Salary Council: Federal Workers Make 23% Less than Private Sector Counterparts

The advisory council on federal compensation recommended that Carroll County, Ill., be added to the Davenport-Moline, Iowa-Ill., locality pay area.

Federal employees make 23.11% less on average than workers in the private sector, according to annual metrics calculated by the Bureau of Labor Statistics and announced by the Federal Salary Council at its annual meeting Wednesday.

The figure marks a modest improvement from a year ago, when the BLS-calculated pay disparity was 26.71%. In 2018, the pay disparity between federal employees and private sector workers sat at 31.86%. The provenance of the BLS data is hotly disputed; although the BLS data is touted for its direct comparison of the salaries in specific occupations and job types, critics argue that it does not adequately account for the fact that the federal government offers more generous non-salary benefits than many private sector employers.

The salary council, which makes recommendations every year to the President’s Pay Agent on how to change the locality pay program, recommended that no new locality pay areas be added in 2022. Members did agree to add Carroll County, Ill., to the Davenport-Moline, Iowa-Ill., locality pay area, although the county did not strictly meet the criteria for inclusion.

Although the county met the required federal-private sector pay disparity, as well as the needed rate of federal employees commuting to and from the county to jobs within the locality pay area, it did not meet the requisite number of federal positions, but federal officials said that was a result of recruitment woes stemming from the inability to offer competitive salaries, in what council chairman Ron Sanders called a “classic Catch-22.” The county clears the federal positions benchmark when including the number of authorized but vacant jobs in the overall tally.

There was less consensus over how the salary council should approach a recommendation on how the locality pay program should integrate a series of changes by the Office of Management and Budget to metropolitan statistical areas and combined statistical areas, which are a map of the nation’s various labor markets. Although the salary council traditionally has taken an additive-only approach—including new counties in existing statistical areas but not removing counties that have been taken out of their previous regions—council members representing management and the Trump administration pushed for taking a “case-by-case” approach.

“When we started looking at these counties that were excluded as a result of OMB’s new definitions, in many instances, the number of employees was in the low double digits, and in one case single digits,” Sanders said. “From a federal employer’s perspective, we no longer need to offer those differentials, because the labor markets are sufficiently robust in the newly expanded counties to recruit and retain civil servants.”

But Jacqueline Simon, policy director for the American Federation of Government Employees, argued that the management members of the council have not adequately justified breaking from past precedent.

“The origins of this proposed deviation from past practice was one member saying, ‘Well why do we always raise pay but not cut pay,’ and this was a way to cut pay,” Simon said. “[I] registered very, very strong objections to the way this happened while we were doing it, and I want to repeat that here today while minutes are being taken, that the whole idea of a bunch of appointees taking a tour of U.S. counties, whose boundaries were altered by the census, deciding to take a little from column A and a little from column B, raising some pay and cutting others was a terrible deviation from the past practice of applying the rules consistently to everyone.”

Sanders said the goal was not to cut federal employees’ pay, and noted that in instances where feds might be removed from a locality pay area, they would be put on the Office of Personnel Management’s pay restoration, or SafePay, program.

“I think locality pay is broken, and I don’t think you can fix a broken system by adding to the broken system,” Sanders said. “If a labor market has moved on, potential employees—not current ones because they’ll be on SafePay—no longer need to look to the federal government for employment and nor does the federal government look to them for talent, that’s part of fixing a broken system.”

With no consensus, each member of the council will submit their recommendations on how to implement the new OMB regions as part of the council’s annual report to the President’s Pay Agent. A list of how the council members would handle each of the more than 50 potentially impacted counties is available on page 15 of the council’s draft report.