Public Sector vs. Private Sector: Which is For You?

You may have heard folks speaking about the public sector vs. private sector, but a few questions may remain: What is the public sector? What is the private sector? What’s the difference? Why should I care?

All good questions. When you decide to take a new job — or even begin working for the first time — it’s important to compare the public sector vs. private sector because your choice can affect potential wages, job security, career growth — all kinds of important factors.

In this article, we’ll break down what each sector “means,” the kinds of jobs you can get in both, and do a direct comparison between the sectors when it comes to:

• Benefits
• Job satisfaction
• Work culture
• Advancement Opportunities
• Job Security
• Pay

Think about which of these things you value most in a job or career. Is it a higher salary — or is it knowing you’ll definitely have a job tomorrow? Is it serving the public good — or is it working with the newest, most interesting technology? Both the private and public sectors have plenty to offer, but which may be a better fit for someone is a highly individual decision. Read on to find out which sector makes the most sense for you!

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What is the Public Sector?

The public sector refers to organizations owned, funded, and controlled by the government, both federal and local. Jobs in this sector often have a strong focus on providing public services and are paid for by taxes, but a few operate as corporations and aim to pay for their own expenditures (i.e. the U.S. Postal Service).

What is the Private Sector?

The private sector refers to the part of the economy run and owned by individuals and for-profit companies. Huge enterprises like Google fall under the umbrella of the private sector, but small mom and pop shops are classified as private sector businesses as well. Technically, non-profits fall under this designation but making money is the primary objective of a majority of private sector businesses.

What Kind of Jobs Can You Get in Each?

There are many jobs you can get in both the public and private sectors. For example, you could be a lawyer, software engineer, surgeon, or pilot in either sector. This is why it’s important to consider which sector might be the best fit for you, your goals, and your values.

Public Sector vs. Private Sector: Direct Comparison

There are numerous factors to consider when it comes to your public sector vs. private sector decision. Read on to see which sector takes the overall “win” when it comes to each category, but keep in mind that these are generalities and there are variations in the following factors when considering specific organizations, industries, and roles.

Benefits 

Overall Winner: ? Public Sector

While some private companies provide their employees with great benefit plans, overall, the public sector tends to win out here. Federal employees enjoy comprehensive insurance packages and generous retirement plans.

Insurance

While public health insurance may be less flexible (there’s a limited number of providers who accept public health insurance), it’s very affordable. There are often no co-pays required or deductibles to meet.

Retirement

Public sector employees are on average able to stop working three years earlier than private sector employees. And there’s a real difference between pensions and 401(k)s.

While folks with a 401(k) — the usual retirement plan for private sector workers — have early access to these funds in an emergency, pension plans offered to public sector employees tend to be viewed as preferable. Though this money is not accessible before retirement, pensions are fully contributed by the employer (the government) and are not subject to market fluctuations. On the other hand, 401(k)s are mostly built through employee contributions and involve some market risk.

Job Satisfaction

Overall Winner – ? Private Sector

Although working in the public sector can give you real satisfaction when it comes to serving the public good, it turns out that overall employee engagement for federal employees falls significantly below their private sector counterparts. Although there are some government agencies that score incredibly high, the engagement rating of public sector employees averages at 69 out of 100 points as compared to private sector’s 77.

One reason for these numbers could potentially be the more dynamic nature of private sector work. Government agencies are, in a way, monopolies. They don’t have to compete to become more efficient and profitable. In fact, they have a duty to ensure that things continue to run smoothly and have less capacity — and incentive — for innovation and operational evolution. It’s pretty much the opposite in the private sector. If these businesses don’t keep up with cutting-edge technology and new ways of doing things, they tend not to survive. 

Because of this, private sector employees may have access to a more dynamic work environment, learning new skills and constantly being challenged to grow. On the other hand, the roles of government workers tend to be rigidly defined and can involve performing similar tasks repeatedly. 

Finally, there’s simply more diversity of industries and roles in the private sector. You’re more likely to find something that fits your exact interests there. Think about it — you’d be hard pressed to find something as niche as theater design work in the public sector. 

Work Culture

Overall Winner – ? Public Sector

There’s another side of the coin when it comes to the agile nature of private sector business. While the ever-optimizing aspect of competitive business may keep things interesting for employees, it can also come at a cost. 

You may be looking at a more demanding environment: longer hours and a performance-based, competitive culture. This is not for everyone. While some thrive in competitive conditions and are willing to put in extra hours to prove themselves and rise through the ranks, many find this extraordinarily stressful and would prefer a more reliable, less intense work culture.

Advancement Opportunities

Overall Winner – ? Private Sector

The private sector is the clear winner in this category because promotions tend to happen more often and more quickly. While career advancement in the government relies on regulations around time served, promotions in the private sector can happen faster through negotiations with management and strong performance. You may find yourself moving swiftly up the ladder in this sector while federal employees must wait years for “their turn.”

Also worth noting is that there’s often more area for growth in the private sector. There can be a top level you reach working in the public sector from which there’s nowhere further to advance.

Job Security

Overall Winner – ? Public Sector

This time, the public sector wins in a landslide. In the private sector, you can be fired for any reason other than discrimination, retaliation, or whistleblowing. For example, if your company had a bad fiscal year, you may be unceremoniously terminated. 

In contrast, it’s very difficult to lay off government employees after they pass a short probationary period. In fact, many federal positions are permanent. Public sector employees can only be fired if just cause is proven during a special hearing.

An extra public sector bonus is that you cannot be fired for using your right to freedom of speech. While private sector employees can be demoted or let go for publicly expressing opinions viewed as harmful to the firm, government employees can say what they wish as long as the functioning of their agency isn’t compromised.

Pay

Overall Winner – ? Private Sector

Now this category is actually pretty tricky because there’s some real variation in pay across private and public sector positions. But we’re giving the win to the private sector because on average, federal salaries lag 22.5% behind the private sector.

Unfortunately, government employees have less ability to negotiate pay — wages and bonuses are generally set in stone and everyone tends to be given the same across the board. While it can be nice to know your job is safe and your salary predictable, private sector employees have more access to raises and higher bonuses. Many private sector businesses earn more profits than governmental agencies and therefore have more funds to reward their employees with.

When it comes to direct public sector vs. private sector pay comparison, in general, blue-collar or trade workers tend to be paid more in the public sector, and degreed white-collar or tech positions tend to be paid more in the private sector. 

Check out this breakdown of public sector vs. private sector salaries for 5 different jobs:

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To see more job comparisons check out this Zippia article, from which the data for the above salary averages was pulled.

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Final Words

Remember that your decision of whether to pursue work in the public sector vs. private sector should be based on what you care about most. For some folks job security is more important than opportunities for career advancement. For others, a six-figure salary trumps worries about job loss. It’s highly individual. 

And further still, keep in mind that overall remuneration may actually balance out when you take the public sector’s valuable benefits and the private sector’s high paycheck into account. It could be a good idea to weigh the type of environment you’ll thrive in more heavily than benefits and pay considerations. 

At the end of the day, which sector is most likely to give you the type of life you’re looking for? The answer to that question should help lead you down the right road.