Commentary by Jeff Neal
Founder of ChiefHRO.com
& Senior Vice President, ICF International

This column was originally published on Jeff Neal’s blog, ChiefHRO.com, and was republished here with permission from the author.

I’ve written recently about the civil service reforms of the last century that created the General Schedule and why I believe it may have outlived its usefulness. The General Schedule worked well when half of federal employees were GS-5 and below and most of the rest of the workforce was spread out over the remaining grades. Today, 7.4 percent of the federal workforce is GS-5 and below. Grade levels are increasing, the number of positions in the top grades is increasing and grade compression at the top of the range is beginning to create significant issues. Today’s post will address some fallacies about the General Schedule. Next week, I will address some facts about the workforce and its demographics. Finally, the following week I will address the consequences of grade compression and what we can do to replace the General Schedule with something more useful for today’s workforce and labor market.

Fallacies About the General Schedule

When I talk with people in and out of government, I hear a number of fallacies regarding the General Schedule. Here are just a few:

• We do not need to worry about the General Schedule, because the majority of federal employees are not covered by it. More than 1.4 million employees are covered by the General Schedule. Another 30,000 are covered by pay plans that tie their pay directly to GS rates. These “Standard GSEG” plans cover 71 percent of the non-postal workforce.
• “Grade creep” in the GS is caused by outsourcing, automation and the growing complexity of federal jobs. It is true that many lower graded jobs have been outsourced and that technology has eliminated many others. Outsourcing and technology could explain the absence of jobs at lower grades, but they do not explain the increase in positions at GS-12 and above. For that, we need to look at the complexity of federal jobs and the issue of grade creep as a solution to pay and retention problems. It is true that some jobs are more complex than they were in the past and there are some new categories of positions that simply didn’t previously exist (such as cyber security). Those do not explain the significant increase in grades for jobs that are not highly technical. For that, we have to look at retention issues, the competition for talent in the Washington, D.C., metro area, and the reduced emphasis on accurate position classification. For example, in 1998 we had 128,038 jobs in the GS-5XX Budget and Accounting job family. Now we have 122,344 in the same type of jobs. Many other occupations and the workforce as a whole show similar trends. Look at what has happened to the grade distribution in this one job family:
  

  	1998	2013	% Change
  GS-5XX Total (including non-GSEG)	128,038	122,344	-4.45%
  GS-5XX GSEG-1/15	108,907	108,480	-0.39%
  GS-5XX-1/5	16,777	8,045	-52.05%
  GS-5XX-6/11	62,537	50,236	-19.67%
  GS-5XX-12/15	44,693	50,199	+12.32%

• GS within grade increases (WGI) are tied to performance, so they are not automatic. In the last numbers I can find (2009), the WGI denial rate was 0.06 percent. Although the federal workforce is excellent, it strains credulity to argue that only 0.06 percent of WGI-eligible GS employees performed at a less- than-fully-successful level.
• Since passage of the Federal Employees Pay Comparability Act of 1990, GS pay is based on market rates by locality. FEPCA established locality pay and requires that pay increases be set based upon the Bureau of Labor Statistics Employment Cost Index. The locality areas are so broad that they do not accurately reflect either the cost of living or the cost of labor. For example, rural parts of West Virginia are located in the Washington, D.C., locality. The Federal Salary Council produces a set of recommendations every year that show salary disparity numbers the process produces. For 2014, the disparity averages 34.6 percent. For some occupations, that may be reasonable. For many others it is absurd. While locality pay differences are a factor in setting pay rates for the GS, pay has never matched the Federal Salary Council recommendations.
• Studies show federal employees are overpaid/underpaid. While there are those who say federal employees are overpaid and those who say they are underpaid, the truth is that both are right and both are wrong. The federal workforce is not a monolith, and accurate sweeping statements about pay are not possible. Some employees are overpaid, others are underpaid. The process attempts to compute pay based upon broad averages that mean nothing for individual categories of positions. Pay decisions are complicated by the political nature of federal pay and the attempts of politicians to use the federal workforce as a proxy for anti or pro-government beliefs. Both sides produce studies that “prove” their side is right. A 2012 GAO report looked at six studies that attempted to compare federal and private sector pay and total compensation. GAO concluded the studies’ results varied because their methods, data sources and approaches were different.The report said “The differences among the selected studies are such that comparing their results to help inform pay decisions is potentially problematic. Given the different approaches of the selected studies, their findings should not be taken in isolation as the answer to how federal pay and total compensation compares with other sectors.” The bottom line is that we have absolutely no idea if pay for federal employees is consistent with private sector pay for a given type of job in a given location.The data is not there and it may not serve the interests of politicians to actually find out what the truth is.
• Job classification reviews ensure job series and grades are appropriate for each position. The number of HR people doing job classification has dropped significantly as agencies have delegated classification authority, used standardized position descriptions and turned to automated classification systems. Those automated systems often allow a manager or HR specialist to classify a position by starting with a desired grade level and having the system produce duties statements that match the grade. This backwards approach, combined with grade level increases driven by competition for talent, has resulted in continuous grade creep for many years.
• Replacing the GS means we have to have a pay-for-performance system like the failed National Security Personnel System. NSPS failed for a number of political and practical reasons — not the least of which was political and union opposition because it included an attempt to undermine the rights of employees to organize and bargain collectively. The GS system is not a performance system, it is a pay system. There are many ways to handle pay that do not require burdening managers who are not trained in pay management with the requirement to set pay. Performance-based pay is an option, but most likely not the best one.

These are but a few of the fallacies surrounding the General Schedule. That they are accepted as gospel, and serve as the basis for many of the debates about the future of federal pay policy is a little frightening. If we want federal employees to have competitive pay that is based on the realities of the labor market where we compete for talent, we have to start facing facts. Next week I will outline some of those facts and how they should be considered when considering next steps on federal pay.

MORE COMMENTARY FROM JEFF NEAL:

Government management is not an oxymoron

Should We Run the Government Like a Business?

In wake of LAX shooting, real talk needed about TSA

How 20th Century reforms became 21st Century headache for feds

Vultures and 19th Century civil service reform

An Open Letter to Federal Employees

Copyright 2013 by Jeff Neal. All rights reserved.

Jeff Neal is founder of the blog, ChiefHRO.com, and a senior vice president for ICF International, where he leads the Organizational Research, Learning and Performance practice. Before coming to ICF, Neal was the chief human capital officer at the Department of Homeland Security and the chief human resources officer at the Defense Logistics Agency.

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