contractor to federal government

[whiskeypete]

I've been offered a temporary federal government position at a GS-13 Step 1 that's non-negotiable. It's well below my current salary of 105k as a government contractor. I'm 34 years old. I value stability and hope that it's a foot in the door to a career in the federal service, but I also don't like that I will have to work at least 7 years (assuming regular in-grade step increases) to reach my current salary. I'm also not very excited about a temporary position of 2 years. I also feel that I'm skilled enough to remain a contractor, but I'll probably have some nervous times and need to job hop quite a bit. My current job and potential government job are very similar, so comparing job satisfaction is not a factor. This is purely a financial payoff/stability/future of FERS retirement program/etc. decision. If given this situation, would you take the job? Why?

 

[utrecht]

Every time we have a "pension" thread, people with government pension say that they've dealt with lower salaries during their career in return for a stable pension. Lots of people respond by saying they don't believe government salaries are lower than similar private sector jobs. Once again, I say they are wrong. In general, the government pays less, but in my opinion the pension and job security are worth it.

Most of my friends made more than I did for years and years. Now I'm retired at 50 and they will be working for who knows how much longer. So, yes, I would take the job.

 

[whiskeypete]

Every time we have a "pension" thread, people with government pension say that they've dealt with lower salaries during their career in return for a stable pension. Lots of people respond by saying they don't believe government salaries are lower than similar private sector jobs. Once again, I say they are wrong. In general, the government pays less, but in my opinion the pension and job security are worth it.

Most of my friends made more than I did for years and years. Now I'm retired at 50 and they will be working for who knows how much longer. So, yes, I would take the job.

That's what people have been telling me, too. I guess the main concern is that it's not a permanent position, and if I had to return as a contractor in a couple years, I have less bargaining power or leverage with the lower pay. The contracting company's HR could say "Oh, you are making 90k now, we can't give you more than 94k" when I was making 105k just a couple years prior. I know the difference is not as significant as it could be, but it's still a factor to consider.

 

[RE2Boys]

I'm a federal retired employee, 29 years. We always considered the contractor workforce as temporary as they had to absorb most of the ups and downs of the work required to be done....and the contract was up for re-bid every 4-6 years so there was no guarantee the follow on company would hire the incumbents or offer the same pay/benefits.

That said, why go to a lower paying temp job? You'll need to assess the likelihood that, once in the door, you can find and move to a permanent GS13 position. In my years, promotions to 12, then 13, then 14 were mostly self-initiated.....applied for and competed for the promotions to an opening and needed to be willing to move for some of them (not for the last one). If that possiblility is limited at your location, then I'd pass on the govt job.

 

[Texas Proud]

Every time we have a "pension" thread, people with government pension say that they've dealt with lower salaries during their career in return for a stable pension. Lots of people respond by saying they don't believe government salaries are lower than similar private sector jobs. Once again, I say they are wrong. In general, the government pays less, but in my opinion the pension and job security are worth it.

Most of my friends made more than I did for years and years. Now I'm retired at 50 and they will be working for who knows how much longer. So, yes, I would take the job.

My belief is that for upper level jobs the gvmt pays less.... for lower level jobs they pay much more.... it is not a one size fits all....

 

[donheff]

A temporary position doesn't provide the Federal retirement benefits discussed above. Is there any realistic expectation that this two year job would lead to a permanent position?

 

[whiskeypete]

A temporary position doesn't provide the Federal retirement benefits discussed above. Is there any realistic expectation that this two year job would lead to a permanent position?

Please expound on this. I believe I am eligible to the same benefits as a permanent employee.

 

[nate2953]

Temp vs term vs permanent. Term and permanent have benefits. Whereas temp is pay only, no FERS/health benefits. At least from how I understand it. Sorry I'm so brief. On lunch break from w*rk.

You may have meant temporary in not to exceed 2 yr-term sense? If so then yes to benefits. If simply a temp position, which I thought was NTE 1 yr max? Maybe we're talking about the same thing?

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[whiskeypete]

Temp vs term vs permanent. Term and permanent have benefits. Whereas temp is pay only, no FERS/health benefits. At least from how I understand it. Sorry I'm so brief. On lunch break from w*rk.

You may have meant temporary in not to exceed 2 yr-term sense? If so then yes to benefits. If simply a temp position, which I thought was NTE 1 yr max? Maybe we're talking about the same thing?

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Yes I'm term not to exceed 2 years. Thanks for helping me clarify.

 

[Live Free]

What is the likelihood that you can turn this term position into a permanent one? If it increases your odds significantly of getting a permanent govt job, then go for it. There are govt jobs that are only advertised internally that you might be able to transition to.

 

[rothlev]

i would take the job. If you are comparing a 1099 job to a w-2 job , to be even a 1099 would need to be paid at least 15% more due to the tax and benefit differences. ( probably more like 25%) You will likely be able to apply for and be hired for a permanent position once you get your foot in the door. Expect the starting pay to be lower, the benefits and tax differences make a huge difference.

 

[whiskeypete]

i would take the job. If you are comparing a 1099 job to a w-2 job , to be even a 1099 would need to be paid at least 15% more due to the tax and benefit differences. ( probably more like 25%) You will likely be able to apply for and be hired for a permanent position once you get your foot in the door. Expect the starting pay to be lower, the benefits and tax differences make a huge difference.

I should clarify further. I am a defense contractor and don't require a 1099 as I work for a large defense contracting company, I'm not an independent contractor. I do agree that federal jobs pay lower, at least in my field.

 

[Amethyst]

I would be leery of a "temporary" Govt position unless you're sure there's a darned good chance they'll make it permanent after a 2 years' probationary period.

Carefully compare the benefits (if you haven't already). Benefits = health insurance, leave, bonuses, and retirement contributions.

In my area, Defense, particularly in any STEM field, contracting companies' benefits are often very close in terms of leave (although they'll expect you to work more hours than Govt will), and better in terms of health insurance. Also, Govt. bonuses tend to be quite small, if they exist at all. Think hundreds, not thousands.

Amethyst

 

[whiskeypete]

Yea I'm definitely not in a STEM field. I would imagine private sector does pay a lot more with comparable benefits. Thanks for the input.

 

[Brat]

Personally, if I needed a job I would take that that job until I found a better one.

 

[stephenson]

Expand your potential as contractor, work hard ...max out your 401 ...your upside potential is much greater. Is it as certain ...no. Will you have to work harder as a contractor ...you KNOW the answer to that. Go for the growth, go for the flexibility to move, to expand into different areas of industry.


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[whiskeypete]

Expand your potential as contractor, work hard ...max out your 401 ...your upside potential is much greater. Is it as certain ...no. Will you have to work harder as a contractor ...you KNOW the answer to that. Go for the growth, go for the flexibility to move, to expand into different areas of industry.


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Darn. Not really what I wanted to hear but I appreciate the candor. I've been leaning toward accepting the position based on advice from others but still on the fence. Interesting to hear differing views here.

 

[38Chevy454]

I think almost all gov't hiring now starts as term and then you work into a permanent position. Also, the gov't pension is not nearly as good as used to be. Not sure of the exact rules now, but check this to know what you would get.

I assume the total salary for GS-13 you quote includes the locality increase? One thing is probably true, the gov't health ins benefits will cost less or be better than your contractor benefits. I know as a contractor emplyee myself I pay more than the fed employees do. Another assumption as a contractor employee you likely don't have any pension program. 401k match might be good or more generous than fed side.

As for the GS-13 step 1, the good part is you have 9 more steps of increase, before having to bid to a higher GS-14. Being step 1 you have better chance for raises than if you were maxed out or near the top of the steps - the way I understand it. I have worked with GS employees, so I am certainly not from personal experience.

Overall, either path can work. Stay higher paid and less job security contractor. Or switch to fed and have better security and bit lower pay. As fed you might save less in retirement savings but have that pension to offset the need for higher savings total.

 

[Andre1969]

I had always heard that the pension plan for FERS employees sucked, but upon reading it, it looks like you get 1% of your high three years, multiplied by your years of service. And if you stay past 62, it bumps to 1.1%. So if you put in 40 years and are older than 62 when you retire, you'll get 44% of your high three years.

Maybe not as good as the old CSRS system, but not as bad as I thought it was. Under CSRS, you'd top out at 80%, but had to put in something like 42 years to get to it. And you didn't get SS, which you do under FERS.

 

[whiskeypete]

I had always heard that the pension plan for FERS employees sucked, but upon reading it, it looks like you get 1% of your high three years, multiplied by your years of service. And if you stay past 62, it bumps to 1.1%. So if you put in 40 years and are older than 62 when you retire, you'll get 44% of your high three years.

Maybe not as good as the old CSRS system, but not as bad as I thought it was. Under CSRS, you'd top out at 80%, but had to put in something like 42 years to get to it. And you didn't get SS, which you do under FERS.

Unfortunately the mandatory contribution to the FERS pension fund is now at 4.4% for new employees. I believe it was originally 0.8% which has increased in recent years. 4.4% is quite a sum when you add it up over the years. The pension plan sounds like a good deal, but as others have said, the pension has decreasing value during your retirement since it doesn't adjust for inflation. In that 15th year of retirement, that monthly retirement check won't look so great as those first few years.

Still on the fence about the job offer. I don't have a doubt you can make a decent career as a defense contractor, but I'm pretty sure that would require a lot of job hopping and brief patches of unemployment or looking for other projects within the company in order to avoid a "lack of work" (LOW) notice from your employer. Of course, ymmv... I know some people who have stuck with the same company for years doing the same job. I'm afraid that's rare in my industry.

 

[RE2Boys]

FERS does have a cost of living adjustment each year, but it is less than than the inflation rate. From http://federalretirement.net/cola.htm:

For Federal Employees' Retirement System (FERS) or FERS Special benefits, if the increase in the CPI is 2 percent or less, the Cost-of-Living Adjustment is equal to the CPI increase. If the CPI increase is more than 2 percent but no more than 3 percent, the Cost-of-Living Adjustment is 2 percent. If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is rounded down to the next whole dollar.

 

[Andre1969]

Unfortunately the mandatory contribution to the FERS pension fund is now at 4.4% for new employees. I believe it was originally 0.8% which has increased in recent years. 4.4% is quite a sum when you add it up over the years.

I didn't realize the contribution rate had been going up over the years. Yeah, that does take a bite out of things. My Mom was under CSRS, and I forget how much she said she had to pay into it, but I think it was something like 6-7%? She made it the full 42 years, so she got 80%, minus survivor benefits, for my stepdad.

We had a secretary here at work who was CSRS, and had something like 39 years of service. She wanted to stick it out a bit longer, but then word got out that the gov't was going to change the mandatory contribution on something-or-other (either the retirement, or maybe the insurance?). That was also during the time where they had put a freeze on the salaries, and she had been at the top step of her pay grade for years, so she hadn't seen an increase for several years. So in the end, she decided, at the age of 77, that it wasn't worth it to stick around for the 2%/year pension increase, blamed it all on Obama, and retired.

 

[Amethyst]

IMHO, comparison of career stability and retirement plans is moot unless whiskeypete has a good line on a permanent govt career. Moreover, I am a Federal retiree, and I do not recommend government work unless you're a) in it for a career, b) have a career goal that demands a period of time in govt (i.e. you need to make certain types of contacts), or c) you're a teacher. Teachers, I have observed, can do well if they get into govt early enough in their careers. Something about being well-prepared, well-spoken, and conscientious just seems to propel teachers through the ranks.

Two years with the govt will get Mr. Pete 2 years of TSP matching contributions (assuming he makes his own contributions to be matched), and he can carry that away with him when they push him out the door at the 2-year mark. I don't see other advantages.

Amethyst

 

[kitesurfer2]

temporary position or temporary appointment--big difference. I just retired with 36.5 years. no regrets.
to be happy in a govt job, expect a pay chec or a thank you, don't expect a bonus, don't expect a raise. expect a direct deposit 26 times a year and you will be happy!

 

[freebird5825]

A few questions...from a retired FERS employee who spent some time in private sector. I crossed over the fence at age 30. I went for the job stability and believe it or not, a decent salary increase. I came in as a GS-11, 0855 Electronics Engineer, a higher paid shortage category.

1. Is your offer coming from a well placed government person who can "make things happen" for you after the 2 years ? This is key.
2. Is your current employer going to have a hissy fit if you make this move ? Would you be working on the same exact contract currently held by your employer, just from the other side of the fence ?
3. Does the agency have limited authority to hire and is using Chapter 11 Excepted Service Appointments to hire you ? see reference at OPM http://www.opm.gov/policy-data-over...ation/processing-personnel-actions/gppa11.pdf
The reference is kind of convoluted with tables, but ask the govt HR person exactly which category your potential hire will fall under.
4. Is the agency undergoing a RIF (reduction-in-force), or reducing by attrition (retirements) and therefore unable to do a direct hire ? What does the agency's overall budget look like ?

I can't say which is the best path, given the information here. Hope I gave you some info leads to help you decide.