Federal Advisory Group Finds Feds Are Paid 26.71% Less than Private Sector Counterparts

An advisory board tasked with examining pay disparities between the federal government and the private sector recently found that federal employees on average make 26.71% less than their private sector counterparts, although the group's methodology is hotly debated.

 A recently published report from the Federal Salary Council dated April 2 said that, when including locality pay, federal employees continue to earn significantly less than workers in the private sector. The 2020 figure marks a nearly 5 percentage point decrease in the gap over previous data, which indicated that feds were making 31% less than employees outside of the federal government.

The figure is based on analysis conducted by the Office of Personnel Management and the Bureau of Labor Statistics. But conservatives fault the statistic for not including non-salary compensation and other benefits that come with federal employment, like the Federal Employees Health Benefits Program and the defined benefit pensions of the Civil Service Retirement System and the Federal Employees Retirement System. Critics instead prefer to cite a Congressional Budget Office report that found that feds make 17% more than private sector workers.

Federal employee groups fault the CBO survey for not adequately comparing jobs between federal agencies and the private sector, relying only on an employee’s educational attainment rather than job duties.

Elsewhere in the report, the salary council said that it would not recommend any new locality pay areas by virtue of newly becoming eligible according to its formula for calculating pay disparities. But members agreed that Wayne County, Pa., should become part of the New York locality pay area, as it would meet all of the requirements when accounting for staffing vacancies in the region.

The council also agreed to recommend a number of updates to how the body does its work each year. The first is instituting a 2018 update to how OPM and BLS compare general schedule jobs and private sector Standard Occupational codes—the council has been using comparisons generated in 2000. And the board agreed to continue studying whether to change the minimum number of federal jobs in a region to justify a locality pay area, which currently sits at 2,500.

But much remains unsettled six months after the council’s annual fall meeting. Although the council’s two political appointees, Chairman Ronald Sanders and Member Katja Bullock, want to update the U.S. Census American Community Survey data on commuting patterns, the members that represent federal labor unions said that should only be done if the council adopts revised Office of Management and Budget metropolitan and combined statistical areas, upon which there remains disagreement.

The labor leaders have argued that the new OMB data should only be used in an additive way—regions that were added to statistical areas should be added, but regions that were removed should be grandfathered into locality pay indefinitely. Bullock and Sanders have been reluctant to sign onto this plan, and have insisted on further study before making a decision.

The results of that study, and any subsequent recommendations, will be sent as an addendum to the president’s pay agent later this year.