White-collar federal employees on average earn 35.2 percent less than private-sector workers in comparable jobs, an advisory council announced Friday in the latest report in a years-long back and forth over how salaries stack up.
The Federal Salary Council announced that figure based on data gathered by the Bureau of Labor Statistics, which under federal pay law follows a methodology that has yielded a large “pay gap” figure in favor of the private sector for two decades.
The indicated gap was nearly identical to the 35.4 percent reported last year.
“The data is consistent data,” said Colleen M. Kelley, a member of the council and president of the National Treasury Employees Union. “It’s been agreed to during every administration regardless of party. Even though it’s flat, it’s still pretty big, and it’s negatively affecting federal employees and agencies also.”
The salary council, consisting of federal labor representatives and outside experts in compensation, reports to a higher-level body called the President’s Pay Agent, which in turn makes recommendations to the White House. By law, federal raises are supposed to consist of an across the board component linked to an indicator of private sector wage growth, the Employment Cost Index, or ECI, plus a locality component varying according to the gaps determined for each locality.
However, the law’s formula has not been followed over the years, largely due to the potential cost of paying such large raises. Also, there is disagreement over the methodology; other studies using different sets of data and different ways of measuring have reached widely varying conclusions. A 2010 study by the conservative Heritage Foundation, for example, concluded that federal employees are ahead by 22 percent on average in pay.
The Congressional Budget Office concluded in 2012 that salaries are roughly comparable overall, although with less educated federal employees at an advantage and more educated ones at a disadvantage. That same year, the Government Accountability Office concluded that no one approach is definitive.
The official number “lacks credibility,” said James Sherk, the Heritage Foundation labor policy analyst who performed the 2010 study. “Virtually every analysis besides this one that looks at the question comes to the conclusion that federal employees earn more than they would, with their skill sets, in the private sector.”
The official comparison ignores the additional value of benefits for federal workers and “essentially superimposes the GS [General Schedule] system on the private sector as a basis to calculate pay, where the private sect0r uses nothing like the GS system,” Sherk said. Federal employees advance up their salary scales largely based on longevity while the private sector focuses more on market factors and performance, he said. “There’s a lot of federal employees working very diligently, and their efforts get ignored,” Sherk said.
For 2015, a raise of 1 percent is expected, since Congress has remained silent on the issue in spending bills where the raise figure can be set. Under the law, if Congress doesn’t act by the end of this year, the 1 percent raise favored by President Obama would take effect by default. The increase would be paid across the board with no differences by locality.
The same increase would be paid to blue-collar employees, who fall under a separate pay system, and the increase would raise the pay caps of employees under several high-level white collar systems whose salaries are set within a range.
“I think federal employees deserve a better raise than they have had,” said J. David Cox, a council member and president of the American Federation of Government Employees. Following the pay rate freeze and the 1 percent 2014 raise as living costs increase, “every single federal employee is living on less,” he said.
Most white-collar federal employees are paid under the General Schedule system, consisting of 15 grades and 10 “steps” within each grade. Pay rates vary by locality, with separate schedules for both Alaska and Hawaii, for 31 metropolitan zones, and a catchall for other areas. Pay rates in the highest-paid areas such as San Francisco and New York exceed the catchall rate by nearly 20 percent. Rates in the Washington-Baltimore area are toward the high end of the range.
The newest data show that despite the higher pay rates, the gap remains the largest in the San Francisco area, 49.5 percent, followed by San Diego, 44.4 percent and Washington-Baltimore, 43 percent, with Los Angeles and New York around 36 percent. The gap is the smallest in the catchall area, 15.9 percent.
For 2016 and beyond, Kelley said, “What I’m hoping and believe should happen is that there should be a fair and appropriate raise proposed that would include the ECI and a recognition that no money has been put into locality pay for four years.”