Federal workers falling further behind in pay, council finds

December 17, 2013

A federal advisory group reported Tuesday that federal workers have fallen slightly further behind the private sector in pay, a trend that union leaders said they hope will be stopped by getting the government back in the habit of paying annual raises.

The Federal Salary Council, a group of union officials and pay policy experts, said that the average “pay gap” in favor of the private sector now stands at 35.4 percent, up from 34.6 percent last year and 26.3 percent in 2011.

(Kim Hong-Ji/Reuters)
(Kim Hong-Ji/Reuters)

The pay gap figure, based on data from the Bureau of Labor Statistics, involves employees paid under the largest of the government’s many pay systems, the General Schedule for white-collar employees below the executive level. Pay rates under the GS system are locality-based, varying among 31 metropolitan areas, the entirety of both Alaska and Hawaii, and a catchall “rest of the U.S.” locality for everywhere else apart from foreign countries.

According to the data, the gap is largest in the San Francisco and Washington-Baltimore areas, just above 49 percent, and lowest in the catchall area, 22.5 percent. 

The BLS study was done while the federal workforce was in the middle of what turned out to be a three-year freeze on salary rates that is set to be broken in January 2014. Before that stretch, raises had been paid almost every year for decades.

The budget agreement passed last week by the House and pending a final vote in the Senate is silent on a raise. That leaves room for President Obama to issue an executive order carrying out an earlier announcement that he would set an across-the-board raise of 1 percent by default in that case. However, language in separate legislation is needed to extend the raise to blue-collar employees; that might be done in a wrap-up spending bill to be considered in January.

“The 1 percent raise is good news, not because of the amount, it’s good news because we’ve broken the cycle of the pay freeze,” said Colleen M. Kelley, president of the National Treasury Employees Union and a council member. “The conversation in the future should be about what should be a fair raise for federal employees. The work of the council continues to document the serious gap between federal and private sector pay.”

Both Kelley and J. David Cox, president of the American Federation of Government Employees, noted that federal executives from several areas asked the council to extend higher pay rates to employees working there, citing problems with recruiting and retaining employees.

“We want the best and the brightest to come to work for the government,” Cox said. “The only way you get there is to pay proper salaries.”

Some federal employees have had their salaries frozen in 2011-2013, while others have received raises in that time due to promotion, performance or advancing up the steps of a pay grade.

The council’s calculations represent the government’s official word on comparing federal and private sector pay, a topic of long-running controversy. Other studies using different methods and different sets of data have found federal employees ahead on average by varying amounts.

The conservative Heritage Foundation, for example, concluded in 2010 that federal employees are overpaid by 22 percent on average over comparably skilled private sector workers, with the greatest advantage for the lower-skilled. James Sherk, a senior policy analyst in labor economics at Heritage who performed the study, said that “virtually all the economic research on federal pay outside [the council's] methodology consistently finds that the typical federal employee is making more than he or she would in the private sector.”

Instead of across-the-board increases, the government should pay according to market demand for skills and an individual’s job performance, he said. “It doesn’t serve anyone well to have a system where pay is almost completely independent of what you do on the job,” Sherk said.

The council reports to a higher-level body called the President’s Pay Agent. The council meanwhile again recommended creating 12 more pay zones, which would result in additional pay increases for employees in the affected areas — although not until 2015. The Pay Agent agreed with a similar recommendation made last year but the policies needed to carry it out have not been put in place in time for 2014, officials said.

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Eric Yoder · December 17, 2013