Public-private pay gap is widening, data show

The gap between federal government and private sector workers' pay has increased 2 percentage points since last year, an official reported during a Federal Salary Council meeting on Friday.

Bureau of Labor Statistics data indicate federal employees were paid 24 percent less on average than their private sector counterparts in 2010, compared to 22 percent less in 2009, Allan Hearne, General Schedule team leader at the Office of Personnel Management, told the council. The report affects the 70 percent of the federal workforce paid under the GS system.

The council, made up of federal pay policy experts and union leaders, makes recommendations to the President's Pay Agent on comparison methods and locality areas and rates. This year's proposals will affect 2012 salaries.

Measuring the pay gap has been a contentious issue lately, especially as Republicans try to show they are serious about reducing federal spending in the run-up to the midterm elections.

Union leaders and federal officials have expressed support for estimates showing federal employees earn 22 percent less than their private sector counterparts, while conservative think tanks have pushed reports showing government workers earn as much as 40 percent more than their private sector peers after considering total compensation. Office of Personnel Management Director John Berry in September said he was working with the Office of Management and Budget to determine if improvements to pay calculations were necessary. He cautioned, however, that the agencies could conclude the current approach is the best available.

In its fiscal 2011 budget BLS proposed a new methodology for evaluating pay, said Philip Doyle, the bureau's assistant commissioner for compensation levels and trends. BLS currently uses estimates from the National Compensation Survey, which collects data by occupation and work level from 36,000 businesses and government agencies nationwide. The new model would incorporate information from the bureau's Occupational Employment Statistics program, a mail survey that samples 1.2 million businesses and covers all U.S. metropolitan areas. If approved by Congress, the change would allow BLS to calculate pay gaps with greater precision and save $10 million annually, Doyle said.

For 2010, OES data show a slightly smaller gap between federal and private sector pay than NCS data -- 47.95 percent compared to 48.92 percent.

Officials agreed factors such as recent changes in survey methodology and personnel shifts due to the Defense Department's Base Realignment and Closure initiative could contribute to the rising pay gap. The BLS data also show federal workers at lower GS grades are paid more than their private sector counterparts while employees at higher grades are paid less.

Hearne updated council members on interim regulations establishing separate locality pay areas for Alaska and Hawaii. The rule also extends the "Rest of U.S." rates to include American Samoa, Puerto Rico, the Northern Mariana Islands and Guam. The changes will apply beginning with the first pay period after Jan. 1, 2011.

The council also heard testimony regarding the creation of two new locality pay areas. Federal agencies in the Albany, N.Y., area have had trouble recruiting and retaining top talent because employees in that region receive "Rest of U.S." locality pay, which is less than the salaries offered by the state and private sector companies, as well as the pay rates for federal workers in the New York City area, said Andy Rakowsky, president of the Federal Law Enforcement Officers Association's Albany chapter. The region should be considered for separate locality pay, he added.

Patrick DeFalco, chairman of the Federal Executive Association of Western Massachusetts, asked council members to add Berkshire County, Mass., to the Hartford, Conn., pay area or a newly established Albany region. Berkshire's 90 federal employees are the only government workers across Connecticut, Massachusetts and Rhode Island not receiving special locality pay, he said.

The council plans to meet again on Nov. 19 to arrive at recommendations to send President Obama.

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