The President’s Pay Agent—the heads of OPM, OMB and Labor—have again criticized the methods used in the official comparison of federal vs. non-federal salaries and have called for greater linkage between pay and performance.
In language that mirrors that of past similar reports, the Pay Agent latest annual report says that “we find that the overall scale of the pay disparities presented to us each year using the current locality pay methodology lacks credibility.” The pay gap calculated by the lower-level Federal Salary Council using Labor Department data annually shows that federal employees on average are underpaid in the range of 30 percent, although that figure has been declining somewhat in recent years.
The Pay Agent again cited a 2017 CBO report finding salaries to be about comparable overall, and federal employees at an advantage when benefits are taken into account, although with differences in both cases varying by educational level.
The Pay Agent made those comments in an annual report in which it tentatively agreed to create a new locality in the Des Moines, Iowa, area and to add Imperial County, Calif., to the Los Angeles area although not at least until 2021; and deferred a decision on using new metropolitan area definitions from OMB that are used for other purposes, pending further study of the potential impact on federal pay localities.
It also agreed that exceptions should be allowed if outlying areas don’t meet all the standards for adding them to a locality, but only after agencies can show that they continue to experience recruitment and retention problems regardless of having used pay incentives.
See also, New 2020 GS Locality Pay Tables
“Ultimately, we believe there is need for fundamental legislative reforms of the federal compensation system. We believe it is imperative to develop performance-sensitive compensation systems that make the government 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,” it said, also in language that mirrors that of past similar reports.
“The existing GS classification and pay system rewards longevity over performance and fails to appropriately compensate employees based on mission needs and labor market dynamics . . . However, the administration cannot achieve sufficient reforms without Congressional action,” it adds.
The administration’s last several budget proposals sought to lengthen by one year the waiting periods between within-grade raises in the GS and wage grade systems. Congress has not actively considered those proposals, however, even when both chambers were in Republican control. The most recent budget proposal dropped a separate previous proposal that had gained no traction, to create a fund for rewarding top performers.