Office of Management and Budget Director Mick Mulvaney defended the administration’s decision to freeze federal employee pay in the fiscal 19 budget request, saying that it was the best way to resolve issues of some employees getting paid too much and some getting paid too little, according to an analysis the administration did of employee data.
“It’s led to a situation where we pay entry level more than we probably should, but we don’t pay the really advanced, experienced people as much as we should,” said Mulvaney at an April 18, House Appropriations Committee hearing.
“I hope that we can all agree with 2 million nondefense federal workers, that some of them might be really good at their jobs, and some of them might not be, yet we come close to paying them pretty much the same. And there can be improvements there, and that’s what our proposal was based on.”
A recent report by the Federal Salary Council Locality Pay Working Group found that federal employees on the whole make over 30 percent less than their private sector counterparts.
But an April 2017 Congressional Budget Office study found that while people with no more than a high school diploma made 34 percent more per hour in the federal government than those with the same education in the private sector, those with a master’s degree or higher made less than their public sector counterparts.
And though the report suggested that the government could save approximately 3 percent on wage spending by adjusting federal pay to meet private sector matches, it also acknowledged that the government tends to hire more highly educated workers overall than the private sectors.
Wage distribution across the federal government also varies from the private sector, as federal employees are less likely to see both the extreme lows and extreme highs present in private sector pay.
The FY19 budget would also slow the pace of step increases, which provide pay raises within an employee’s pay grade, for federal employees.
“It seems to me that what you do when you put the freeze there and you remove those step increases is you remove the incentives to get people to work for the federal government who are highly skilled or who have hopes of a good career that will be remunerative to them, and makes it less competitive than the private sector,” said Rep. Sanford Bishop R-Utah.
The federal government already struggles to attract top talent in in-demand areas such as IT and cyber, fields that often pay far more in the private sector than in the government.
Mulvaney said that, at its heart, the federal government lacks the ability to effectively differentiate the pay between strong performers and poor performers. He added that any changes they would make to the step increase and pay system would abide by agreements with unions and other third-parties.