public services, but these aren't the primary goals of each respective sector.

Will it last?

While civilian employment has decreased by nearly seven million jobs during the recession, government employment has actually enjoyed a modest increase of 110,000 jobs. Also, many government jobs are more difficult to eliminate when times get tough (though they aren't immune). For example, even in a recession we need police officers, teachers and firefighters.

Government positions also tend to have more support from unions, whose contracts make firing workers or cutting back benefits more difficult. In fact, government employees are almost five times more likely to be union members. With less union activity, private companies have more control over their workforce. And private job growth is dependant on the market, so it is relatively easy to layoff employees, cutting companies' costs in tough times.

Over the long haul

Government jobs are generally hard to get because the government sector only makes up 17% of total U.S. employment, so there are fewer jobs available. But government jobs are usually more stable, even in a downturn, and easier to hold on to.

Due to the greater number of positions at private companies, you may have a better chance of landing a job that lives up to your expectations. Also, because private companies are beholden to the bottom line, if you show exceptional worth as an employee and seize opportunities, you're likely to advance higher in the organization or be offered a job somewhere else. But, the need to turn a profit can also make private sector jobs less stable and more susceptible to layoffs.

Who pays more?

The common perception is that jobs in the private sector pay more. Recently that's been less true, especially considering that government jobs usually offer better benefits. When the economy is in a slump, private companies can cut wages and benefits more quickly and easily than the government. And they don't have to worry about getting re-elected if the public is angered by job cuts. Their responsibility is to do what is best for the company, which isn't always in the best interest of every employee.

On the other hand, private companies sometimes offer other forms of compensation, such as shares of the company, stock options or stock purchase plans--something the government can't offer. While the value of these forms of compensation is dependant on the stock price, they could pay off in the future (imagine getting Google stock back in 2004).

Also, private jobs are quicker to offer promotions. While government workers have their own system of promotions and raises, it is usually slower (but steadier) over the long run.

The Bottom Line

As of August 2009, over 140 million people, or around 90% of the total workforce, were employed in the U.S. If you want to be a part of this group, think about what sector is right for what you want out of a job.

Sources: cnn.com; nytimes.com; time.com; usatoday.com; jobjournal.com; google.com; fastcompany.com; govcentral.com; fool.com; washingtonpost.com; berkeley.edu; bls.gov; finance.yahoo.com; quintcareers.com