What Are Comparability Payments?
Comparability payments are a component of compensation designed primarily for U.S. federal employees, falling under the broader category of Public Sector Compensation. These payments aim to bridge the gap between federal government salaries and those in the non-federal sector for comparable work in specific geographic regions. The objective of comparability payments is to ensure the federal government can attract and retain a qualified workforce by offering competitive total compensation that aligns with prevailing labor markets. These payments are a key mechanism in the federal pay system to address regional differences in pay.
History and Origin
The concept of comparability payments for federal employees gained legislative traction with the enactment of the Federal Employees Pay Comparability Act of 1990 (FEPCA). Prior to FEPCA, federal salaries had significantly lagged behind those in the private sector. The law was designed to provide guidelines to achieve pay comparability between federal and non-federal jobs, introducing a two-part annual pay adjustment for General Schedule (GS) workers: an across-the-board increase and a locality pay adjustment that varies by geographic area. While FEPCA established a formula to determine annual pay raises, the full implementation of this formula has often been overridden by presidential authority due to budgetary or economic concerns since 1994.15
Key Takeaways
- Comparability payments are designed to align federal employee salaries with private sector pay in local areas.
- They are authorized under the Federal Employees Pay Comparability Act of 1990 (FEPCA).
- The Bureau of Labor Statistics conducts surveys to determine pay disparities for these payments.
- Comparability payments are considered part of basic pay for purposes such as retirement and life insurance.
- The actual implementation of statutory pay increases has often been adjusted due to budgetary concerns.
Interpreting Comparability Payments
Comparability payments are determined based on surveys conducted by the Bureau of Labor Statistics (BLS). These surveys compare GS pay rates with salaries generally paid to non-federal workers for similar levels of work within specific geographic locality pay areas. The purpose is to identify a pay gap and reduce the disparity between federal and non-federal pay. An employee's comparability payment is the difference between their locality rate and their scheduled annual rate of basic pay. These payments are intended to ensure fair compensation, helping with recruitment and retention of skilled federal employees.13, 14
Hypothetical Example
Consider a hypothetical federal employee, Sarah, who is a GS-11 accountant working in a specific metropolitan area. The Office of Personnel Management (OPM) determines that, based on BLS surveys, the average private-sector accountant with comparable skills and responsibilities in Sarah's locality earns 20% more than the national GS-11 base salary. To address this disparity, a locality pay percentage (a form of comparability payment) of 15% is authorized for Sarah's area.
If Sarah's national GS-11 base salary is $70,000, her comparability payment would be calculated as 15% of that base salary.
Comparability Payment = $70,000 * 0.15 = $10,500
Her total scheduled annual salary, including the comparability payment, would be:
Total Salary = $70,000 (Base) + $10,500 (Comparability Payment) = $80,500
This ensures Sarah's earnings are more competitive with her private-sector counterparts in her specific geographic location.
Practical Applications
Comparability payments are primarily applied within the U.S. federal government's compensation structure. They are crucial for maintaining the competitiveness of federal salaries across different regions of the country. These payments address disparities in pay between federal and non-federal workers, which is vital for the government's ability to attract and retain a high-quality workforce, particularly in areas with a higher cost of living or more robust private-sector salaries. The Federal Salary Council, composed of labor relations and pay policy experts, provides recommendations on the locality pay program to the President's Pay Agent.11, 12
According to the U.S. Department of Commerce, locality-based comparability pay is specifically designed to reduce the disparity between Federal and private sector pay, with the goal of bringing it to within five percent over a period of nine years. The amount of the increase is based on survey data gathered by the Bureau of Labor Statistics.10
Limitations and Criticisms
Despite their intent, comparability payments have faced various criticisms and limitations. One significant challenge is that the statutory formula for determining these payments has rarely been fully implemented due to budgetary concerns, leading to persistent pay gaps between federal and non-federal employees.8, 9 Critics argue that the methodology, which often relies on a single locality rate for an entire geographic area, may not accurately reflect variations in pay for different occupational groups within that same labor market. This can lead to some mission-critical occupations being underpaid while others might be overpaid.7
Additionally, some analyses suggest that while comparability payments aim to close the gap in cash earnings, they may not fully account for differences in comprehensive benefit packages, such as civil service pensions and health insurance coverage, which are often considered more generous in the federal sector.6 The President's Pay Agent, consisting of the heads of the Office of Management and Budget, the Office of Personnel Management, and the Department of Labor, has acknowledged these methodological concerns and has called for legislative reforms to the federal pay system.5
Comparability Payments vs. Special Rate Pay
While both comparability payments and Special Rate Pay aim to address pay disparities for federal employees, they serve distinct purposes. Comparability payments are broad, locality-based adjustments designed to reduce the overall pay gap between federal and non-federal salaries for similar work across designated geographic areas. They apply to most GS employees within defined pay localities based on comprehensive surveys of local labor markets.
In contrast, Special Rate Pay is typically authorized for specific occupations or categories of positions where the federal government faces severe recruitment and retention difficulties due to significantly higher private-sector pay, undesirable working conditions, or remote locations, regardless of a general locality pay gap. These rates are usually higher than the standard GS schedule or locality pay for that position. An employee receives the higher of the applicable locality rate or the special rate.3, 4
FAQs
How are comparability payments determined?
Comparability payments are determined by comparing federal General Schedule (GS) pay rates with the rates paid to non-federal workers for similar work in specific geographic areas. The U.S. Bureau of Labor Statistics (BLS) conducts surveys to gather this data, and the President's Pay Agent, advised by the Federal Salary Council, recommends the appropriate adjustments.
Do all federal employees receive comparability payments?
Most General Schedule (GS) employees are eligible for comparability payments. However, employees covered by a special pay authority for critical positions or those receiving certain special rates might be ineligible or receive the higher of their special rate or locality pay. Employees' eligibility also depends on their official worksite location.
Are comparability payments the same as cost-of-living adjustments?
No, comparability payments are not the same as cost-of-living adjustments. Comparability payments are based on wage differences between federal and non-federal jobs in specific labor markets, aiming to close a pay gap. Cost-of-living adjustments, while also influencing purchasing power, are typically tied to changes in consumer prices or inflation rather than direct salary comparisons with the private sector.
Can comparability payments change annually?
Yes, comparability payments are reviewed and can be adjusted annually. While the Federal Employees Pay Comparability Act (FEPCA) outlines a formula for these adjustments, the President has the authority to propose an alternative pay plan based on national emergency or serious economic conditions, which can lead to variations in the actual percentage increase provided each year.1, 2