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.

My last post on replacing the General Schedule addressed some of the common fallacies about the GS pay system. Among them is the idea that all Federal employees are over/underpaid (depending on the political bias and source of the study), that GS pay is truly based on labor costs by location, and that the GS system no longer covers most employees.

Today I’m addressing some facts about the General Schedule and the implications of what is happening to it. While I know there are many people who have no interest in changing the GS system, probably because of fear of what it could become, there are also many good reasons why it must be reformed. There are a lot of numbers here, but I think it is important to get a look at them to better understand the problems with the General Schedule.

Facts About the General Schedule

The number of people in the top 4 GS grades (GS-12 – 15) is going up much faster than the total number of employees. Grade inflation (the tendency of grades to go up without substantial changes in duties) has become more common in the Federal government. Here is a look at Federal employment numbers and the distribution of employees in the top General Schedule and Equivalent Grades (GSEG)*. In just 15 years, the number of employees in the top grades has increased by 29.4% and the percentage of GSEG employees in the top grades has increased from 39.0% to 49.1%. The numbers of GS-12, 13 and 14 positions have increased substantially more than the overall or GSEG workforce.

The number of GS-13s outside of DC, Maryland and Virginia and the number of GS-14s and GS-15s in DC, Maryland and Virginia have skyrocketed. The number of GS-13s outside of DC/MD/VA has increased by 41.8%. GS-14s are increasing everywhere, but have increased far more in DC, Maryland and Virginia (55%). The data on GS-15s is remarkable – the number of GS-15 jobs has increased only marginally more than the percentage of the overall workforce (but more than 5 times as much as the GSEG workforce). However, the number of GS-15s outside of DC, Maryland and Virginia has actually gone down by 19.9%, while the number of GS-15s in DC/MD/VA has increased by 48.8%.

*GSEG = General Schedule and Equivalent Grades. Source: OPM Fedscope Data

**The best data available is OPM’s Fedscope (a great resource for anyone interested in Federal employment data). Older Fedscope data shows data by metro area, but now it is state-by-state. I chose DC/MD/VA as the best surrogate for National Capital Region data.

The number of high grade employees ages 20 – 34 and over age 50 is increasing dramatically, while average length of service has dropped significantly. The average length of service for GS- 14s has gone down from 20 years to 17.5 years. The average length of service for GS-13s has gone down even more – from 18.8 years to 15.9 years. That means we are seeing employees advance to high grades much more quickly than in the past and employees in high grades are increasingly becoming retirement-eligible. Here is a look at the age distribution of GS-13, 14 and 15 in 1998, compared to 2013. Numbers that have increased since 1998 are shown in green, those that have decreased are red.

Why Should We Care About The Numbers?

Some folks have asked me why we should care about these numbers. The reason is that they reveal a job classification system that has significant issues. Here are just a few:

Grade inflation makes career progression impossible. When the General Schedule was established by the Classification Act of 1949, employees in positions such as Budget Analysts, Contract Specialists, HR Specialists and other 2-grade interval jobs had full performance levels at GS-9 or GS-11. After a few years at the full performance level, an employee could become a team leader or individual contributor at the 11 or 12 level and could aspire to several more promotions in his/her career. Today, particularly in the National Capital Region, the full performance level is GS-12 or 13. An employee can rise to that level rapidly, then has only 1 or 2 possible promotions to look forward to. Because GS-15s comprise only 4% of the workforce, realistically a GS-13 can only look forward to one more promotion. A system that rapidly moves people to near the top of the pay range and then freezes their careers for 2 decades or more is not healthy. It stifles growth, creates nothing to aspire to, and creates morale issues that are difficult to address.

Federal employee pay is not based on market conditions, so it will remain a political football. Federal employee pay has become such a political issue in the last 25 years or so that having an adult discussion about it seems to be impossible. Regardless of their beliefs about the proper size of government, most reasonable people agree that Federal employees should receive fair compensation for their work. Until Federal pay is based upon real data for real occupations in real places, and kept up to date based upon such data, we will continue to hear the pro and anti government camps arguing about whether Federal employees should receive no pay increases or 1% raises like they got this year. Defining “fair” is a challenge that I will address in my next post on this issue.

The age distribution shows three changes that could be cause for concern.

1. The number of younger and less experienced high grade employees is increasing. While new ideas and youthful enthusiasm can be a great asset, the overall reduction in experience can create problems with workforce capabilities.
2. The number of high grade GSEG employees over age 55 has increased 122%, from 57,956 to 128,755. That means the number of retirement-eligible employees in the highest grade levels is exceptionally high at the same time the numbers of mid-career GS-15 employees has decreased. While I believe fears of an across- the-board retirement wave are overstated, the retirement eligibility numbers at the highest grade levels are cause for concern.
3. The average length of service is decreasing significantly at high grades. Combined with the increasing age of the workforce and likelihood of high grade retirements, the government faces talent shortages that could become severe.

Either (a) the position classification process is broken, resulting in grade inflation that breaks the system, or (b) Federal jobs really have become so complex that most of the employees should be in the top 3 or 4 grades of a 15-grade system. Regardless of which is true, the system must be changed to correct it. If it is a classification problem, fixing the classification process when high grades have become so pervasive can only be done if the pay issues and the government’s ability to compete in the labor market are addressed. Doing that means fixing the pay system, and that means overhauling the General Schedule. If the problem really is that the General Schedule was designed for a mostly clerical and low-grade level workforce that no longer exists, then the General Schedule has to be overhauled.

In my next post, I will outline some ideas for replacing the General Schedule with something more suitable for today’s workforce, while protecting both the right of Federal employees to receive competitive pay for their work and the government’s ability to compete for talent.

MORE COMMENTARY FROM JEFF NEAL:

Should We Replace The General Schedule?

Supporting STEM leaders: 5 things we need to do

Four Decisions That Can Make or Break Training Programs

Government Management Is Not an Oxymoron

Copyright 2014 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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