Federal employees on average see a 31.86 percent difference between their paychecks and those doing the same work in the private sector, according to an April 10, 2018, report submitted to the Federal Salary Council by its Locality Pay Working Group.
The working group calculates the pay gap between federal employees and their private-sector counterparts by taking sample data from the Bureau of Labor Statistics’ National Compensation Survey in areas of the country in which federal employees receive locality pay and averaging those pay rates into a format that is comparable with federal general schedule rates.
Federal employees can receive locality pay on top of what the general schedule rates allow for their position if the government has determined that the cost of living in that locality is higher than the rest of the U.S.
These 46 established and four pending locality pay areas can span wide swaths of the U.S., such as the entire states of Hawaii and Alaska, to make up for cost-of-living expenses.
The Washington-Baltimore-Arlington locality, for example, would have seen a nearly 88 percent pay disparity from 2015 to 2017 without the addition of locality pay, according to the report.
The target disparity for the whole of the federal workforce is five percent, according to the report, giving the government a long way to go to bring employee pay in line with targets.
In 2017 and 2018 reports, the Council recommended that Burlington, Vermont; Virginia Beach, Virginia; Birmingham, Alabama; and San Antonio, Texas, be established as new locality pay areas, and the President’s Pay Agent approved that recommendation, though the regulatory process to make that change has yet to be undertaken.
For 2019 pay, the working group also recommended that Corpus Christi, Texas, and Omaha, Nebraska, be established as locality pay areas, as pay disparities in those areas have exceeded the rest of the U.S. by more than 10 percent in the past three years.
Federal employee base pay has seen fairly steady increases since 2014, hovering at or just above one percent. U.S. code calls for increases in basic pay equal to the percentage increase in the Employment Cost Index minus half a percent. As the ECI increased to 2.6 percent in September 2017, the GS basic pay increase for 2019 should be 2.1 percent.
Donald Trump’s FY19 budget proposal calls for a freeze federal employee pay.
The working group’s report was submitted during an April 10, 2018, meeting of the entire Federal Salary Council, whose full report to the Pay Agent will be made available in the coming weeks.