Some feds miss out on pay raise as salary compression worsens

Most people expect a raise when they get a promotion. But for some feds in 2017, thanks to salary compression, that’s not the case.

Most people expect a raise when they get a promotion. But for many feds like Janice, an employee with the Homeland Security Department, that’s not the case in 2017.

Janice, who asked her last name and specific agency within DHS be withheld, just stepped up from GS-15 step eight to step nine. But because she works in the Washington, D.C. area, she’s fallen victim to locality-driven pay compression.

“With the most recent additional half a percent the President authorized there at the very end, if he had applied that to the base salary, it might have helped … but he didn’t, he just gave us a bump to locality, and that’s what really dominoed us into this,” she said. “Now the GS-15 step 8 is caught up in the same pay compression that the 9 and 10 have been.”

Pay compression is when multiple ranks of federal employees get paid the same amount of money, and it can occur for a number of reasons.

According to the Office of Personnel Management, GS-15 step 10s in 19 different regions will make $161,900 in 2017, the maximum amount of money federal employees in the General Schedule can make this year. In 14 of those areas, including Washington D.C., GS-15 steps 8 through 10 will make that amount. In San Francisco, steps 5 through 10 will all make the same. So will appointed Senior Executive Service members who are level four. Political SES level 5 feds, meanwhile, will make more than $10,000 less, at $151,700. Careers could make even less than that.

The higher steps in the GS-15 rank run into this problem due to locality pay, a cost-of-living adjustment some feds receive for living in certain regions. The higher the locality pay rate, the more money a fed makes for doing the same job, right up until they hit the pay cap. So a GS-15 step 1 will make $143,244 in San Francisco, but only $119,285 outside of locality pay areas.

The 2017 bump in locality pay President Barack Obama authorized for federal workers worsens the pay compression within the GS-15 rank, pushing step 10s in Atlanta up against the pay cap for the first time, and adding a second, third or even sixth level of compression in other regions.

Salary compression also occurs between the highest levels of the General Schedule and lower levels of the SES because senior executive pay is linked to congressional pay, and only goes up when Congress votes to give themselves a raise, something that’s frequently avoided due to the political environment.

That’s why Janice is exploring her options in the private sector.

“I don’t know that there’s anything that could convince me to stay,” she said. “There are a lot of opportunities in the private sector that are exciting. And given the very low raises we’ve had for so long, and the lack of opportunity, eventually you start making decisions.”

She said she wouldn’t even consider SES positions, which were once considered attractive, because it would be added work and increased responsibility without increased compensation.

“Government is slowly but surely getting rid of the reasons that you would want to stay, become senior, become responsible,” she said. “It’s basic, it’s tied to compensation. It always is. It’s never been particularly competitive as a whole, but there’s a lot to be said for security. But the scales are now becoming more and more imbalanced.”

Compression between the GS-15s and SES is nothing new, former DHS chief human capital officer Jeff Neal said.

“It’s a problem that has existed a long time, and has gotten slightly worse,” Neal said. “People like to spin it that SES pay compression is a real problem and it’s growing and it’s enormous and the cause of every problem in SES. I don’t think that’s true. It’s just not that big a difference.”

He said that in the years since the problem first arose, agencies haven’t had to stop hiring SES. He also said there are different authorities — albeit rarely taken advantage of — that agencies can use if they are having difficulty.

“Agencies having demonstrable trouble hiring from outside government due to low pay can make the case to raise the cap on SES pay or to use critical position pay, an authority granted by OPM and OMB,” Neal said.

With approval, he said these authorities allow an agency to pay SES up to the same salary as the Vice President.

And in 2015, Obama issued Executive Order 13714 — “Strengthening the Senior Executive Service” — to instruct agencies to raise the pay of SES with GS employees.

“The heads of agencies with SES positions that supervise General Schedule (GS) employees shall implement policies, as permitted by and consistent with applicable law and regulation, for initial pay setting and pay adjustments, as appropriate, for career SES appointees to result in compensation exceeding the rates of pay, including locality pay, of their subordinate GS employees,” the EO said.

Former acting OPM Director Beth Cobert said before she left her post on Jan. 20 that those instructions were mostly successful in dealing with the problem.

“There are provisions in the executive order about SES pay and how the pay for the SES needed to exceed that of the GS-15s,” she said during an exit interview with Federal News Radio. “That has happened. We’ve changed that for hundreds of people. That policy is done and executed at the agency levels.”

OPM, however, could not provide specific numbers as to how many SES members this affected governmentwide. Multiple sources said that agencies do not report data to OPM regarding how many General Schedule employees report to specific SES members, or what levels they may be.

According to a 2016 fourth quarter update on People and Culture from, prior to the EO, there were about 800 SES who were paid less than their General Schedule employees. After implementation of the EO, that number is around 100, with various agencies implementing plans to further reduce that number.

But it’s unclear if anything is being done to rectify locality-driven compression within the General Schedule. At the time of this article, OPM had yet to comment.

The National Treasury Employees Union raised this issue as part of congressional testimony before the House Subcommittee on Federal Workforce, Postal Service and the District of Columbia as far back as 2008.

“While NTEU does not represent large numbers of employees at the top of the GS scale, we do represent some and they are very deserving of their full raises,” said Colleen Kelley, then-president of NTEU. “We recognize — and support — fixing the problem. We fight hard for fair pay raises in the General Schedule each year, and all federal employees who serve in government should not suffer because they worked hard, got promoted and reached the top of the pay scale.”

But the problem has persisted. Some feds are concerned that if pay raises continue at roughly the same speed — around 1.5 percent each year — then within 20 years compression will begin spreading into GS-14s.

But Neal says that’s not likely to happen.

“That’s one of those Washington, D.C. statistics people love: ‘If nothing changes, and nobody touches federal pay, this will happen in 20 years,’” he said. “Well, that’s not going to happen in 20 years. This issue will be dealt with in one way or another. My guess is that we won’t have to worry about federal employees getting a 1.5 percent pay raise the next few years. Federal employee will be lucky to see a penny pay raise in the next few years. The incoming Congress and the incoming administration have not expressed any desire to boost federal pay.”

Either way, it’s a no-win situation for feds with compressed salaries like Janice.

“You do start to wonder, knowing that the people that are at these higher grades are often long-time employees, I do think it’s hard, but there certainly isn’t an eagerness to keep the more experienced hands on board, and that’s one of the reasons why they’re chipping away at things like this,” she said. “Of course there’s budget reasons and everything else, that’s legitimate, but the end result is that the people that have been there a while, that have attained this level of knowledge and management skills, historical knowledge of the agency, it’s disincentivizing not only their staying and seeking more responsibility, but staying at all.”

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