Federal employee organizations are watching for whether the Trump administration’s budget proposal for fiscal 2019, expected to be released in early February, will recommend paying no federal raise next January as a first step toward a broader overhaul of federal pay policies.

Preliminary documents obtained and released by Senate Democrats indicate that the administration will recommend no raise in January 2019. Another indicator came in the release in late December of a report from the President’s Pay Agent—the heads of OPM, OMB and Labor—which challenged the methodology used in the government’s own data showing that federal employees on average are about 35 percent behind their private sector counterparts in pay.

Those comparisons “fail to reflect the reality of labor market shortages and excesses” and the value of benefits, it said. It cited CBO’s report of last year finding that overall salaries are about comparable—although with less-educated federal employees at an advantage and the most-educated at a disadvantage—and a substantial benefits advantage on the federal employee side primarily due to the value of the defined benefit CSRS and FERS programs.

“Ultimately, we believe in the need for fundamental reforms of the white-collar federal pay system. We believe it is imperative to develop performance-sensitive compensation systems that will contribute to a government that is more citizen-centered, results-oriented, and market-based. We need to empower federal agencies to better manage, develop, and reward employees in order to better serve the American people,” the report said.

Pay for performance redux?

That reflects long-running recommendations – coming primarily, but not exclusively, from fiscal conservatives – to link pay more closely to performance, for example by denying raises to those deemed to be performing unacceptably and paying larger raises to top performers.

The Bush administration had installed such systems at DHS and DoD but the former never got off the ground before being dropped and the latter was repealed early in the Obama administration, primarily due to opposition from unions, after operating for several years for a segment of the DoD workforce.

While a salary rate freeze could be accomplished by agreement of the White House and Congress – as it was for a three-year period during the Obama administration – more substantial changes in pay practices would require a major legislative effort.

Barriers would include the strong differences of opinion over how to properly compare federal employee pay with that of the private sector, whether benefits should be taken into account and if so how they are to be compared, and how to structure a pay for performance system so that it would be trusted as accurate and fair.