Pay compression results from caps that apply under the GS and separately to the SES and equivalent salary systems. Image: Holmes Su/Shutterstock.com
The Biden administration has said it will ask Congress for a change in law to address the longstanding issue of “pay compression” at the upper salary levels for federal employees.
“Because of pay compression at the top end of the federal pay scale, the difference in pay between employees, supervisors, and Senior Executives is often minimal or non-existent, which deters individuals from taking on important leadership responsibilities. The budget proposes to rectify this long-standing pay compression,” says a posting on performance.gov.
A budget book released this week in support of the budget plan sent to Congress last week similarly says that “The administration will take action to rectify long-standing white-collar Senior Executive Service and higher graded General Schedule pay compression.”
However, other than stating that a legislative proposal is upcoming, neither specifies an exact intended approach.
Pay compression results from caps that apply under the GS and separately to the SES and equivalent salary systems. The GS cap is tied to a rate under the Executive Schedule for political appointees, which this year is $183,500. That limit now applies to those in the upper steps of GS-15 in 33 of the 51 GS localities, as well as to the upper steps of GS-14 in the San Francisco locality, the highest-paid.
Executive Schedule rates are increased annually by only the across-the-board component of the GS raise, and not by the locality component as well. The effect is that each year that GS raises are split into those two parts—as typically happens—the pay cap affects more employees at upper salary levels, denying them part of the raise that others receive.
Career senior executives and those under other high-level pay systems who are paid within a range do not get raises automatically but as a practical matter many agencies pay performance-based raises to them at the start of the year. Their pay is capped at one of two higher levels of the Executive Schedule, depending on whether their performance appraisal systems meet certain standards. The large majority of them do, meaning the cap this year generally is $212,100.
In addition, there are separate, higher caps for the combination of basic salary and the performance awards that are a feature of those high-level pay systems.
Both the budget document and the blog posting also reference ending the practice of capping annual for blue-collar employees at the level of the GS raise for employees in the same area. They are under a separate locality-based pay system called the wage grade or federal wage system which involves comparisons with similar private sector jobs but in practice for many years the indicated raises have been capped at the local GS amount.
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