The Federal Employees Pay Comparability Act of 1990 is a U.S. federal law designed to ensure that salaries for government employees are comparable to those in the private sector. This legislation falls under the broader category of Public Finance. It aims to reduce the disparity between federal and non-federal pay through a system that includes locality-based pay adjustments. The Federal Employees Pay Comparability Act of 1990 is often referred to by its acronym, FEPCA.
History and Origin
The roots of federal employee pay adjustments based on prevailing local rates date back to the Civil War, initially applying to blue-collar workers. Over time, the system evolved, leading to the establishment of the Federal Wage System (FWS) in 1972 to standardize pay for trade, craft, and laborer employees. By the 1980s, a significant pay gap emerged, with federal civil servant salaries in the executive branch falling behind those in the private sector. In response, the Federal Employees Pay Comparability Act of 1990 (FEPCA) was enacted on November 5, 1990, as Section 529 of the Treasury, Postal Service and General Government Appropriations Act, 1991. Its primary objective was to provide guidelines for achieving pay comparability between federal and non-federal jobs, particularly for those under the General Schedule (GS) pay system.
Key Takeaways
- The Federal Employees Pay Comparability Act of 1990 (FEPCA) is a U.S. federal law aiming to align federal employee salaries with private sector pay.
- FEPCA introduced a two-part annual pay adjustment: an across-the-board increase and a locality pay adjustment.
- The Act established the President's Pay Agent and the Federal Salary Council to recommend locality pay amounts.14
- Despite its goals, FEPCA has not been fully implemented due to presidential authority to propose alternative pay plans during national emergencies or serious economic conditions.
- FEPCA authorized recruitment and relocation bonuses and retention allowances for specific situations.
Formula and Calculation
The Federal Employees Pay Comparability Act of 1990 (FEPCA) outlines a formula for annual pay adjustments for General Schedule (GS) employees. This adjustment comprises two main components:
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Across-the-Board Pay Adjustment: This component is designed to be a percentage increase equal to the 12-month percentage increase in the Employment Cost Index (ECI), minus one-half of one percentage point.13 The ECI is a widely used economic indicator that tracks changes in the costs of labor.
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Locality Pay Adjustment: This adjustment varies by geographic area and is intended to reduce the pay disparity between federal and non-federal jobs in specific localities to no more than 5%.12 The amount is determined based on annual surveys conducted by the Bureau of Labor Statistics (BLS) comparing federal and non-federal pay rates for similar work in different regions.11 This helps address regional economic disparities.
These two components combine to determine the overall annual pay raise for federal employees. However, it is important to note that while FEPCA provides this automatic formula, presidents have the authority to propose alternative pay plans.
Interpreting the Federal Employees Pay Comparability Act of 1990
Interpreting the Federal Employees Pay Comparability Act of 1990 (FEPCA) involves understanding its intent to bridge the gap between federal and private sector compensation. The core idea is that federal employees should receive pay that is comparable to their counterparts in the non-federal workforce, considering variations in cost of living across different regions. The law's emphasis on locality pay aims to ensure that a federal employee in a high-cost urban area receives more than one in a lower-cost rural area, reflecting the local labor market conditions.
The ongoing pay disparities, despite FEPCA's existence, highlight the challenges in fully implementing such comprehensive legislation. The ability of the President to propose alternative pay adjustments means that the actual increases may not always match the formulaic outcomes. This can lead to continued discussions about pay equity within the federal workforce. The General Accountability Office (GAO) frequently reports on the status and effectiveness of federal pay programs, providing insights into the persistent pay gaps.10
Hypothetical Example
Imagine a federal employee, Sarah, works in a high-cost metropolitan area. Under the provisions of the Federal Employees Pay Comparability Act of 1990, her annual salary adjustment would be calculated in two parts. First, there's an across-the-board increase based on the national Employment Cost Index, for example, 2.5%. Second, because she works in an area identified as having a significant pay disparity between federal and non-federal jobs, she would also receive a locality pay adjustment. Let's say the locality pay for her specific region is determined to be an additional 15% of her base pay to bring her compensation closer to that of private sector employees performing similar work.
If Sarah's base salary is $60,000, her pay adjustment would be:
- Across-the-board increase: $60,000 * 0.025 = $1,500
- Locality pay adjustment: $60,000 * 0.15 = $9,000
Her total increase for the year would be $1,500 + $9,000 = $10,500, making her new salary $70,500. This example illustrates how the Act aims to adjust federal salaries based on both national economic trends and specific regional economic conditions. This dual approach helps maintain a more equitable compensation structure.
Practical Applications
The Federal Employees Pay Comparability Act of 1990 (FEPCA) has several practical applications within federal employment and broader economic analysis. Primarily, it serves as the statutory framework for setting and adjusting the salaries of a significant portion of the federal workforce, particularly those under the General Schedule (GS) pay system. This directly impacts the personal finances and disposable income of millions of government employees.
Beyond individual salaries, FEPCA influences human capital management within federal agencies. The ability to offer competitive pay, including locality adjustments, is crucial for recruiting and retaining skilled professionals, especially in occupations where private sector demand is high.9 Furthermore, the data collected by the Bureau of Labor Statistics for FEPCA's locality pay determinations provides valuable insights into regional labor markets and pay trends, which can be used by economists and policymakers for broader economic analysis. The U.S. Office of Personnel Management (OPM) provides extensive resources and regulations related to FEPCA's implementation and impact on federal compensation.8
Limitations and Criticisms
Despite its intent, the Federal Employees Pay Comparability Act of 1990 (FEPCA) has faced limitations and criticisms regarding its full implementation and effectiveness. A primary criticism is that FEPCA's provisions for automatic pay raises, particularly locality pay, have rarely been fully realized as intended. Presidents have the authority to propose alternative pay plans if they determine that "national emergency or serious economic conditions affecting the general welfare" make the statutory increase inappropriate. This has often resulted in lower raises than the FEPCA formula would mandate.
The Government Accountability Office (GAO) has consistently reported on the persistent pay gaps between federal and non-federal employees, indicating that FEPCA's goal of reducing these disparities to no more than 5% has not been met since its authorization in 1994.7 As of March 2020, non-federal pay was, on average, 23% higher than federal pay for similar jobs.6 Critics argue that this undercuts the Act's original purpose of maintaining competitive federal salaries, potentially affecting the government's ability to attract and retain top talent.5 Furthermore, some discussions have revolved around whether FEPCA adequately considers all aspects of compensation, such as employee benefits, when comparing federal and private sector pay.4 The ongoing debate about FEPCA's implementation highlights the complex interplay between fiscal policy and federal workforce management.
Federal Employees Pay Comparability Act of 1990 vs. Federal Employees Compensation Act
The Federal Employees Pay Comparability Act of 1990 (FEPCA) and the Federal Employees' Compensation Act (FECA) are distinct pieces of legislation related to federal employees, often confused due to similar acronyms but serving entirely different purposes.
FEPCA, as discussed, primarily deals with the salaries and pay adjustments for federal employees. Its goal is to ensure that federal salaries are comparable to those in the private sector, incorporating factors like locality pay to account for regional differences in the cost of living and labor markets. It's a forward-looking mechanism for determining employee compensation.
In contrast, the Federal Employees' Compensation Act (FECA) is a workers' compensation law. It provides benefits for federal employees who sustain injuries or illnesses arising out of and in the course of their federal employment. These benefits can include medical care, wage loss replacement, and vocational rehabilitation. FECA is designed to provide a safety net for employees who are injured on the job, addressing the financial and medical consequences of work-related incidents.3
Essentially, FEPCA is about how much federal employees are paid, aiming for fair and competitive wages, while FECA is about what happens when a federal employee is injured or becomes ill due to their work, providing necessary support and disability benefits.
FAQs
What is the main purpose of the Federal Employees Pay Comparability Act of 1990?
The main purpose of the Federal Employees Pay Comparability Act of 1990 (FEPCA) is to ensure that federal employee salaries are comparable to those paid for similar work in the private sector, accounting for local market conditions.
How does locality pay work under FEPCA?
Locality pay under FEPCA involves annual adjustments to federal salaries based on surveys that compare federal and non-federal pay rates in specific geographic areas. The goal is to reduce pay disparities in those localities.
Has FEPCA been fully implemented as intended?
No, the Federal Employees Pay Comparability Act of 1990 has not been fully implemented as intended. Presidents have often exercised their authority to propose alternative, lower pay increases than the formula outlined in the Act.
What is the Employment Cost Index (ECI) and its role in FEPCA?
The Employment Cost Index (ECI) is a key economic indicator used in FEPCA's formula for the across-the-board pay adjustment. The general increase for federal employees is linked to the 12-month percentage increase in the ECI, minus a small deduction.2 This helps to incorporate broad labor market trends into federal pay adjustments.
What is the Federal Salary Council?
The Federal Salary Council is an advisory body established by FEPCA that recommends locality pay amounts and modifications to locality pay areas to the President's Pay Agent.1 The council plays a role in identifying and addressing pay gaps between federal and non-federal jobs.