Hitting the Ceiling

A specialist in the Congressional Research Service is drawing renewed attention to the issue of crowding at the top of the federal pay scale.

Curtis Copeland, a specialist in American national government at CRS, told members of a House subcommittee Tuesday that ceilings limiting maximum compensation are creating compression at the high end of pay schedules, and cases where the officials in one system are paid as much as higher-ups in another. And while pay compression is not a new issue, it is a growing problem, testimony from the hearing indicates.

In 1991, for example, Cabinet secretaries and others at the top of the Executive Schedule were paid 28.2 percent more than employees at the top of the Senior Executive Service scale. But in 2007, top Executive Schedule salaries were only 11 percent more than those of the highest paid SES employees working under certified performance appraisal systems, Copeland said. In fact, top SES employees earned the same salaries as deputy Cabinet secretaries, senators and members of the House -- those in level II of the Executive Schedule.

Last year, the Government Accountability Office found that employees in the Executive Schedule are losing buying power. Using the gross domestic product price deflator, GAO found that Cabinet secretaries make 27 percent less than they did in 1970.

Compression is beginning to affect the upper reaches of the General Schedule as well, Copeland said. Under current law, base and locality pay for employees under the GS system cannot exceed level IV of the Executive Schedule, which stands at $145,400 nationwide, he said. As a result, GS-15 employees at steps 7 through 10 in nine locality pay areas are unable to receive full pay increases, he said.

Pay compression also has caused GS-15 salaries to bump up against the first levels of SES pay, said Linda Springer, director of the Office of Personnel Management. "You have people in GS-15 who don't find it particularly attractive to move to the SES level," she said.

"The primary drivers behind this cascading set of pay compressions appear to be limits on [Executive Schedule] salaries and the linkages between the [Executive Schedule] and other pay systems," Copeland said.

A 1989 ethics reform law includes two provisions under which pay rates for officials under the Executive Schedule can be set, including one that provides for a quadrennial review of such salaries by a Citizens' Commission on Public Service and Compensation. But the commission was never established, largely because initial funding was rescinded in a 1994 appropriations act, Copeland said.

He recommended that Congress begin to re-examine pay compression and connections among federal pay systems "to avert even more pay compression problems in the future." Such an examination has not been conducted since the 1989 ethics reform law was enacted, he said.

Copeland also brought to light reports that federal employees are paid more than their private sector counterparts. He pointed to one article published last month in the Asbury Park (N.J.) Press that concluded that federal workers are paid almost 50 percent more than employees in the private sector.

But Copeland cautioned that there is an established process for comparing GS pay rates to those outside government. Such comparisons are administered by OPM and use data from the Bureau of Labor Statistics. "That process has been examined by top compensation experts in academia and elsewhere, and found to be valid and reliable," Copeland said, concluding that federal and nonfederal pay comparisons outside of the congressionally authorized process are much less precise.

OPM reviews "have found consistently that federal pay lags behind the private sector by as much as 50 percent in some localities," Copeland said.