Public-Private Sector Pay Gap Remains at 35 Percent

Public-Private Sector Pay Gap Remains at 35 Percent

Federal employees on average now earn 35.2 percent less their private-sector peers, according to the latest data analyzed by the Federal Salary Council.

The council released its report on Friday, showing the pay gap — which has widened over the last several years — is about the same as last year’s 35.4 percent gulf.

The Federal Salary Council is made up of union representatives and pay policy experts and uses data from the Office of Personnel Management and the Bureau of Labor and Statistics to make its annual calculations. The group reports its findings to the President’s Pay Agent, which in turn makes recommendations on federal pay to the president.

The report urged the Obama administration move forward on its 2012 recommendation to create 12 new localities for pay purposes; so far the administration has not enacted any changes because locality pay has been frozen since 2010. The President’s Pay Agent tentatively approved establishing the new pay localities in a report published in May 2013.

Currently, OPM uses 33 metropolitan or state-based distinctions, as well as a 34th “rest of the United States” category. The recommended locality pay areas are: Albany, N.Y.; Albuquerque, N.M.; Austin, Texas; Charlotte, N.C.; Colorado Springs, Colo.; Davenport, Iowa; Harrisburg, Pa.; Laredo, Texas; Las Vegas; Palm Bay, Fla.; St. Louis, Mo.; and Tucson, Ariz.

“Here we are in October 2014 and the administration is still being coy, saying it cannot move forward just yet,” AFGE National President J. David Cox Sr. said. “The excuses keep piling up. They are scared of the reaction of House Republicans. They are scared that the public won’t understand what they’re doing. They are scared to find out what might happen if they actually do something positive for federal employees, worried that anti-government extremists will somehow hurt them.”

The council also made a new recommendation this year that Kansas City be added as a separate locality pay area as well.

There are two components to federal pay: base pay and locality pay. The latter, which has been frozen since 2010, varies by region. Federal salaries tend to be higher in places where the cost-of-living is higher, like New York City, San Francisco and Washington. But the average pay gap between public and private-sector workers also is higher in these areas as a result.

The council repeatedly has pushed for increases in locality pay adjustments as the primary means to close the gap between public and private-sector pay. The problem has been exacerbated, members of FSC have said, because OPM has not created new regional designations in several years.

Federal employees received a 1 percent base pay raise in 2014, and are expected to receive the same amount in 2015, per President Obama’s proposal. Under the 1990 Federal Employees Pay Comparability Act the annual raise is determined by the change in the Employment Cost Index minus 0.5 percent for federal employees. Presidents, however, largely have ignored the formula under FEPCA, preferring to offer their own figure, which under the law they can do. The commander-in-chief has the authority to set an alternate pay raise for military personnel and civilian employees, citing a national emergency or fiscal concerns, if Congress doesn’t pass legislation adjusting the amount or canceling it.

The Federal Salary Council’s report conflicts with other studies — including those from conservative-leaning think tanks — that show federal employees earn more than those in the private sector. A 2012 Government Accountability Office study concluded there is no definitive way to measure any potential gap. A Congressional Budget Office report found that public and private sector salaries were about comparable, but that education level played a role in pay disparities between the two groups.

(Image via spectrumblue / Shutterstock.com)

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