Advocates say pay caps wreak havoc on recruitment and retention.

Advocates say pay caps wreak havoc on recruitment and retention. DavidLeshem/Getty Images

Pay Caps: Fed Exec Lobby Group Says Reform Is Past Due

“We are stuck with a personnel system mostly put together too many decades ago,” says a policy chief for the Senior Executives Association.

Pay, for most feds, falls along the 15 levels of the General Schedule and finer step increments in between, with base pay currently spanning from about $21,000 to just over $152,700. Under this system in recent decades pay caps affecting especially higher-level feds increasingly have come into play. 

Where locality pay would boost some upper level feds to much higher salaries, the congressionally mandated limit for executive pay sets an absolute ceiling of $183,500 for those within that pay system. “Limitations on GS pay that correspond to Executive Schedule (EX) pay rates prevent some employees from receiving pay adjustments they would otherwise be entitled to,” as a recent Congressional Research Service report succinctly summarizes the situation. 

Feds overall earn 24% less than similarly employed private-sector counterparts, according to the Federal Salary Council, and underpayment is more pronounced at top-level jobs. 

With those depressing statistics in mind for top feds it’s no surprise that—as federal unions and advocacy organizations have long complained—pay caps wreak havoc on recruitment and retention, particularly at higher levels. Along with their already comparatively low base pay, many upper-level employees hit caps year after year. Increasingly aware they could do better in the private sector, and despite their public-service inclinations, many simply leave for private-sector employment. Meanwhile, among those who remain in federal service salary caps continue to corrode morale. 

Government Executive explored these stubborn issues with Jason Briefel, director of policy and outreach for the Senior Executives Association, an advocacy organization representing more than 8,000 of those high-level feds in the Senior Executive Service, with feds from GS-15 into the Executive Service pay grades. 

Q&A with Jason Briefel

GovExec: What are federal pay caps, and why are they a problem for many federal employees? 

Briefel: This is a longstanding and critical issue for many federal employees. First, you need to take a historical perspective here. The General Schedule classification system, which we still use today, launched in 1949. Now, to the extent government has updated job classifications (which it has not done for far too many occupations) it isn’t the worst thing in the world. But, especially at the upper end, nowadays the GS system has increasing problems. 

GovExec: In what way are there increasing problems—and how do they relate to pay caps? 

Briefel: To see the situation clearly, you must compare the federal Civil Service in the first decades of the post-World War II era with today’s. Most employees back then actually really were “bureaucrats,” with huge numbers in clerical roles. Jobs were concentrated at the lower end of the GS. Only a tiny portion were in upper ranks or management. Today, the situation is the opposite. It’s hard to find a GS-1 through GS-5 in many parts of the government. 

Now, about pay caps—which were invented in more recent decades—they affect more and more upper-level feds. Pay compression and pay caps have been an ongoing topic of conversation among the federal workforce since at least the passage of the Civil Service Reform Act of 1978.  The issues have continued to accelerate and become more dire and pervasive over time. With the transformation toward a more skilled federal workforce, and because pay caps are hit by more feds over time, they are a worsening problem. Until Congress reforms the system further, we are stuck with a personnel system mostly put together too many decades ago. 

GovExec: Why are more and more feds hitting pay caps? 

Briefel: Within the 15 main levels in the GS system, advancement by design was made to be controlled and not that fast—there are provisions in the law to accomplish this. The law stipulates that at lower levels you must spend one year in grade before advancing to the next. And at higher levels, you need two years at that level before you can move to the next. These provisions were put in place to prevent employees from racing up the pay scale too quickly. And decades ago, that made sense and kept the top end of the federal government lean. 

Now, because of the nature of government, far more of the work requires higher-order skills from the start, with a bigger portion of feds operating at those higher levels—like GS-13 through GS-15. The bottom line—as the Office of Personnel Management has documented—is pay compression is prevalent and intensifying for those in GS-14 and GS-15s in and around 30 major cities, or "locality areas.” It’s a big problem, because it means the government is short-changing tens of thousands of employees. We do not have exact data. But these are feds who year to year do not get their full pay increases from their federal employer because of statutory pay caps.

GovExec: Let’s talk solutions: What are some legislative reforms proposed in recent years to ease the unfair effect of pay caps—for instance, that proposed by Rep. Eleanor Holmes Norton, D-D.C.

Briefel: Rep. Eleanor Holmes Norton’s current proposal is not yet far along. We can also talk about a narrative in the Biden administration’s proposed FY 2024 budget. The administration offers strong language of support and their expectation that they will have a proposal to deal with pay compression. We are trying to get more specifics, but realistically it may be a long wait. 

GovExec: Even if the Norton and Biden fixes are so far ill-defined, other fixes have been proposed, right? 

Briefel: The point of all proposed reforms—and our point—is that pay caps and pay compression are a serious problem. Congress will have to act on this. It is not something that the administration on its own can change. The pay cap problem is baked into law. 

GovExec: Though it is very complicated, can you summarize exactly how the pay cap problem is “baked into law”? 

Briefel: To put it simply, the top end of the SES pay band is linked by statute to that of the Executive Schedule (ES), which governs the pay of senior political appointees. And the ES is further limited by law to pay for members of Congress. And, last link here, Congress has frozen those for years now. 

GovExec: That is quite a Gordian knot—the top end of the GS, the SES, the ES for political appointees, all tied together and held down by pay rates for Congress? How did it happen? And if the pay cap part is such an old problem why is fixing it so urgent now? 

Briefel:  It is complicated. It happened, getting tied together, because presumably the original idea was that further congressional action would be taken—so over time all boats would rise and fall together. But then, over a decade ago, Congress made a political decision to freeze its own pay, and dragging into it political appointee pay and pay caps for feds. Reforming pay caps is pressing because, again, it’s gotten worse. The continuing freeze, over time, has created pay and retention problems across the executive branch—for political appointees and all of those in higher-level jobs affected by pay caps. In effect, the linkages in the law end up stealing pay from more and more of the government’s most skilled professionals. As an example, some feds get a combination of compensation plus performance awards. But for those managers or executives who are on this kind of pay-for-performance system, they cannot get above a cumulative cap—meaning their pay is lower than what they would get without the cap. All this is about a deficiency in the pay scale. A lot of stakeholders may want to change it, sure. But the problem is baked into current law.

GovExec: Yet, Congress has chosen for years to keep all these pay systems linked—and, except for some inflation adjustments, frozen? 

Briefel: Right. Every year, in appropriations, by not developing and voting for change on this, Congress has chosen to perpetuate the problem. And it’s a bad problem. Federal workforce pay caps make it harder for people to serve and to stay with federal government work—in GS jobs, as SES and as political appointees. It’s one of those unfortunate “D.C.” things—sometimes a talking point on an issue becomes politically a nearly insurmountable barrier to getting on with solving real problems. The government should not be putting their boot on the necks of its top managers and executives, and expecting their dedication to public service will always overcome their legitimate need to be paid what they’re worth. It has been the government's strategy for far too long to capitalize and profit on people's public service motivation. 

GovExec: How could Congress most efficiently reform the law to end the pay cap problem? 

Briefel: One relatively simple way to address the problem would be for Congress to pass a law de-linking the SES pay scale from the Executive Schedule—period. 

GovExec: So, you would start by decoupling the pay schedule for top-end GS jobs from the pay schedules for Congress and executive branch political positions? 

Briefel: Exactly. You could de-link executive pay from the executive schedule, while still maintaining an overall government-wide cap, say, at the level of the president’s salary—about $400,000. But Congress needs to make pay reforms consistent. We can’t do this piecemeal. For example, already Congress has passed such reforms for parts of the VA workforce. So now many VA medical professionals can earn up in the neighborhood of the president's salary, because of statutory exemptions. Yet meanwhile, VA senior executives are still subject to pay caps! That means a frontline nurse at the VA can earn more than, say, the hospital administrator. It creates real problems for recruitment and retention—something we hear about from our upper-level GS folks. In the end, many just walk down the street and take a job in the private sector, earning tens of thousands more. “I don’t want to leave the mission,” they’ve told me, “But I have a family.” The gap is just too much. 

GovExec: Your point is that when Congress reforms and removes caps for some jobs at some agencies—notably the VA—ironically, it can make the disparity problem at pay-capped jobs more glaring? 

Briefel: That’s right. Congress in recent years has chosen certain professions and occupational categories at certain agencies that they see as particularly critical to a government mission—and some certainly are—and so they made targeted reforms. But these targeted reforms can, and sometimes do, make the overall pay system less coherent, exacerbating pay and morale problems at other jobs. Again, the pay reforms done at VA don’t apply to or help managers at all—and only help those who do frontline healthcare work. 

GovExec: Can you summarize your position on the urgency of federal pay cap reform? 

Briefel: Pay reform absolutely has to be done. I'm also saying it should be noted our laws already require government to use evidence to drive our pilot public policy in this country—that’s the law: the Foundations for Evidence-Based Policymaking Act of 2018. And there absolutely is evidence of our having problems with our policies on federal government pay, and on recruiting and retaining people for many federal jobs—and evidence-based ways to do reform. These are complicated problems, right? So, sure, it will take time for Congress and the government to more truly be data driven—as opposed to ideological policy driven—and to get to much more policy truly driven by data. But every single month in the Chief Human Capital Officers (CHCO) Council, pay caps and pay compression is discussed by OPM and OMB as a top-tier concern—deeply affecting the ability of the government to compete for talent. Reform has to be done.