Federal salary council

What Is the Federal Salary Council?

The Federal Salary Council is an advisory body within the Executive Branch of the United States government responsible for providing recommendations on the locality pay program for federal employees. It operates within the broader context of Government Compensation & Human Resources, aiming to ensure that federal salaries remain competitive with non-federal wages. The Council submits annual recommendations to the President's Pay Agent, a body comprising the Director of the Office of Management and Budget (OMB), the Director of the Office of Personnel Management (OPM), and the Secretary of Labor²⁶. These recommendations address the establishment or modification of pay localities, the scope of salary surveys, and the calculation of comparability payments²⁵.

History and Origin

The Federal Salary Council was established under the provisions of the Federal Employees Pay Comparability Act of 1990 (FEPCA). This landmark legislation aimed to reduce the pay gap between federal and non-federal employees by introducing locality-based pay adjustments²⁴. Before FEPCA, federal pay scales were primarily uniform across the nation, which often led to difficulties in attracting and retaining talent in high cost-of-living areas. FEPCA mandated the creation of the Federal Salary Council to provide expert advice on how to implement these locality adjustments effectively. The Council replaced the Advisory Committee on Federal Pay, with a key difference being the inclusion of representatives from federal employee labor unions²³. This shift reflected a move towards greater employee representation in the federal compensation setting process.

Key Takeaways

• The Federal Salary Council is an advisory body focused on federal employee pay.
• It primarily provides recommendations on the locality pay program for employees under the General Schedule.
• The Council's recommendations are submitted to the President's Pay Agent for consideration.
• Members include experts in labor relations and representatives from major federal employee organizations.
• Its work aims to help maintain pay comparability between federal and non-federal sectors.

Interpreting the Federal Salary Council

The Federal Salary Council’s recommendations are crucial for understanding the proposed adjustments to federal employee pay, particularly the locality pay component. The Council evaluates data from surveys conducted by the Bureau of Labor Statistics (BLS) to compare federal salaries with those in the private sector across various geographic areas. ²²When the Council identifies a pay disparity, it proposes adjustments to locality pay rates for specific regions. For example, if BLS data indicates that non-federal workers in a particular metropolitan area earn significantly more than federal employees in similar positions, the Council might recommend increasing the locality pay percentage for that area. ²¹These recommendations are then reviewed by the President's Pay Agent, who makes the final determination on locality pay adjustments.

Hypothetical Example

Consider a hypothetical scenario where the Federal Salary Council is reviewing pay disparities for federal employees in "Techville," a rapidly growing metropolitan area. The BLS conducts a national compensation survey and finds that the average salary for IT specialists in Techville's private sector is significantly higher than the salary for federal IT specialists at comparable pay grades under the General Schedule.

Based on this data, the Federal Salary Council might recommend establishing Techville as a new locality pay area or increasing the existing locality pay percentage for the region. For instance, if federal IT specialists in Techville are currently on GS-12, Step 5, and the Council's analysis suggests a 15% pay gap, they would propose a locality pay increase to help bridge this gap. This recommendation would then be forwarded to the President's Pay Agent. If approved, federal employees in Techville would see an increase in their basic pay to better align with local market rates, making federal service more attractive in that specific labor market.

Practical Applications

The work of the Federal Salary Council has direct practical applications for approximately 1.5 million federal civilian employees covered by the General Schedule. ²⁰Its recommendations inform the annual adjustments to federal pay, particularly concerning locality pay rates which vary by geographic area. ¹⁸, ¹⁹For example, the Council may recommend the creation of new pay localities or the modification of existing ones, which can lead to higher salaries for thousands of federal workers in specific regions. ¹⁷These adjustments are crucial for the federal civil service to remain competitive in attracting and retaining qualified professionals across diverse fields. The Office of Personnel Management (OPM) plays a central role in administering these pay policies and ensuring compliance with the Council's and the President's Pay Agent's directives.
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Limitations and Criticisms

Despite its crucial role, the Federal Salary Council and its methodology face certain limitations and criticisms. One frequent critique revolves around the "pay gap" calculation. The Council's analysis often finds a significant disparity between federal and non-federal salaries, sometimes suggesting federal workers are underpaid by a substantial percentage. ¹³, ¹⁴However, critics argue that the Council's "jobs-to-jobs" comparison, which matches federal positions to similar private sector jobs based on job classification, might be misleading. They contend that this approach does not adequately account for differences in employee education, experience, and other "human capital" factors that influence pay.
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Alternative studies, using different methodologies that compare pay for similar workers (based on education and experience), have sometimes found a federal salary premium or a much smaller pay gap. ¹¹This suggests that the Council's single aggregated "pay gap" number may mask significant variations across occupations, grade levels, and locales, potentially overstating the actual pay disparity. ⁹, ¹⁰Such critiques highlight the complexity of achieving true pay comparability and underscore ongoing debates within human resources and public policy regarding federal employee compensation strategies.

Federal Salary Council vs. President's Pay Agent

While often discussed together, the Federal Salary Council and the President's Pay Agent are distinct entities with different roles in the federal pay-setting process.

The Federal Salary Council is an advisory body composed of labor relations experts and representatives from federal employee organizations. Its primary function is to study and recommend changes to the locality pay program, including the definition of pay localities, the scope of salary surveys, and the calculation of comparability payments. ⁸The Council's recommendations are just that—recommendations.

The President's Pay Agent, on the other hand, is a body designated by the President, typically comprising the Director of the Office of Management and Budget, the Director of the Office of Personnel Management, and the Secretary of Labor. Th⁷is agent is responsible for considering the recommendations of the Federal Salary Council and ultimately making the final determinations regarding locality pay areas and proposing locality pay percentages to the President. The Pay Agent also oversees the implementation of federal pay policies. In essence, the Council advises, while the Pay Agent decides and implements.

FAQs

Who appoints the members of the Federal Salary Council?

The President of the United States appoints the members of the Federal Salary Council. By law, the Council includes three experts in labor relations and pay policy, and six representatives from employee organizations that represent a significant number of General Schedule employees.

#⁶## What is the General Schedule (GS) pay system?
The General Schedule (GS) is the primary pay scale used for the majority of civilian white-collar federal employees in the United States. It consists of 15 pay grades (GS-1 to GS-15), each with 10 steps, classifying positions based on the level of difficulty, responsibility, and qualifications required.

#⁴, ⁵## How often does the Federal Salary Council meet?
The Federal Salary Council meets at least once a year to discuss issues related to locality-based comparability payments and prepare its annual recommendations for the President's Pay Agent.

#³## Are the Federal Salary Council's recommendations binding?
No, the recommendations of the Federal Salary Council are advisory only. The President's Pay Agent considers these recommendations but makes the final determinations regarding locality pay adjustments and submits them to the President.

What is locality pay?

Locality pay is a geographic-based percentage rate added to the basic pay of federal employees. It is designed to reflect pay levels for non-federal workers in specific geographic areas, aiming to reduce the pay gap between federal and private sector salaries in different regions.¹, ²