Public-private pay gap rises in 2009

By Alyssa Rosenberg

October 19, 2009

The gap between average pay for federal and private sector workers rose 1.25 percent during the past year, the Federal Salary Council reported on Thursday. The council did not recommend a specific pay raise for federal employees in 2010.

The pay gap between public and private sector workers increased from 25.17 percent in 2008 to 26.42 percent in 2009.

The salary council is down five of its nine members, but the decision not to issue a recommendation on a pay raise was based not on those vacancies (the group does not require a quorum to operate or make decisions), but rather on the political environment. Randy Erwin, legislative director for the National Federation of Federal Employees, said the council did not make a recommendation for how to allocate the pay raise between salary hikes and locality pay because Congress hasn't approved a raise yet.

"The union members of the council wouldn't want to make a recommendation that could be perceived as supporting anything less than [the 2.4 raise mandated by the formula in the Federal Employees Pay Comparability Act], so we just said nothing on the matter," Erwin said. "We are hoping that federal employees will receive the 2.9 percent adjustment that they deserve."

The biggest hikes in pay gaps occurred in Cincinnati (4.52 percent); Sacramento, Calif., (2.82 percent); Washington (2.8 percent); Hartford, Conn., (2.63 percent); and New York City (2.61 percent).

For the second consecutive year, the salary council discussed the effect of large incentive payments to some private sector workers who are the equivalent of General Schedule Level 12 administrative employees. The size of those bonuses distorted the overall pay gap, the council said. If that data were excluded, the 2009 pay gap would be 22.13 percent instead of 26.42 percent.

But Colleen Kelley, president of the National Treasury Employees Union, pointed out that the Bureau of Labor Statistics cycles 20 percent of private sector pay data out of its sample every year, so the effect of those bonuses on the pay gap equation are short-lived. She also cautioned against the temptation to adjust the data randomly.

"We have never, as far as I know, reached into BLS data and said, 'Use this and don't use this,' " Kelley said. "I worry about doing that because BLS data is the data upon which we rely. I understand the impact it can have on some of the localities this year, but we've never made decisions based on [the effect of anomalies]."

Phil Doyle, assistant commissioner for Compensation Levels and Trends at BLS, acknowledged that the agency faces some challenges in obtaining the appropriate data for the Federal Salary Council to use in its analyses.

He said some gaps in data were due to cuts in the agency's budget. BLS is eliminating its three salary surveys in Alaska and one of its two surveys in Hawaii, according to Doyle. A measure included in the fiscal 2010 Defense authorization bill would move federal employees in those states into the locality pay system. And he said 2009 BLS budget cuts have forced the agency to shrink its sample size for the overall salary survey.

Doyle said the council members should not be concerned about another upcoming change to the compensation surveys. The Office of Management and Budget plans to introduce a new set of occupational classifications for the economy as a whole in 2010 that BLS will use to sort workers into categories.

But for federal agencies and workers, Doyle said, "most classifications in the new standard occupational classification are unchanged from the old version."

By Alyssa Rosenberg

October 19, 2009