House bill aims to reduce effects of pay compression for senior-level feds

New legislation in the House is trying, at least in part, to address a years-long issue impacting some of the senior-most leaders in the federal government.

Del. Eleanor Holmes Norton (D-DC) introduced the Federal Employee Pay Compression Relief Act Tuesday, which aims to reduce the overall effects pay compression.

“This bill will allow many of the longest-serving federal public servants to receive the pay adjustments they are entitled to but for the pay cap,” Norton said in a press statement Tuesday. “This bill will help the federal government hire and retain the most qualified individuals for the job.”

Pay compression exists on the General Schedule because, according to federal statute, salaries for career GS employees cannot exceed pay rates for political appointees and others at level IV on the Executive Schedule. Even though Congress or the president raise federal employee salaries each year, a pay cap has remained in place for those on the Executive Schedule — and therefore also for some GS-15s, depending on where they work and their spot on the federal career ladder. While the White House proposed a 5.2% federal pay raise for 2024, those in the senior-most levels of government would not receive that pay bump, if it were to bring them above the currently set pay cap.

Specifically, Norton’s legislation would let federal employees who reach the pay cap in their respective pay system receive base and locality pay adjustments, to help bring them toward what their pay would have been without the pay cap.

The new bill is another step toward trying to fix the pay issue more broadly, after the Biden administration in the fiscal 2024 budget request also hinted at a goal of addressing pay compression. The Office of Management and Budget did not immediately respond to a request for comment about any progress on a proposal to fix pay compression and other pay issues.

Advocacy organizations for career federal leaders, including the Senior Executives Association and the Professional Managers Association, have been particularly vocal on the topic of pay compression. Jason Briefel, SEA’s director of policy and outreach said he was “grateful” for the bill’s introduction.

“This bill, if enacted, would provide meaningful relief to federal employees who have been unable to receive full compensation for their work due to pay compression and pay caps,” Briefel said in an email to Federal News Network.

And while the legislation is a step in addressing pay compression, there is certainly more work ahead for federal pay reform overall.

“With more than 100 overlapping white collar pay systems, it is not clear that this bill would not impact managers on the IRS’s alternative pay scale, thus continue to create a system of winners and losers that disincentivizes careers in management,” PMA’s National Vice President Kelly Reyes said in an email. “The General Schedule requires much more comprehensive reforms to address the continued pay compression at the higher ranks of government and to bring federal compensation into the modern era.”

In 2022, Norton made initial plans to introduce a bill addressing pay compression, but the legislation was never officially filed. While her new bill does not solve all pay compression issues in the federal government, Norton said it’s an important step in the right direction. She said last year that she plans to find additional routes to reduce pay compression as well.

“It will not resolve the issue entirely, but any action is better than no action,” Briefel said.

But, Briefel said, SEA continues to await details from the Biden administration about its proposals on pay reform, which it promised in the fiscal 2024 budget request.

In July, SEA, PMA and the Government Managers Coalition (GMC) sent several letters to top agency officials, urging them to move forward with proposing a specific way to fix to pay compression for federal employees, something that can have negative effects on federal executives.

The organizations’ leaders said pay compression, for example, can disincentivize individuals from moving into positions in the Senior Executive Service, which can often reach that pay cap.

“Pay compression skews the risk-reward trade-off for employees advancing in their federal careers,” SEA President Marcus Hill said in a letter last month, addressed to leaders at OMB, the Labor Department and the Office of Personnel Management — the three agencies that comprise the President’s Pay Agent. “At a certain point, the risks of advancing in management continue to grow, but the rewards do not keep pace.”

After sending the series of letters, Briefel said the OPM and OMB have not yet offered a clear response on their plans to move forward with initial promises included in the fiscal 2023 budget proposal. But SEA leaders plan to meet with the two agencies later this month to discuss possible paths forward for pay reform.

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