A key Senate subcommittee plans to take up the issue of federal-employee compensation and sinking employee morale.

“In the wake of sequestration and the shutdown, we must address the state of federal workers from two standpoints: Compensation and perception,” said Sen. Jon Tester (D-Mont.), chairman of the Senate subcommittee that oversees the federal workforce.

Tester, speaking at the National Treasury Employees Union annual legislative conference in Washington, D.C., said the committee plans to hold the hearing in the spring.

Among the issues the panel plans to probe is making sure federal pay keeps pace with the private sector.

“None of us are going to get rich in public service, but we ought to be able to make a living doing our jobs and helping our nation,” Tester said. “The federal government must ensure that salaries and benefits properly compensate you for your work … and as the economy strengthens, it must ensure that your compensation stays competitive with the private sector.”

Until a 1 percent pay raise went into effect in January, federal employee pay had been frozen since at 2010 levels for the past three years.

White House budget officials recently announced that the President’s fiscal 2015 budget request would propose another slight 1 percent pay raise for federal employees next year.

NTEU argues that that’s not enough.

NTEU National President Colleen Kelley said the three-year pay freeze has put federal workers behind the economic curve. An adequate pay hike would be in the neighborhood of 3.3 percent, NTEU argues, which would track the rise of inflation as measured by the Employment Cost Index — the formula mandated by a 1990 law on federal pay comparability. That would also include a 2 percent increase to locality pay, which boosts pay for employees in more expensive metropolitan areas, such as Washington and New York. Federal workers haven’t received any locality pay adjustments since 2010.

The American Federation of Government Employees has proposed an even bigger annual pay raise — 4 percent — calling Obama’s 1 percent recommendation “pitiful.”

Federal employees’ dissatisfaction with pay has also been the main driver of crumbling morale at federal offices, which Tester said he also wants to address.

Overall employee satisfaction dropped for the second year in a row last year, to 59 percent, according to the Office of Personnel Management’s annual tally.

“Recent studies depicting low morale at many federal departments are discouraging, but my hearing will strive to find smart solutions and will help keep the federal workplace as dynamic and rewarding as it is — and as it used to be,” Tester said.

Tester’s remarks came as NTEU, one of the largest federal-employee unions, kicked off its annual Capitol Hill confab.

Among the union’s top priorities is rolling back sequestration cuts, which led to unpaid furloughs days for thousands of workers last years and led many agencies to freeze new hiring, cut travel and halt employee bonuses.

“We need that word out of our vocabulary, and we need that word out of the federal budget vocabulary,” Kelley said.

The bipartisan budget deal negotiated late last year restored partial funding to many agencies, replacing about 60 percent of the across-the-board reductions with alternative savings.

But agencies and employees aren’t out of the woods yet, Kelley suggested.

“While we may avoid lurching from budget crisis to budget crisis, there are still major challenges facing the federal workforce,” she said. “We may not see furloughs, but we do see agencies trying to do far more with far less, and that is taking a tremendous toll on employees.”

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