OMB chief parries questions about pay gap

Office of Management and Budget Director Mitch Daniels hedged on pay gap issues Thursday during a hearing held to examine President Bush's fiscal 2002 OMB budget request. In February, several lawmakers from Virginia and Maryland pressed the President to close the gap between federal and private sector salaries in his 2002 budget. Bureau of Labor Statistics reports show the gap ranging from 17 percent to 36 percent. In Bush's April budget proposal, federal workers got a 3.6 percent average raise while military workers got a 4.6 percent average raise. "I'm concerned with how federal employees are treated in this budget proposal," Rep. Steny Hoyer, D-Md., ranking member on the House Appropriations Subcommittee on Treasury, Postal Service and General Government, said at the hearing. According to Hoyer, Bush should implement the Federal Employees Pay Comparability Act (FEPCA). Passed in 1990, FEPCA included a formula aimed at closing the gap between federal and private sector salaries over 10 years beginning in 1994. The Clinton administration used a loophole in the law to issue smaller raises each year because it believed that the FEPCA methodology is flawed and because it did not want to increase federal spending. But Daniels indicated that the Bush administration does not yet have a firm position on the matter. "I'm not yet clear," Daniels said when asked if he believed there was a public-private pay gap. "There seems to be some questions about the reliability and methodology used to determine the gap." Rep. Anne Northup, R-Ky., probed Daniels about the role federal benefits play in pay disparity numbers and the impact early retirements has on federal budgets. "So often public employee benefits are constrained by our years of retirement benefits that private sector employees don't have," Northup said. "The cost to the governmental unit that pays is enormous because of [growing] retirement benefits and fewer years of service needed to get those benefits." According to Daniels, the FEPCA discussion may no longer be relevant after 10 years. "Flexibility is sadly lacking in the entire federal personnel system," Daniels said. "Not just in pay and benefits, but in how we recruit and get the people we bring in." Daniels said pay gap issues might have to be addressed through means other than FEPCA. "The answer may well lie in other areas, like dramatically enhancing the ability of federal managers to pay people," Daniels said.