Agencies Should Pay More to Get Feds to Work in Undesirable Locations, Lawmakers Say

Dmitry Kaminsky /

Federal agencies need to do a better job of giving employees pay raises when local economies demand them, lawmakers said at a hearing on Thursday.

Agencies have the authority to provide incentives to recruit, retain and relocate employees in areas where applicants are not naturally drawn to federal work, Obama administration officials told the Senate Homeland Security and Governmental Affairs Committee’s federal management panel, but they are not adequately using it. Lawmakers expressed concern that agencies do not have enough flexibility to provide the bonuses, while federal employee groups argued agencies simply do not have adequate funding.

The hearing was organized by Sen. Heidi Heitkamp, D-N.D., the subcommittee’s ranking member, who said agencies in her home state were unable to recruit and retain employees who instead sought higher-paying work made available during the private sector’s oil boom. The locality pay adjustment process, she said, was too slow to adapt to the rising costs of living that accompanied the money pouring into the region from newfound oil deposits.

Additionally, Heitkamp said, obscure regions like those along North Dakota’s northern border, present recruiting challenges for agencies like Customs and Border Protection. While there are tools in place to help agencies in that situation attract workers, the process is too burdensome.

“The intention is to do what’s fair and equitable,” Heitkamp said of federal agencies in her state working with the Office of Personnel Management to create incentives, “but somehow the rules get in the way.”

The oil boom, for example, began in 2006, but special pay rates were not approved until earlier this year. Brenda Roberts, OPM’s deputy associate director for pay and leave, said incentive pay is more important than ever in the era of fiscal austerity.

“In light of the current climate, it is extremely important for agencies to strategically use pay flexibilities to attract desirable applicants and support the retention of good employees,” Roberts said. She also encouraged the use of non-pay incentives such as alternative work schedules, telework and discretionary leave benefits that do not have budgetary impacts.

Heitkamp argued that there should be an incentive structure that agencies can “plug in” when problems arise, but Debra Warner, who oversees personnel at the Air Force, warned against a “one size fits all” approach. Instead, she said, each location should be evaluated independently. If, for example, the same incentive were offered to work in two different places but one of the locations was a more desirable place to live, every applicant would flock there.

Roberts pointed to guidance created OPM to help agencies recognize the opportunities they have to provide pay incentives, or even to approve higher rates of pay with OPM’s approval. She promised to lawmakers her agency will improve its education efforts so agencies are aware of the tools available.

Sen. Joni Ernst, R-Iowa, said there should be a new such tool for employees who want to stay in federal jobs but move to a different location. Roberts said that was something she would “like to take a look at.”

National Treasury Employees Union President Tony Reardon said the system was not broken, but Congress and the White House failed to authorize enough pay raises to keep the federal sector competitive.

“Private sector wages have increased 8.3 percent over the last five years while federal wages have increased by a total of 2 percent,” Reardon said. “No employer can expect to recruit and retain a modern, professional and skilled workforce while failing to keep up with general pay trends.”

Reardon said agencies are aware of incentive tools, but argued there are not sufficient resources to deploy them. Roberts noted that one reason OPM was slow to adjust pay rates in North Dakota was that no special rates were approved during the three-year pay freeze that started in 2011. Bill Dougan, president of the National Federation of Federal Employees, said pay incentives are “often looked at as a luxury,” and agencies cut them first whenever belt tightening is required.

OPM’s Roberts also noted that in some cases agencies opted instead to pursue locality pay for certain areas, but Roberts said that was “not a flexibility.”

“That is not a viable option,” she said.

Heitkamp called it “disappointing” that the locality pay process was so difficult, despite there being a clear “intellectual case” to create a new pay area.

“We’re doing a workaround with specialty pay rates,” Heitkamp said. “We’re not getting to the real issue of locality pay.”

Locality pay has been frozen since 2010, but in 2016 President Obama plans to increase it by an average of 0.3 percent across all pay areas. 

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