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By: FEDweek StaffA report for Congress lists a number of topics regarding federal pay that Congress might want to review, including long-standing issues regarding how federal and non-federal salaries are compared and the more recently growing issue of “pay compression” for employees in the upper reaches of the GS.
The Congressional Research Service, which does not make policy recommendations, said that if Congress decides to conduct a review, one topic would be the comparisons that produce the local “pay gap” figures which are used to determine the size of locality-based raises. It said that could involve revisiting the three major reviews over the last 20 years:
• A 2002 OPM report that found the pay gap figures suffer from a “credibility gap” because the comparisons are based on methodology that “bears little resemblance to the reality of labor markets and that “presumes an unrealistic level of precision and requires lengthy deliberation.” That report also criticized the process for producing an average that is applied across all occupations in an area, which “disguises and ignores substantial differences in the degree to which federal and non-federal salaries for particular occupations or grades differ.”
• House hearings in 2017 at which witnesses from conservative think tanks criticized the GS system as not sufficiently taking individual performance into account, while GAO and union witnesses said the issue is that agencies are not making the best use of the rewards that the system contains.
• A 2021 GAO report that examined a series of alternative ways to conduct the comparisons as recommended by Trump administration appointees to the Federal Salary Council.
The report also pointed to the GS pay cap of Level IV of the Executive Schedule, this year $176,300. While that cap increases with annual federal raises, that increase reflects only the across-the-board component and not the locality pay component. “As annual adjustments to base and locality pay are provided and this limitation prevents raises from taking effect at the top of the scale—’pay compression’—employees paid at an increasing number of GS step levels have reached this cap,” it said.
It noted that the pay cap this year limits pay for employees at GS-15 step 10 in 10 localities plus Hawaii; at steps 9-10 in four; at steps 8-10 in seven; at steps 7-10 in four plus Alaska; at steps 6-10 in two; and at steps 4-10 (plus GS-14, step 1) in one, the San Francisco-Oakland locality.
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