Wednesday, January 7, 2009

Overseas Pay Gap: Illustrated

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John Doe, a Foreign Service officer, and Mary, his wife, a primary school teacher, are assigned to Washington, D.C. John was recently informed that he will be assigned to Libya as a diplomat. In D.C., John earns a base salary of $52,221 (FS-4 rank) and a 23.10-percent D.C. locality payment (worth $12,063) for a total of $64,284. Mary earns $48,000 as a teacher. Their total family income is $112,284.

When the Doe family arrives in Tripoli they will no longer receive locality pay ($12,063) but will receive a 20 percent hardship differential ($10,444). While John will take a small pay cut to serve overseas, Mary will most likely not be able to find employment in Libya so she will lose her entire salary ($48,000). Thus, despite John's hardship differential, the Doe family’s total income will drop from $112,284 to $62,665. That is a drop of $49,619 or nearly 45 percent from what they were earning in the Washington, D.C. area.

In addition, while in Libya, the Doe family will likely face significant out-of-pocket costs such as needing to fly back to the United States for a family member’s wedding, a sister’s life threatening illness, a beloved relative’s funeral, or for other important occasions not covered by government-funded emergency visitation travel.

Finally, in the event that John is killed in Tripoli, Mary would receive 23.10 percent less in death benefits than would the family of a TDY visitor from Washington. This is because Foreign Service death benefits are calculated on base pay, excluding allowances and differentials, and John’s salary is 23.10 percent less than it would be back in the States.

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1 comment:

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