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Federal salaries are lower than the private sector by 23 percent, advisory council reports

(Mark Lennihan/AP The salaries of federal employees lag those of private-sector workers in comparable positions by about 23 percent, an advisory council reported Wednesday.)

Salaries of federal employees are lower than those of private-sector workers in comparable positions by about 23 percent, although the gap has narrowed in recent years, an advisory council reported Wednesday.

The Federal Salary Council reported that the pay gap is now 23.1 percent, down from the 26.7 percent reported last fall. That represents the average national difference between the two sectors across some 260 occupations, based on Bureau of Labor Statistics figures that are weighted by their numbers in each.

The council, consisting of federal union leaders and administration appointees, oversees the locality-based General Schedule pay system for white-collar federal workers below the executive level. Its findings are passed to a higher-level group called the President’s Pay Agent, which in turn reports to the White House.

However, the annual findings of a shortfall in average federal salaries, which have ranged as high as 35 percent, have had little impact on actual pay raises for federal workers, which have been in the range of 1 to 2 percent in recent years.

For January 2021, President Trump recommended 1 percent, saying that closing the indicated gap as a 1990 pay law directs would cost “$21 billion in the first year alone” and that “Federal agency budgets cannot sustain such increases.”

That raise will take effect automatically unless Congress legislates a different figure. The House has passed a budget measure that effectively accepts the 1 percent figure by being silent, while the Senate has not acted.

While the Salary Council’s number results from a formula in the 1990 law, other studies, using different methods and different data sets, have reached different conclusions. Some conservative and libertarian organizations have concluded that there is little difference or even that federal salaries are higher, while the Congressional Budget Office in 2017 found federal salaries overall to be slightly ahead, although with variations by educational level.

Pay rates under the General Schedule vary according to where employees work, with specific rates in each of four-dozen city areas and a standard “rest of the United States” rate elsewhere.

The newest report shows that despite the higher pay rates already being paid there, the gaps remain the largest in the San Francisco, Los Angeles, New York, Seattle, San Diego and Washington areas. Differences were deemed to be the smallest in the catchall locality and in the Corpus Christi, Tex., and Palm Bay, Fla., areas. About 85 percent of federal employees work outside the D.C. area.

The BLS is looking into why the reported gap has narrowed in recent years, an official said, adding that the data was collected before the economic slowdown hit this year.

“If there is an effect we’ll see it next year, presumably,” said council chairman Ronald Sanders, a longtime senior federal personnel official who now is the director of the School of Public Affairs at the University of South Florida.

Since becoming chairman in 2018, Sanders has pushed for changes in the annual comparison, suggesting for example replacing the general BLS salary data with a survey focused on occupations where the government and the private sector compete the most directly.

“We deserve our own methodology tailored to the federal locality pay program,” he said, instead of the current “piggybacking” on data collected for other purposes. While that could be done under current law, he said he also would like to see the law changed to tailor pay according to local unemployment rates and cost of living, as well as the value of benefits and differences by occupation and location.

Union members agreed regarding the data collection but opposed changing basic federal pay law.

“We do not want any kind of pay system that gives vast new discretion to managers,” said Jacqueline Simon, public policy director of the American Federation of Government Employees. “It’s inviting trouble, it’s inviting corruption and even if the intentions are the best, meeting the market and providing better pay, opening it up to discretion is opening it up to discrimination.”

Tony Reardon, president of the National Treasury Employees Union, said the General Schedule “has rules, standards and evaluations that are transparent. It has both merit and market-based components and is a performance-based system. . . . When applied fairly and consistently by managers who are adequately trained to use the tools it contains, the General Schedule is a model pay system.”

The council also considers issues such as changing the boundary lines of existing localities and adding new ones. At Wednesday’s meeting it reached no agreement on redrawing the boundaries of some localities based on changes to city-area definitions the government uses for other purposes.

Instead, it decided to pass the issue to the higher-level group, with members divided over how to address the impact on salaries in areas that would move out of a city zone into the catchall zone.

The group further did not recommend any new localities, although it heard requests from federal officials in several areas who cited problems with recruiting and retaining employees despite paying incentives. Under an earlier recommendation, a new locality is to begin in January in the Des Moines area.