This paper will examine the disparities in compensation between the public and private employment sectors. Compensation includes wages, salaries, and other benefits that an employer offers their employees in return for work done. With the use of data collected over the past ten to 20 years, the paper will establish how wide these disparities have become and its leading causes. The paper will also examine if the common theory that public sector employees receive better salaries and benefits than private-sector employees is accurate. In addition, the paper will try to ascertain the impact of any disparity on employee retention and hiring in both sectors and if employee demographics in both have been impacted by salary and benefit disparities. In conclusion, the paper will try to determine the differences in compensation and benefits between these sectors as well as their causes and potential solutions.