White House urged to fix ‘pay compression’ at federal agencies (2024)

WASHINGTON — The Biden administration must address long-standing compensation issues including “pay compression” that make senior government jobs less attractive than the private sector, according to a nonprofit that advocates on behalf of managers of federal agencies.

The Senior Executive Association, which represents some 8,000 members of the Senior Executive Service and other high-level managers, wants the President’s Pay Agent — a panel of the Secretary of Labor and the directors of the Office of Management and Budget and the Office of Personnel Management — to address polices it says make it hard for top talent to stay in government.

Most federal employees receive annual base pay under the General Schedule, which is divided into 15 grades from lowest salary to highest, as well as locality adjustments. Salaries for appointed officials are set in the Executive Schedule which is has five grades.

Salary caps at the highest levels of the GS scale are preventing many senior managers from receiving adjustments they would otherwise be entitled to, according to SEA. Non-executive federal employees are subjected to a salary limit equivalent to the pay cap for political officials, or Level IV of the Executive Schedule, which in 2022 is $176,300.

The result is “pay compression,” with the salaries of a vast and growing number of senior managers subject to the cap, and managers with different levels of seniority and responsibility making nearly the same amount of money. As a result, many leaders with decades of valuable knowledge and experience leave government work, according Jason Briefel, director of policy for the SEA.

“Pay compression skews the risk-reward trade-off for employees advancing in their federal careers,” Briefel said during his testimony before the Federal Salary Council on Oct. 28. “At a certain point, the risks of advancing in management continue to grow but the rewards do not keep pace.”

Pay compression was most evident in the San Jose-San Francisco-Oakland locality area, according to a report by the Congressional Research Service. There, employees at GS-15 steps four through 10 all received the same rate of pay.

The February report found that as a result of last year’s pay adjustments, employees in the middle to upper levels of the GS pay grade were affected by the cap in a total of 30 locality pay areas.

Meanwhile, members of the SES have seen their salaries fall even below those of senior managers under the GS. A law passed in 2004 that abolished annual across-the-board raises and “locality pay” adjustments for the SES is further contributing to the salary crush, SEA said.

As of 2012, approximately 25% of the Senior Executives Service earned below $160,000, less than some GS-14s and 15s. Instead of steady increases for the SES, there is instead overlap with grades below.

“Public service motivation is the only incentive to enter the SES,” Briefel said. “That is not enough to sustain our nation’s leadership cadre.”

The problem is not new.

The Government Accountability Office reported to Congress back in 1980 that pay compression was already affected about 90% of the SES, and more than 10,000 top federal executives were receiving the same salary, despite varying levels of responsibility and experience.

Pay must keep up for these civil servants because members of the SES cannot take advantage of the same on-the-job work protections, like the right to join a union, receive overtime pay or appeal performance reviews, according to SEA.

“If the federal workforce is truly this administration’s number one management priority, confronting pay compression and the consequences of persisting in the General Schedule of 1949 in the year 2022 is something we hope this Federal Salary Council will do,” Briefel said.

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