John Palguta, vice president for policy at the Partnership for Public Service and a leading advocate for civil-service reform, said that the concentration of federal employees into higher paygrades is "not a healthy situation." (James J. Lee / Army Times)
Federal employees are being increasingly concentrated into higher paygrades without taking on greater responsibility, according to a Federal Times analysis of government data.
Since 1998, the percentage of employees in grades 12 to 15 — the highest four grades before reaching the executive ranks — http://militarytimes.com/static/projects/pages/101011_fed_grade_creep_2.jpg">increased from 48 percent to nearly 64 percent.
Experts say inflated grades — and the higher salaries that come with them — unnecessarily cost the cash-strapped government at a time when it can least afford waste.
"Everybody complains that more of [the] budget goes to paying salaries, and you wonder how much of that could be savings if people were properly classified," said former Office of Personnel Management pay policy executive Henry Romero. "It's not going to [eliminate] the government's deficit or anything. But if you think about how many tens of millions of dollars go to salaries of people who are overgraded, could they be better spent somewhere else? Equipment, facilities or other improvements?"
John Palguta, vice president for policy at the Partnership for Public Service and a leading advocate for civil service reform, agreed.
"It's not a healthy situation," Palguta said. "These numbers tell me there's something going on. In these tough budget times, this suggests we could do better."
President Obama last month called for a new high-level commission as part of his deficit-reduction plan that would recommend ways to overhaul the General Schedule to make it more market-sensitive and performance-focused. Palguta said that task force should take a close look at grade creep and poor job classification.
Grade inflation has been going on for decades and the reasons behind it vary, Romero said. Some employees take on more responsibility and duties, and receive a new paygrade and salary that reflects their higher work level — as the system is supposed to work. But some see grade promotions as a reward for doing a good job — not a recognition that their job has changed. As a result, the government is paying higher salaries for life — and resetting employees' step increase schedules so they'll get future raises faster — for essentially the same work, he said.
"There is a cost to satisfying one person's desire to have a higher grade," Romero said.
These promotions add up and prompt other employees to demand grade promotions, as well. Over time, an office has redefined how it classifies an entire job category.
"Some see it as an entitlement — the expectation that if I get hired as a [GS] 7 to 9, and if I'm a good worker, I should be promoted to a higher grade level, regardless of whether I have higher duties to perform," Romero said. "Then that becomes the new norm. If they get promoted to a 9, the person across the hall says, ‘Hey, we do the same work.' Pretty soon, in the interest of equity, everybody gets upgraded. And that's the target for the next vacancy, because that's what people [in those jobs] are already being paid."
This turns the GS system into a de facto pay band, Romero said, and renders the GS system's classification of jobs in specific grades meaningless.
The trend is apparent in http://militarytimes.com/static/projects/pages/101011_fed_grade_creep_1.jpg">several of the government's most common occupations — accountants, budget analysts, contracting specialists, program analysts and others.
New hires are creeping up, too
Grades GS-12 to 15 also make up a larger portion of new hires at many leading agencies.
Palguta said agencies sometimes have difficulty finding qualified job candidates and will bump up the vacancy's paygrade and starting salary to lure better-qualified candidates. This is a sign that the GS system is flawed and does not effectively track market rates, he said.
"Since they can't adjust pay based on the market, they adjust it by pushing up the grade level," Palguta said. "It's not random greed or nefariousness. Sometimes it's managers doing the rational thing when faced with an irrational system."
This kind of jury-rigging of the GS system doesn't cause a problem when the economy is booming and the government has a hard time competing for top talent, Palguta said. But when the job market softens and candidates flock to federal job vacancies, he said, the floor has already been set higher, and agencies rarely push the grades back down.
"I've never seen an organization where managers are campaigning with HR staff to lower grade levels," Palguta said. "It's the kind of upward pressure that never entirely goes away."
Romero said when the rules for grade promotions get blurred, it hurts the government in less tangible ways. Traditionally, federal employees are supposed to advance by moving to different jobs or seeking out new responsibilities, he said.
But if they think they can stay in their current job with the same responsibilities and still get promoted to a higher grade, they have no incentive to excel, he said.
"People strive less to stand out and go above and beyond," Romero said. "All they have to worry about is demonstrating competence to their current boss."
This is unfair to employees who take on new responsibilities and genuinely deserve a promotion, he said.
Not everyone agrees that grade creep is largely to blame for the upward shift in the federal workforce. John Crum, director of the Merit Systems Protection Board's Office of Policy and Evaluation, said that even within individual jobs such as contracting and information technology, the level of work expected is increasing and growing more complicated. As a result of those increased responsibilities, Crum said agencies may be rightfully beefing up their grade levels — though he said grade creep probably also plays some part.
Fixing the problem
Palguta said the only way to solve grade creep is to change the government's pay system so salaries are not determined by hard-and-fast grades — where a GS-13 attorney is paid the same as an equally graded contracting specialist or human resources specialist.
Instead, pay scales for specific grades in specific occupations should reflect what the market is paying. This would allow agencies to offer more money to hire a new employee, or keep an existing employee, when a particular skill is in demand, and bring the salaries back down when the market cools.
"The only real answer to this is to change the pay system," Palguta said. "You give people a system that doesn't work very well, you get unintended outcomes."
The government currently adjusts its pay scales based heavily on salary averages within broader occupational categories — averaging salary changes for, say, accountants together with information technology specialists, even if one job's average pay goes up and another's drops.
Palguta and other critics say this means that any distinction in how different jobs are compensated is lost.
The Agriculture Department, which hired 602 employees at grades 12 to 15 in 2010 compared with 397 in 2006, said it is hiring to replace retirees, which often fall into that grade range. As a percentage of all new hires at the department, those at grades 12 to 15 dropped from 37 percent in 2006 to 32 percent in 2010.
The Justice Department hired more than 1,000 GS-12s to 15s in 2010, nearly three times the number hired in 2006. The department says it needs seasoned employees to fill mission-critical occupations related to counterterrorism and violent crime, and that the economic downturn is causing midcareer job seekers to apply in droves.
But as a proportion of all new hires at Justice, those in the GS-12 to 15 range dropped from 27 percent in 2006 to 25 percent in 2010.
Most agencies hiring greater numbers and percentages of new employees in grades 12 to 15 declined requests for comment for this story, or said they did not know why they were hiring more employees at higher grades. OPM declined to comment.
For this analysis, Federal Times examined the demographics of professional and administrative, full-time permanent nonseasonal employees in the GS system and related pay plans using data from OPM's Central Personnel Data File.
Professional and administrative employees make up nearly two-thirds of the nonpostal federal workforce, usually hold college degrees and help run programs and conduct analyses.
Clerical, law enforcement, blue collar and technical jobs do not fall under that category and were not analyzed for this story. That means the government's grade inflation cannot be attributed to its fast-dwindling ranks of clerks and other lower-graded, unskilled support jobs.