The Problem with the Federal Pay System Is No One Cares to Fund It

Categories: Pay

Federal agencies have more than enough flexibility within the current pay system to raise wages as needed to meet market demands. It’s Congresses and administrations that refuse to exercise that authority, AFGE President J. David Cox Sr. told a Senate panel Oct. 22.

The federal pay systems, both the Federal Wage System for hourly employees and the General Schedule Locality Pay System for salaried employees, are supposed to be market-sensitive comparability systems. Federal pay is supposed to track pay in the private sector and state and local government for similar jobs. But that’s still not the case as successive Congresses and administrations have refused to fund it.

“The bottom line is that the federal pay systems suffer from a lack of funding, not a lack of flexibility,” Cox said in testimony delivered Oct. 22 to the Senate Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management.

Take for example the discovery of an oil field in the Bakken region of North Dakota in 2006. Demand for goods and services in the area skyrocketed. Wages and prices both rose substantially. Yet federal agencies in the region were slow to respond. The Defense Department (DoD) was authorized to implement a 10% across-the-board “group retention incentive” without OPM approval, but it chose not to do so. With OPM approval, DoD could have provided up to a 50 percent “group retention incentive” but it chose not to do so. The failure to provide these payments to alleviate the economic stress on federal employees in the Bakken region was not due to lack of statutory authority on the part of the agencies or OPM, it was because they chose not to exercise their authority.

What DoD ultimately did was give higher wages and salaries to specific positions for which agencies faced difficulties in recruitment or retention. Not every federal employee in the region received higher pay.

“There is no question that current law and regulation contain fully adequate flexibilities for responding to special economic situations such as surges in demand and prices,” Cox said. “The delayed and limited action on the part of federal agencies in response to the oil boom in the Bakken region was wholly a function of austerity budgets and bureaucratic foot-dragging on the part of agencies. OPM did its part and did so quickly.” 


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