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Pay Agent has ‘major’ issues with pay gap methodology

The President’s Pay Agent in its annual report on federal employee salaries and compensation, said it has “major methodological concerns” with how the Federal Salary Council calculates the pay disparity between federal employees and the private sector workers.

According to the report, the value of employee benefits is not included in the pay comparison, and the comparison also does not reflect the reality of labor market shortages and excesses.

Last April, the council found that private-sector workers are paid, on average, 32 percent more than federal employees in similar occupations.

The Pay Agent notes that a recent report by the Congressional Budget Office finds the pay gap to be 17 percent in favor of federal employees, accounting for an average 47 percent higher benefits package than the private sector and 3 percent higher wages.

“While we recognize that the methodologies used by CBO and the Federal Salary Council differ, and that the current locality pay methodology allows the Pay Agent to make distinctions in GS pay levels on a singular geographic basis for each locality pay area, we find the overall scale of the pay disparities presented to us each year using the current locality pay methodology lacks credibility,” the report states.

“We strongly encourage the Council to thoroughly assess the methodology and identify strengths, weaknesses, and areas for improvement,” it added, continuing, “We look forward to seeing the Council’s findings and further recommendations for improvement.”

View the full report here.

2021 Digital Almanac

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