Full raises needed to close the gap do not get paid because of the potential cost, and skepticism about the data the BLS uses to produce those figures. Image: Andrey_Popov/Shutterstock.com
By: FEDweek StaffWhile the 5.2 percent average raise for federal employees scheduled for January “would be a major step in the right direction and would benefit the federal workforce,” the Federal Salary Council has said, a 1990 law designed to bring federal salaries up to near parity with comparable private sector jobs has fallen well short of its goal.
A report issued at the annual meeting of the council last week notes that despite that law, a substantial “pay gap” remains—now 27.5 percent and up from 24.1 percent over the last two years—and that “now may be a good time” to reexamine it.
The law called for an annual across the board raise linked to the employment cost index of labor market costs, to keep federal raises on pace with private sector increases, plus locality pay based on Bureau of Labor Statistics data on local salary rates to close that gap within 5 percentage points. However, the full raises needed never have been paid because of the potential cost and because of skepticism about the data the BLS uses to produce those figures.
In many years the employment cost index figure alone has been used for the total raise, with locality pay carved out. That is set to be the case again for 2024, with a 5.2 percent average raise matching that figure (which is to be split as 4.7 percent across the board and funds equal to the other 0.5 percent for locality pay).
“Providing smaller base pay increases exacerbates pay disparities throughout the country and has the effect of increasing the locality pay dollars needed to close pay disparities in locality pay areas,” said the council, which consists of union representatives and federal pay experts and which reports to a higher level of body of administration officials, the President’s Pay Agent.
Paying the full base raise indicated by the ECI figure “might be better than creating new locality pay areas and possibly waiting for years for their locality pay percentages to grow much beyond that for the Rest of US. The President could then use any amount reserved for locality pay increases to vary those so that the areas with higher pay disparities could receive larger increases to reduce their pay disparities,” said the report.
It added, “Consistently providing meaningful locality pay increases each year—at least 0.5 percent of the GS payroll but preferably 1.0 percent or more—would also be helpful.”
The 0.5 percent designated for locality pay for 2024 matches its share of the total raise each year since the 2018 raise, except that the 2021 raise totaled just 1 percent, which was paid across the board. In some years the locality portion has been as high as 1.4 percent, although in most years it has been 1 percent or less.
“The goal of locality pay is to reduce significant pay disparities. The greater an overall amount is for locality pay increases, the more locality pay percentages can be adjusted based on current pay disparities. The smaller an overall amount is for locality pay increases, however, the less implemented locality pay percentages will reduce pay disparities and reflect changes in local labor markets as shown by BLS salary data,” it said.
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