What You Need to Know: Pay Scales

By Eric Yoder
Washington Post Staff Writer
Tuesday, November 18, 2008 12:00 AM

There are several bits of conventional wisdom about federal pay. One is that the government underpays its employees when compared with similar jobs in the private sector¿the so-called pay gap. In part that's due to a series of reports generated by the government itself supporting that perception. The government's troubles in hiring and keeping employees in high-demand occupations buttresses that perception.

The reality is more complicated. While some data show that federal jobs do indeed lag behind on average, that's in part due to large differences in certain occupations¿such as some professional and administrative positions¿or only at certain levels¿such as entry level or very senior levels. In contrast, other studies have found that in certain occupations federal employees are paid more than the private sector on average.

Another common belief is that the federal pay structure is a monolith, and that everyone is pegged into one of its slots. Again, the reality is more complicated.

The government operates a system in which jobs are "classified" as being at a certain grade and step level according to the qualifications needed for the position, the difficulty of the work and other factors. The largest pay category is the "general schedule," covering most white-collar jobs below the executive level. It has 15 grades of 10 steps each. The "wage grade" system covers blue-collar jobs, generally with 15 grades of five steps each. Current rates are posted on the Office of Personnel Management Web site.

Advancement within a grade and from one grade to the next is much like climbing a ladder. Most general schedule employees move up a step every one, two or three years. Those advances, paid to everyone performing at least at an acceptable level, increase pay by about 3 percent. Employees also can move up based on good performance.

But that's about as far as the absolute statements can go.

For example, while newly hired employees typically are brought in at the first step of a grade, in some cases, agencies can set higher starting salaries. In addition, some agencies operate under what is called pay "banding," in which grades are combined and the manager has greater leeway in setting salaries. Pay banding also provides more leeway in rewarding employees for good performance, job accomplishments, newly achieved academic degrees and other signs of the employee's value to the organization.

For general schedule employees, pay typically is divided into two parts. There's an across-the-board component that goes to all GS employees, plus a locality component. Locality pay is based on where the employee works, not where he or she lives, and is linked to local labor market conditions, not cost of living.

The result is that even jobs in the same occupation and at the same level pay differently from one place to the next. Pay in the Washington-Baltimore area, for example, is about 7 percent higher than pay outside one of 31 metropolitan zones called pay localities. Pay in some city areas, such as San Francisco, New York and Los Angeles, is even higher.

A main development in pay of recent years is a move toward pay-for-performance. In such arrangements, the largely automatic step increases are eliminated and a pool of money is created, with the biggest shares going to the best performers. The largest example of this is in the Defense Department, where around 200,000 jobs are covered by a special pay program called the National Security Personnel System. There are similar programs in a number of other agencies. All of them are somewhat controversial because of disputes over whether the government does a good job of assigning the performance ratings that determine the raises.

There are numerous special pay programs that can set pay above the basic rates, as well. For example, some general schedule employees are covered by "special rate" designations, which give them higher pay for being in high demand occupations. Many of the government's information technology employees are paid under this system, giving them pay up to 30 percent higher than what they would get if their jobs were regular general schedule positions. Many technical and engineering positions also are covered, as are some clerical and other jobs.

There also are special pay arrangements for high-ranking employees, law enforcement officers, medical personnel, the Foreign Service and many other occupations, as well as special payments for certain locations or for having certain levels of expertise. So, a person's rate of pay can depend on a host of factors.

The only way to decide if a federal job pays too much, too little or just enough is to directly compare it with the same job elsewhere. And direct comparisons often are difficult if not impossible, as those who have tried it soon learned. Much of government work simply has no parallel elsewhere.

One thing can be said for certain about federal pay: Unlike many private sector employers, the government gives raises like clockwork, each January. The raises are set in the annual congressional budget process, and in recent years have been linked to raises for uniformed military personnel. Over the last decade, federal raises have ranged from about 2.5 to 5.5 percent per year.

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