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Federal Eye
Posted at 05:10 PM ET, 07/23/2012

No pay comparison method is definitive, GAO says

Various studies have used different methods and data in reaching widely varying conclusions about how federal and non-federal pay compare, but no one approach is definitive, according to a Government Accountability Office report released Monday.

“Simply put, the differences among the selected studies are such that comparing their results to help inform pay decisions is potentially problematic. Given the different approaches of the selected studies, their findings should not be taken in isolation as the answer to how federal pay and total compensation compares with other sectors,” the report said.

GAO examined six major recent comparisons of federal and private sector pay, including one performed annually by the Bureau of Labor Statistics that is used to set the official estimate of the “pay gap”; the 2011 report found federal workers behind by 24 percent, on average.

However, reports by conservative or libertarian think tanks including the Heritage Foundation, the American Enterprise Institute and the Cato Institute, as well as the budget watchdog group Project On Government Oversight, have found that the shortfall runs in the other direction by that much or more. Earlier this year, the Congressional Budget Office essentially split the difference with a report finding federal employees ahead by 2 percent on average.

GAO said that the government’s own study along with the POGO study use a “job-to-job” approach and attempt to compare pay for similar jobs of various types based on job-related attributes such as occupation and level of work. The Heritage, AEI and CBO reports attempt to compare pay for individuals taking into account personal attributes such education and job experience, as well as other attributes such as occupation, locality and size of employer. The Cato report focused on trends in pay over time without controlling for attributes of the workers or jobs, it said.

“The studies’ differing conclusions on the overall pay disparity between federal and private or nonfederal workers were affected by their basic approaches—human capital, job-to-job, and trend analysis. Across these approaches, data sources and types of attributes controlled for differed. Within each approach, conclusions differed due to studies’ specific methodologies—specific attributes controlled for and statistical methods used,” GAO said.

“The study authors and people with expertise in compensation issues that we interviewed differed in their views on which type of approach is most informative in comparing pay of workers across sectors,” it added.

Comparisons of federal and non-federal pay have been under political debate for years, and in particular in recent years as new outside studies have challenged the government’s own study that every year has found federal employees substantially underpaid on average.

Federal pay rates were frozen in 2011 and 2012 at 2010 levels. No decision has been made regarding a potential raise in 2013. President Obama has recommended a 0.5 percent increase, saying an indefinite freeze is “neither sustainable nor desirable.”

The House has voted several times to freeze federal pay rates for at least one more year, while the Senate earlier this year rejected a continued pay freeze as part of an amendment to an unrelated bill. Both the House and Senate versions of the key annual appropriations bill that traditionally determines the raise are silent on the issue, but several other House-passed spending bills assume that no raise will be paid.

Despite the salary rate freeze, employees remain eligible for various types of increases. One of them, called a step increase or within-grade increase, is worth about a 3 percent boost and is paid to every one, two or three years unless denied for poor performance. GAO said that more than 99 percent of white-collar federal employees were rated above the threshold of “fully successful” in 2011, and 39 percent of employees received such raises, “comprising nearly all the employees who completed their waiting period.” Several percent also advanced up a step as a performance reward.

Employees also are eligible for ratings-based awards, GAO noted. In 2011, among those covered by a five-level rating system, awards were given to 65 percent of employees at the top level, averaging nearly $1,800. Awards averaging nearly $1,300 were given to 58 percent of employees rated the next level down.

GAO added that while some of the studies further attempt to compare total compensation, including pay and the value of benefits, others don’t — including the government’s own study.

By  |  05:10 PM ET, 07/23/2012

 
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