Federal Salary Council Sees Federal Workers as Substantially Underpaid

The Federal Salary Council has concluded, as it has in past years, that federal employees are generally underpaid by about 35%.

Whether federal employees are paid too much or too little is always the subject of intense disagreement.

One recent report noted that federal employees make 78% more than private sector workers and 43% more than state and local workers. It concluded that “The federal government has become an elite island of secure and high-paid employment, separated from the ocean of average Americans competing in the economy.”

But, shortly following this earlier report, the Federal Salary Council has reached a different conclusion. This organization concluded that federal employees are underpaid by 35 percent on average. This “pay gap” cited by the Council is similar to its earlier findings. It found pay gaps for federal workers of 35.37 and 35.28 percent numbers over the last two years.

The Federal Salary Council, which consists primarily of federal union representatives and also has two outside experts, also recommends that more federal employees continue to be put into new or existing locality pay areas. It has recommended adding 12 new locality pay areas for federal employees and these employees will apparently receive the benefit of this new pay bump in January 2016. (See About 102,000 Feds to Get Pay Raise in New and Expanded Locality Pay Areas)

Locality Pay, under the General Schedule pay system used by the federal government, has varying rates for federal pay for a number of larger cities in the country. The rest of the country falls under a category called the “rest of the U.S.”. The result is that more federal employees are receiving higher pay as a result of the locality pay system.

Federal pay expert Howard Risher noted in an article: “The recommendations submitted by the Pay Agent to the President have been rejected annually for two decades.  It’s clear the reported conclusions are not credible. I doubt if even the union members of the Federal Salary Council believe employees on average are paid 34.6% below market rates.”

In a less dispassionate analysis, which disagrees with both extremes, the Congressional Budget Office (CBO) concluded that when adding wages and benefits together, the CBO found that, on average, the federal government pays about 16% more than comparable private sector compensation levels.

In effect, the Salary Council is a way for the unions to work to increase salaries for federal employees within the existing system without going through Congress—a system which most federal workers would probably like as it results in increasing their pay.

A number of other areas are also seeking to be included as a locality pay area. Which of these areas, if any, will ultimately be included remains to be seen. The President’s Pay Agent also has to approve proposed changes from the Federal Salary Council. It is unlikely the Salary Council is too concerned about credibility. The reality is that their recommendations carry weight with the President’s Pay Agent and ultimately may and often do result in higher pay for many federal employees.

No doubt, the debate on federal employee salaries will continue depending on the economic interests of the reporting organization.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47