Federal employees make average 26 percent less than private workers, Labor agency reports

By Eric Yoder - Posted at 02:00 PM ET, 11/04/2011

The federal government reported Friday that on average its employees are underpaid by 26.3 percent when compared with similar non-federal jobs, a "pay gap" that increased by about 2 percentage points over the last year while federal salary rates were frozen.

Federal employees chant at a New York-area rally in July. (Mary Altaffer - AP)

The Bureau of Labor Statistics presented the figures to the Federal Salary Council, an advisory group of federal agency officials, union representatives and outside pay experts.

The numbers are calculated for setting pay raises under the locality pay system used for white-collar employees who work under the general schedule pay system. Some of the money provided by Congress for an annual raise is paid across-the-board while the rest is divided according to the pay gaps for 31 city areas plus a catchall "rest of the U.S." for areas outside those metropolitan zones.

Under a 2010 law, however, federal salary schedules were frozen for 2011 and will be frozen again in 2012, although "within-grade" raises that are largely based on longevity still are allowed, as are raises after promotions.

"It's not surprising there's an increase in the gap because of the pay freeze but it highlights the impact on federal employees that the freeze is having," said Colleen M. Kelley, president of the National Treasury Employees Union and a member of the council. "There's no doubt in my mind that it will increase more when the 2012 freeze is in effect."

The pay gap in the Washington-Baltimore area was calculated at 36.9 percent, slightly below the 38.1 percent reported last year. Officials said a variety of factors could have caused that result, including changes in the mix of jobs and the switch into the general schedule of thousands of Defense Department employees from a separate pay system that is being phased out.

The gap in the locality with the largest number of federal employees, the catchall locality, was pegged at 19 percent, up from 14.7 percent. The overall average gap was calculated at 24.1 percent last year.

The comparison of federal versus non-federal pay long has been a controversial topic, with other studies, using different sets of data and different methods, producing widely varying figures. The conservative Heritage Foundation, for example, concluded last year that federal employees are overpaid by 22 percent on average.

The methods BLS itself uses have been evolving, in part because funding is being cut off for a salary survey that it traditionally used in the federal pay comparison. BLS presented an alternative set of figures based on a different set of data that showed the pay gap to be still larger. However, the council voted to continue using numbers from the old method while it studies the reasons for the difference, and in the meantime it recommended restoring funding for the salary survey.

The council's recommendations go to a higher-level group called the President's Pay Agent. Ultimately decisions on the amount of raises are made between the White House and Congress in the budget process.

With a decision on federal salaries for 2012 already made, attention has turned to 2013 and beyond. Proposals are circulating in Congress to extend the freeze for as many as three more years, and the Office of Management and Budget recently warned that there is no guarantee a raise will be paid in 2013.

Officials said that over the 12 months ending in September, comparable private sector wages rose by 1.7 percent, a figure that under the pay law would be used as the starting point for setting a 2013 raise.

"I would hope that anyone considering an extension [of the freeze] would recognize that this is enough and it's time for the freeze to be over and employees to receive the appropriate increase in 2013," Kelley said.