Federal Salary Council Revives Fight Over Federal Employee Pay Comparability

Members of a group tasked with advising agency officials on how to eliminate pay disparities between federal employees and their private sector counterparts are in the midst of a debate on how best to calculate that pay gap, with Trump administration appointees on one side and labor groups on the other.

The Federal Salary Council on Tuesday weighed potential changes to how the Bureau of Labor Statistics calculates pay disparities to determine which regions require their own locality pay levels so that federal employees’ pay keeps pace with workers in the private sector.

The three Trump administration appointees argued that the current methodology does not adequately capture differences in pay and advocated, among other ideas, that the White House propose legislation to require pay comparisons to include “total compensation,” including non-salary benefits like health insurance and pensions. But the proposal, along with two more modest suggestions to widen data collection, were opposed by members representing federal employee unions, who argued the proposed changes were an attempt to “politicize” the council’s work.

Council Chairman Ronald Sanders said the current methodology, which consists of examining the three-year average of a scientific sample of compensation by employers in a region, can be something of a lagging indicator. He cited Charleston, S.C., a region that is not yet eligible to become a locality pay area in part because of recent changes to its labor market.

“First, I’d say it’s obvious to us that the current methodology is problematic, although we can’t necessarily say it’s broken, because it’s the best that the BLS budget can buy,” Sanders said. “But I think it doesn’t tell the whole story. We can continue on and supplement [the existing methodology] . . . these are supportive measures.”

Jacque Simon, director of public policy at the American Federation of Government Employees, took issue with that assessment.

“To be clear, we don’t all think that the methodology is broken or problematic,” she said. “There are some criteria that could be added [to improve locality pay decisions], but the methodology for measuring the pay gap is not problematic or broken.”

A council working group, despite a lack in consensus among its members, criticized the current model as a “black box” that “relies heavily on statistical modeling,” and offered options that would not require a change in law. One would be to continue the current methodology, and another that could be accomplished administratively would be to develop a survey of benchmark jobs, rather than looking at the labor market as a whole. A third option would be to supplement the existing BLS research with additional human capital data like agency attrition rates and recruitment and retention data.

Two proposals that would require legislation include “developing a method for taking benefits into account when comparing federal and non-federal total compensation,” and establishing a periodic “comprehensive” review of total compensation for federal workers, akin to the Defense Department’s quadrennial review of military compensation.

AFGE, the National Treasury Employees Union, and the National Federation of Federal Employees, all of which have a seat on the council, issued a formal dissent of the working group’s staff report blasting it as both “anti-scientific” and improper, given the lack of consensus by the council.

“This year’s workgroup report, however, is a clear attempt to politicize what has been for the last 26 years a technical, apolitical report that has followed the law’s instructions regarding measurement of pay disparities and boundaries of pay localities,” they wrote. “When considering the workgroup report, please understand that wherever the words ‘some members of the workgroup’ appear, it means the administration’s political appointees to the council.”

Proponents of the changes to methodology insisted that the proposals are merely an effort to acquire additional data to aid locality pay decision-making.

“I think it’s a very good idea to use, in our analysis, human capital factors,” said Katja Bullock, who also serves as special assistant to President Trump and the White House associate director of presidential personnel. “Don’t throw away the statistical model, but add additional factors to consideration.”

Union officials largely focused on the proposals to include non-salary benefits in comparisons, which they said were a veiled attempt to either reduce locality pay rates or to justify oft-proposed cuts to the Federal Employees Retirement System and other programs.

“Comparison of benefits should not be considered, since it is beyond the scope of the statute [establishing the council],” NTEU National President Tony Reardon said. “Any comparison like that will eventually be used as justification to reduce federal benefits. BLS cannot provide data on benefits in the private sector—that’s not even currently possible. And any use of outside consultants could potentially expose these programs to unnecessary partisanship.”

NFFE National President Randy Erwin said that the current methodology is important to preserve as a longitudinal benchmark to guide decision-making.

“It’s very important that we maintain a consistent time series of data, without any convoluted additions or contractions,” Erwin said. “We have to limit this discussion to the GS scale, but it’s similar across all the pay systems. People need to know how much federal employees are underpaid compared to the private sector, and I’m opposed to anything other than option 1.”

Sanders said that given the lack of consensus on the council, he will solicit written recommendations from each member to be submitted to the President’s Pay Agent for review by the end of this year.