Federal Agency Staffing Problems in California Should Trigger Alarms

A new report from the Partnership for Public Service, “California’s Talent Gap,” captures the tremendous challenges agencies must overcome in attracting a new generation to federal service. The report highlights needed changes in government’s recruiting and employment practices. The California story illustrates problems that are or soon will be the same in other states.

The report is on point but the magnitude of the projected loss of talent demands broader reform than the employment process. Federal employment in the state is close to 150,000. In addition to all the federal offices across the state, there are 32 military bases, 13 federal prisons, 9 national parks, 10 VA medical centers, numerous federal courts, several international airports and shipping ports, the Mexican border, and millions of acres of federal land to manage and protect.  

“By 2028, nearly 50% [of current employees] . . will be eligible to retire.” Over the decade thousands will retire and others leave government for new employers. Added to that is the need to retrain employees so they are ready for that future. That reality has serious implications for day-to day agency operations. It should set off alarms in HR offices.  

Pay is an important issue, of course. California salaries are among the nation’s highest. The four locality areas—Los Angeles, Sacramento, San Diego and San Jose/San Francisco—highlight the complexity of the state’s labor markets. The Partnership’s report downplays the pay concerns and instead focuses on the high cost of living and commuting problems. The reason is simple: The individuals interviewed for background in preparing the report have no expectation that salaries will be raised to competitive levels.

Starting Salaries Are A Problem

Federal starting salaries are low – significantly below market. Currently, the GS 7 starting salary in the San Francisco/San Jose area is $51,026. San Jose is in the heart of the Silicon Valley. The salary-level of technology jobs is certainly important but atypical of broader pay problems. For a more instructive comparison, a widely used private sector survey shows average salaries for specialists in three commonly defined jobs in their first year of employment are: Accountant, $81,435; Chemist, $73,744; and Industrial Engineer, $94,870.

Outside of the locality pay areas, GS salaries are the same across the country; GS 7, step 1, in the Rest-of-US or RUS schedule is $42,053. When an agency in rural California has an opening for a new college grad, the starting salary offer is no different than in Mississippi, West Virginia or Arkansas. (The May 2019 Federal Salary Council report shows the RUS average gap was 34%. The report’s Attachment 4 shows estimated gaps for a list of cities in the RUS. The gaps range from 17% in, Lawton, Oklahoma, to 45% in Des Moines, Iowa. Surprisingly Tulsa, Oklahoma, is the second highest. The average is meaningless.)  

But government is not only competing on entry-level salaries. For qualified candidates, private employers have the flexibility to negotiate starting salaries and sign-on bonuses and promise six-month salary reviews. They can also brag about their culture and values, promise developmental training and career opportunities, commit to coaching and mentoring, etc. They have the flexibility to do what’s necessary.

In today’s tight labor markets, companies compete aggressively for the talent essential to their operations. That competition is job-specific and their employment practices are planned to match or exceed the job offers from other employers in the relevant labor market. The Partnership report concludes with six recommendations for agency hiring managers. When compared with best practices in the business world, government is at a serious disadvantage.

But the Pay Gaps Are Suspect

Pay levels in California have been high for decades. The most recent Bureau of Labor Statistics survey (May 2018) shows the average worker in the United States annually earned $51,960. Across California the average was $59,160—14% higher. Pay differentials in urban areas have been widely reported. According to the BLS, the average worker in San Francisco/Oakland earned $72,400—39% higher. Surprisingly, perhaps, workers in Los Angeles/Long Beach earned considerably less at $57,890, or 11% more than the US average. In San Diego the average is $58,090 and in Sacramento it’s $56,430.

Using federal survey data, the Partnership report shows that federal workers earn 47% less than the average worker in San Francisco and 41% less in Los Angeles. (The source of the percentages is not reported.)

Competing for talent starts with job-specific market data that accurately report what jobs are paid by competing organizations. All the black box statistics cannot make BLS data useful. Their focus is on pay increase rates, not on what similarly defined jobs are paid. In surveying all work sites with at least one employee, BLS data include thousands of small, mom-and-pop employers that are not competing with federal agencies for talent. For those reasons, BLS data are useless in developing a staffing strategy.

To illustrate the point, data from the most recent BLS survey (May 2018) show the average salaries in the San Jose area for the same three jobs: Accountant, $91,060; Chemist, $95,500, and Industrial Engineer, $124,940. A widely used private sector survey shows the average employees in the same jobs are paid: Accountant, $96,597; Chemist, $106,330; and Industrial Engineer, $128,747. The lower BLS averages could be attributable to the inclusion of small employers.  

To take a fresh look at the pay gap, the FedScope database shows the average federal employee in those jobs in California (data are not reported separately for San Jose) is paid: Accountant, $117,401 (if the average is limited to Cabinet level agencies, it drops to $96,088); Chemist, $113,586, and Industrial Engineer, $97,807.

Based on more credible survey data, there is no evidence of a 47% differential. For the three jobs, the gap flips and favors government. Clearly all San Francisco workers are not underpaid.  On average, incumbents in the three jobs are paid competitively.

The situation in the San Jose/San Francisco labor market is not unique. Seattle is another high pay area. The private sector survey shows the following average salaries: Accountant, $84,162; Chemist, $91,938; and Industrial Engineer, $112,559. FedScope data for Washington state (not limited to Seattle) shows the average federal employee in these jobs is again paid competitively: Accountant, $87,582; Chemist, $98,993; and $85,272. The pay gap also disappears in Boston, another high pay city, and no doubt would again disappear if data were compiled for other jobs and locations. 

The Problem is the Civil Service System

Survey data limited to three jobs clearly does not make the case. However, developing job-by-job market data is the universal approach for salary planning in other sectors. With the array of federal jobs and locations, it’s a big but very doable job. Problem solving starts by defining the problem. 

Government has a serious staffing problem. The situation confronting agencies in California is not significantly different in other states. Other cities share the problems, including Washington.

A May story in The Hill, “Fewer graduates are choosing government jobs,” reported the percentage of graduates from public policy programs going into government has declined over a 16-year period. Graduates “no longer equate ‘public service’ with ‘government service.’” This was not the first time the trend has been reported.

In the Partnership report the final recommendation for agency hiring managers focuses on “collecting metrics to evaluate which approaches work best.” That should be broadened to all HR policies and practices. An early step is workforce planning to anticipate the loss of talent and the need for future skills. Government’s HR specialists need to get on the metrics bandwagon.

The array of jobs, locations, needed skills, workforce demographics, and unusually tight labor markets all contribute to talent gaps that cannot be solved within the rigid civil service system.  Agencies need the flexibility to address specific concerns. The alarms will grow louder.