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Federal Pay and New Locality Recommendations

recommendationsThe Trump administration will soon get a series of recommendations from the Federal Salary Council that outlines how the government might begin to change the way it makes key decisions about employee pay. The council is advancing 5 options, after several months of debate, to the president’s pay agent, comprised of the Labor Secretary and Directors of the Office of Personnel Management and the Office of Management and Budget. These options are being considered when comparing federal pay to the private sector.

Recommendations:

  1. Continue to use the current methodology
  2. Adopt a salary method that “reduces the extent of statistical modeling”
  3. Use other human capital data on attrition and acceptance rates, such as make future salary-based decisions
  4. Develop a method that compares both federal employee pay and benefits to those of the private sector
  5. Find a way to conduct a comprehensive, periodic review of total compensation for federal civilian, white-collar employees.

The first 3 options don’t require a law change but the latter 2 would.

Union Reactions

Federal employee unions who sit on the council include the American Federation of Government Employees, the National Treasury Employees Union, and the National Federation of Federal Employees. They do not agree with the alternatives and voiced their concerns.

The council “is not meant to be a platform for the president’s own views as expressed by his appointee,” AFGE policy director Jacque Simon said. “This year’s workgroup report, however, is a clear attempt to politicize what has been for the last 26 years a technical, apolitical report that has followed the law’s instructions regarding measurement of pay disparities and boundaries of pay localities.”

The unions are concerned the council is using itself as a vehicle to advance the administration’s preference for pay-for-performance over across-the-board pay increases.

The also adamantly defend the Bureau of Labor Statistic’s model to measure discrepancies in pay between the public and private sectors.

“We do not advocate for throwing anything out,” Jill Nelson, the council’s vice chair said. “We are looking more at having more factors on the table. How they’re considered, that will all work its way out, but they are still elements. They should at least be there for consideration.”

Currently, the salary council uses a model which uses the National Compensation Survey for the measuring of non-federal compensation in a particular market and compares it to federal pay for GS employees who perform similar work in the same region.

According to BLS, private sector workers are paid, on average, 30.91% more than their federal government counterparts.

Federal unions argued that agencies have challenges in recruiting and retaining talented workers because Congress never sets aside enough funding to pay employees up to the 30% gap, as the Federal Employee Compensation Act (FECA) tells lawmakers to do.

Ron Sanders, the council’s chairman said, “I would submit that one of the reasons that pay raises aren’t fully funded because of that of the 30% gap is because no one trusts that that gap is 30%.”

Locality pay isn’t the entire solution to recruitment and retention challenges. “We’re not hemorrhaging talent across the board, Sanders said. “We are hemorrhaging talent in some occupations and in some grade levels and in some locations. If our job is to help the government recruit and retain talent, a single number nationwide doesn’t cut it.”

The president’s pay agent could choose one, or any combination of the recommendations. “Those options are points along a continuum,” Sanders said. “They’re not the only options. There’s a lot between here and there, and if the pay agent thinks some of the challenges that we’ve articulated are real, then maybe they should do their own study.”

New Pay Localities Coming Soon

The council did agree on important changes to the locality program. OPM said it intends to finalize Birmingham/Hoover/Talladega, AL; Burlington/South Burlington, VT; San Antonio/New Braunfels/Pearsall, TX; VA Beach/Norfolk, VA as new locality pay areas in time for the first paycheck of 2019.

The president has the final say and must physically set pay rates for these areas.

The agency has also approved Des Moines, IA as a separate locality pay area for 2020. It also recommended Imperial Co, CA as an “area of application” to the Los Angeles area.

The pay agent must still approve these recommendations and OPM must propose and finalize changes with new regulations; then the president must approve them.