This Is What an Overhaul of the Federal Employee Pay System Could Look Like

The civil service system that governs the federal workforce is outdated and counterproductive, according a new report, and should be overhauled to improve hiring practices, reward top performers and create a more market-based pay structure.

The current system is a “relic of a bygone era” that does not account for vast changes in the demographics of the federal workforce and the scope of its mission over the last several decades, the report by the nonprofit Partnership for Public Service and consultancy Booz Allen Hamilton said.

“The work of government has changed,” the report said. “The way we work and the skills needed have changed. And the world has changed. Our civil service system has not kept pace.”

Many aspects of that system date back to 1949, PPS and Booz Allen noted. Just in the past 15 years, the number of federal employees working in professional or administrative positions has risen 10 percent, to nearly two-thirds of the workforce. The current system fails to recognize the evolving complexity of the federal government and the increased role it plays in American lives, according to the report.

This has resulted in a need to overhaul the General Schedule pay system, the report said. Positions designated as GS-5 through GS-15 should be consolidated into five levels, according to the study: Entry/Development, Full Performance I, Full Performance II, Expert and Manager. Currently, nearly nine in 10 feds in professional/administrative positions serve as GS-10s or higher, and the new system would bring more equity and clarity into the pay grades.

Under the proposed model, the White House and Congress would set total compensation for every agency each year. Pay would mirror a market-sensitive formula and be determined for each occupation in a way that more closely aligns with the private sector. The plan would also eliminate across-the-board pay raises, instead only awarding increases to individuals whose performance exceeds expectations.

PPS and Booz Allen said the existing system does little to reward high performers or punish poor performers, and its overhaul would lead to greater accountability.

The report called the federal hiring system complex and mysterious, leading to a clouded judgment of which candidates are best qualified to fill a position. Additionally, rigid policies that were designed to retain employees in the long term have discouraged flexibility and innovation.

“The civil service system has become a maze of rules and procedures that are not perceived as rational by the people who serve in government or by the general public,” the report stated.

The study recommended extending governmentwide hiring flexibilities enjoyed only at “excepted” agencies, holding managers accountable for their hires, creating better governmentwide assessment tools and making re-entry into federal service easier.

Top-level managers should have inter-agency or inter-governmental experience, PPS and Booz Allen said, and the government should generally encourage job mobility. This would create a better pipeline for new leadership, instead of fostering supervisors with deep knowledge but narrow perspectives. Senior executive positions would be categorized into four tiers, with the top level reserved for those with the most diverse resumes. The analysts also suggested setting aside more senior positions for career employees, thereby limiting the total number of political appointees. 

The report’s authors would also revamp the Merit Systems Protection Board to expedite the process for employees accused of wrongdoing.

The analysts said federal stakeholders such as employee unions must be included in the implementation of these reforms, but the proposals should generally not be considered controversial.

“There are legitimate differences of opinion about what government should do,” the report said, “but none about wanting whatever government does to be done well.”

The American Federation of Government Employees, however, found plenty to criticize. The union said in a statement that the proposals are not original, and accused Booz Allen of trying to “drum up new business, now that the Department of Defense is starting to put the brakes on its contract spending.”

The proposed pay structure would “reallocate salary dollars from rank-and-file, frontline employees to managers,” and the MSPB changes would leave federal employees with fewer options for challenging adverse personnel actions, AFGE said. 

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