Proposal to reform pay for blue-collar feds gets committee approval, but concerns remain

Tens of thousands of blue-collar federal employees would see changes to the way they’re paid, under a draft of proposed regulations from the Office of Personnel Management.

If implemented, the proposed changes aim to improve pay rates by merging the wage map for many blue-collar government workers with the locality pay map for employees on the General Schedule (GS).

Most members of the Federal Prevailing Rate Advisory Committee (FPRAC), a council that advises on pay for blue-collar feds, generally agree that some kind of reform to the pay system is necessary. But there are persisting disagreements over the details of how the reform should look.

“We’ve been working hard to consider potential recommendations for reforms,” FPRAC Chairwoman Janice Lachance said during a committee meeting Thursday. “It’s a complex issue. It has a very, very long history. And everyone has dedicated themselves to really asking the right questions, thinking about ways that we can come to agreement and doing it in a very creative, constructive and supportive way.”

FPRAC, composed of members of OPM, the Defense Department and other stakeholders, voted 9-1 in favor of OPM’s draft proposal, which, if implemented, would alter the map of geographically based pay areas for the Federal Wage System (FWS).

FWS is the government’s largest pay system for blue-collar feds and covers close to 168,000 employees working in trade, craft and laborer jobs. About 117,000 of those employees work for DoD. The system was established with the intention of ensuring pay equity for blue-collar feds based on location and it predates locality pay for the GS workforce.

When the locality pay system for GS feds was created in 1990, FWS employees were intentionally excluded from the system, according to the Defense Civilian Personnel Advisory Service (DCPAS), the DoD component that manages FWS wage schedules.

“The federal government’s compensation practices mirror the private sector’s general practice of establishing separate and distinct pay structures and pay adjustment mechanisms for white-collar and blue-collar employees,” DCPAS explains.

But the idea to now merge the mapping of the two different pay systems is still far from new — FPRAC has been considering different FWS reforms for about 15 years. The current draft proposal is more recent — it stems from a 2022 request from Congress for OPM consider ways to align the locality pay maps for FWS and GS employees.

The goals of OPM’s draft proposal have gained more support in Congress as well. In November, Sen. Bob Casey (D-Pa.) and Rep. Matt Cartwright (D-Pa.) reintroduced the Locality Pay Equity Act. If enacted, the bill would address reforms in the same way by bringing FWS employees’ pay map in line with the map for GS locality pay.

In its current form, if OPM’s draft proposal were implemented, about 10% of FWS employees would be moved from one wage area to another — in many cases impacting their pay rates. Around 15,000 employees would see their wage rates go up as a result of the proposal. Another roughly 2,000 affected employees would be covered by “pay retention,” an OPM mechanism that maintains pay rates of employees who would otherwise see a decrease to their pay. An estimated 1,170 of those 2,000 employees who would be put on pay retention work for DoD.

Jacqueline Simon, director of public policy at the American Federation of Government Employees, said she sees two ways of implementing the reforms for FWS employees — either by adding counties to existing wage schedules, or by creating an entirely new schedule prior to implementation — but said the exact details shouldn’t prevent the committee from approving the draft proposal.

“One way is a little more complicated, more expensive, and the other one is following past practice,” Simon said during the committee meeting. “I don’t think we need to decide here today which of those paths for implementation would be taken, but I’m hoping that we don’t kick the can down the road because time really is of the essence to get this going.”

Several other members of the committee, however, took issue with the details of the draft proposal. Despite voting in favor of the proposal, Nancy Speight, deputy assistant secretary of Defense for civilian personnel policy, was still reluctant. She said she had “substantive” concerns about the cost and implementation of the changes.

Specifically, Speight said it may be a better solution to consider pay reforms on a case-by-case, regional basis, rather than amending the entire system. She added that the specific mapping OPM used to form the draft proposal may be outdated — and recommended using updated data to establish the new pay rates.

“This approach could increase pay retention rates, however, it reduces overpayment and is more consistent with legislative intent,” Speight said. “Either implementation plan will require increased data collection [and] resources.”

There could also be unintended consequences of the proposed changes, Speight said, such as recruitment and retention issues for the FWS workforce in areas where the pay rates would decrease, or opening the door to federal positions being moved to federal contract employees to save money.

Additionally, some committee members were concerned that the proposal doesn’t include consideration of the costs of implementation, meaning the funding to adjust the pay rates would have to come from within an agency’s current funding.

“That could seriously erode mission readiness by having to divert funds,” Catherine Anders, a program manager for the Department of Navy’s office of human resources, said during the meeting. “Offsets may have to be taken from a workforce reduction.”

Both Anders and Speight added that using “pay retention” to maintain pay for current FWS employees — whose wages would otherwise be decreased — would then be unfair to new employees hired into the same positions, but whose pay would be initially set at the lower rate.

Instead of approaching the problem with wide-ranging reforms, Anders said there are already flexibilities agencies can use to address challenges of staffing and retention, such as implementing special salary rates (SSRs).

But other committee members, including Paul O’Connor, president of AFL-CIO’s Metal Trades Department, said the benefits of the broader reforms would outweigh the costs, adding that just using SSRs wouldn’t entirely solve the problem.

“There is a cost to adopting these recommended changes — there’s also a cost if we do not adopt these recommended changes,” O’Connor said. “We’re not hiring the right people interested in doing federal sector jobs because the pay rates are so low. Special pay rates [are] … not a long-term solution. Once those hiring numbers are reached, then the special wage rate can go back to its original rate … And the cycle of having not enough skilled people to apply for jobs will begin again. Special pay rates are not the solution.”

Mandy Laughlin, a committee member and HR specialist for the Department of the Army, was the only member to vote against the draft proposal, saying it “would have multiple negative fallouts.”

“There’s no clarification on how this proposal will be funded,” Laughlin said. “Without additional funding support by the Office of Management and Budget or the Office of the Secretary of Defense, the proposal will result in drastically reducing training funds and the potential loss of approximately 300 civilian employees.”

Still, AFGE and other stakeholders on the committee have remained major advocates of the reforms.

“We’ve been working for years to get parity between salaried and hourly federal employees who work side by side, but are treated as if they work in different labor markets,” AFGE National President Everett Kelley said in a statement to Federal News Network. “This draft proposal would finally bring equity to hourly workers who have long been underpaid, and as such represents historic progress. We ask the administration to swiftly implement what the advisory committee overwhelmingly approved today.”

Moving forward, the language and exact details of OPM’s draft proposal would still need to be worked out before it can move through the rest of the federal rulemaking process.

“We still obviously have work to do, given everybody’s comments,” Lachance said during the meeting. “I think the group is willing to maintain its dedication to the issue and to advancing this, so that we can at least move forward with some of the reforms or changes that have to take place. We’re going to work hard to figure out how to do that … We’ll stay focused on it and appreciate at least this milestone that we’ve been able to achieve.”

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