We’re a little more than a week into the new year, and already we’re looking for bright spots in 2021.
The news of a 1% across-the-board pay raise for most federal employees this year didn’t inspire a lot of cheering, but I didn’t field too many complaints either.
As my colleague Mike Causey has said before, a 1% raise isn’t much, but it’s something.
But at least in 2021, a 1% pay raise with no additional locality adjustments wasn’t enough to accelerate the pay compression at the upper ends of the General Schedule. It’s a phenomenon that some long-time GS-15s, depending on where they work and their spot on the federal career ladder, have experienced for several years.
According to federal statute, salaries for career federal employees on the General Schedule can’t exceed the pay rates for political appointees and others at level IV on the Executive Schedule.
As either Congress or the president raises federal employee salaries each year but keeps an arbitrary pay cap in place, it means a growing number of long-time career feds bump up against a pay ceiling that’s either fixed in one place or raised slowly when Congress remembers to adjust it.
So what’s the good news?
Congress did raise the pay ceiling for 2021, meaning GS-15s in this situation will receive a maximum of $172,500 this year, an amount that roughly accounts for the 1% pay bump the vast majority of federal employees got this year.
The pay cap was $170,800 last year and $166,500 in 2019.
For now, this highly-nuanced detail of the federal pay and personnel system impacts long-serving and top-ranked GS-15s, whose salaries are technically growing with annual federal pay raises but can’t realize their “full” raises due to a cap on their pay.
Pay compression in 2021 will affect federal employees in a total of 25 separate locality pay areas.
The good news? That’s the same as last year, meaning the pay compression we’ve seen over the last few years took 2021 off.
Employees at step 10 within the Raleigh, North Carolina; and Buffalo, New York, locality regions joined the pay cap club for the first time last year.
Other regions, however, appear quite close to reaching the pay ceiling in the near future, especially if Congress doesn’t raise the pay caps next year.
A GS-15, step 10 in Columbus, Ohio, for example, will earn $172,346 in 2021, just $154 shy of the $172,500 pay cap.
Career GS-15s in Huntsville, Alabama, were just $398 away from entering the pay cap club this year.
Top feds in Phoenix, Arizona, were even closer. GS-15, step 10s in the region will earn just $10 less than the 2021 pay cap this year.
It’s a strange phenomenon. I’ve had readers email and call me to air their frustrations, or at least question why the pay ceiling exists and what ask what could be done to address it. There’s not much to say, other than point to Congress. Only Congress can make changes to federal statute.
The bad news? While pay compression didn’t grow worse this year, it didn’t improve, either, and there’s not necessarily a path in sight to address it.
The arbitrary pay caps limit an employee’s take home pay during a given year, but they may cost future annuitants thousands of dollars a year during retirement.
We previously described those impacts with a few examples here. The hypothetical isn’t pretty.
Beyond the implications salary compression has on pay and future retirement plans, it also begs another question: Why take the promotion if means you’re technically not getting the full salary that you’re owed?
I imagine that a sense of mission, purpose and responsibility has something to do with the answer to that question. But others might not know the challenge exists at all.
When it comes to pay compression in 2021, no, it didn’t get any worse. But it didn’t get much better either.