Salary council finds widening pay gap

Federal employees make an average of 23 percent less than their private sector counterparts, the Federal Salary Council announced Wednesday.

The body, an independent group of salary experts, employee representatives and federal officials that makes determinations each year on the allocations of locality pay, said at its annual meeting that the average gap widened by 6 percentage points from last year.

The council uses data collected by the Bureau of Labor Statistics under the National Compensation Survey to determine the pay gap. Unlike previous years, however, this year's data included small private sector establishments with 50 or fewer employees, resulting in pay gaps averaging 1.6 percentage points higher than when such establishments were not included.

"Each year, federal employees must fight for a higher pay raise than the administration wants," said Colleen Kelley, president of the National Treasury Employees Union and a member of the salary council. "And we need to do this despite a 1994 federal law that was aimed at closing this gap. Pay is a critical factor in the government's ability to recruit and retain skilled and talented employees, and we must do better."

The council also recommended that locality pay raises be distributed next year so that employees living in areas with the largest pay gaps receive the largest increases. That strategy would be in line with President Bush's decision last year to change the locality pay formula so that it takes into consideration the increasing difference between private and public sector pay in some cities, such as New York, compared to others.

The council recommended that employees in all pay areas receive at least some portion of the locality funds in 2008. But allotting larger portions to cities with the largest pay gaps will mean that many cities and the "Rest of U.S." category will get a slightly smaller locality adjustment.

President Bush has proposed a 3 percent average pay raise next year, and has until Nov. 10 to submit a plan for dividing the raise between an across the board increase and locality pay. The House and Senate have drafted legislation providing a 3.5 percent average pay boost. The council recommended that whatever the final overall raise figure turns out to be, next year's across the board increase should be at least 2.5 percent.

In years past, the council has voted to shift some cities into or out of the "Rest of U.S." category, but this time it kept the same 32 locality areas as last year. The private-federal pay gap for Louisville, Ky., rose slightly above that of the "Rest of U.S." category last year, but the council decided to keep the city in the catch-all category and monitor it closely next year. The council also pledged to closely monitor gaps in Austin, Texas, and Memphis, Tenn.

Meanwhile, the council also rejected two locality pay proposals during the meeting.

The Federal Executives Association of Northeastern New York recommended that the council establish a new locality pay area in the Capital Region of New York, where federal agencies have struggled to compete with the private sector and state government on pay and benefits. The federal government in this area also is struggling because of its close proximity to New York City, where employees receive a 24.57 percent locality pay adjustment, the association said.

Representatives from Western Massachusetts unsuccessfully made a case for adding Berkshire County to the nearby Hartford, Conn., locality pay area.

The council's recommendations will go to the President's Pay Agent, a board made up of the heads of the Office of Personnel Management, Office of Management and Budget and the Labor Department. Board members will consider the council's stance and submit their recommendation to President Bush by Nov. 30.