The Federal Salary Council (FSC), the advisory board of the executive branch, issued a report that included its recommendations regarding locality pay beginning in January 2020. While the actual decisions on recommendations to the White House will still be made by the President’s Pay Agent – with reports coming as late as December – what the FSC has to say is also important.

The FSC was established under the provisions of the Section 5304(e)(1) of Title 5 of the United States Code. It exists to provide recommendations on the locality pay program that was created by the Federal Employees Pay Comparability Act of 1990 (FEPCA). This program provides for localized pay differentials – which are also known as comparability payments – for federal employees under the General Schedule (GS). With oversight of federal pay, it also is at the center of the ongoing debate as to whether federal employees are over or underpaid compared to their private sector counterparts.

By law, the President appoints the members of the FSC, and this includes three experts in labor relations and pay policy along with six representatives of federal labor unions or other employee organizations that represent large number of GS employees. Currently, five of the salary council’s members include individuals representing the American Federation of Government Employees (AFGE), National Treasury Employees Union (NTEU) and National Federation of Federal Employees (NFFE).

In Agreement on Some Points, and Disagreement on Others

In recent years the FSC has concluded that there is an overall pay disparity of about 36% between federal and private sector pay. The disagreement comes when it comes to whether pay disparity is universal, or local. Some members of FSC are advocating for an overhaul of how locality pay adjustments are made, with a new focus on industry and career field versus blanket recommendations based on location. Non-union members of the FSC disagree with making changes to the way federal pay schedules are determined.

In a public meeting last November the FSC unveiled five recommendations that could change the way the government evaluates and then compensates federal workers. In its May report, the FSC provided more details on those suggestions.

This would include using the current methodology while also adopting a salary method that “reduces the extent of statistical modeling”; using human capital data and attrition and acceptance rates to make future salary-based decisions; develop a method that compares federal employee pay and benefits to those in the private sector; and finding a way to conduct a comprehensive, periodic review of total compensation for federal civilian, white-collar employees.

The report highlights the partisan lines within the FSC. The AFGE, NTEU and NFFE have noted that they strongly disagree with the methodology recommendations. They argue that the methodology that is used doesn’t paint a complete picture of what it is meant to demonstrate – notably the gap between the salaries of federal works and their state and local government counterparts as well as those in the private sector.

However, at last November’s meeting the council members decided to “agree to disagree” and said that they’d submit the recommendations to the President’s Pay Agent.

“There is no requirement that the salary council speak as one, nor is there any statutory requirement that majority rule,” the council’s chairman, Ron Sanders, told reporters after the November meeting.

Recently, Sanders and Council Members Jill Nelson and Katja Bullock have recommended that the Pay Agent consider alternatives for measuring any disparity between private and federal sector pay. The three have suggested that the Bureau of Labor Statistics and OPM be commissioned to conduct an in-depth study to find the most cost-effective alternatives to better measure the pay gap.

However, the unions on the council have shown more concern with ensuring that any different measures of comparing private sector and federal sector pay would not result in lowering the disparity or possibly impacting federal employee benefits.

Sanders, Nelson and Bullock recommended “Alternative Survey Methodologies,” which were laid out in the report. These included three options that would not require a change in the law: maintaining the status quo, and continuing to use the current salary methodology (NCS/OES Model); modifying the existing methodology, which would include modifying the existing salary survey methodology to improve the validity of its statistical modeling; or verifying the results, including the validating the results of the modeling methodology by examining a set of human capital indicators (HCIs), which could include attrition data, to quantitatively and qualitatively assess the effects of the statistically modeled salary estimates.

Two other options were recommended, and these would require a change in law: assessing the total compensation gap – in addition to comparing federal and non-federal salary, develop a method for comparing the cost of major benefits such as health insurance and pensions in order to assess disparities in total federal and non-federal compensation; and establish a commission to periodically review federal civilian compensation, conducting a comprehensive, periodic review of total compensation for white-collar federal civilians, patterned after DoD’s most recent Quadrennial Review of Military Compensation.

The Salary Council did find some common ground in establishing Des Moines, IA as the new locality pay area; while Imperial County, CA would be the Los Angeles locality pay area.

In recent years there have been a number of new areas that have been added to the federal locality pay system and these include Birmingham-Hoover-Talladega, AL; Burlington-South Burlington, VT; San Antonio-New Braunfels-Pearsall, TX; Virginia Beach-Norfolk, VA; Corpus Christi, TX; and Omaha, NE.

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Peter Suciu is a freelance writer who covers business technology and cyber security. He currently lives in Michigan and can be reached at petersuciu@gmail.com.