The gap between private and federal sector salaries is shrinking, but federal employees on the General Schedule are still earning 24.72% less than private sector employees in comparable jobs.

The wage gap between federal and private sector salaries shrunk by about 3% over the last year, according to fiscal 2024 wage data from a report the Federal Salary Council published Monday. The previous year, the federal-private wage gap was 27.54%.

Still, the National Treasury Employees Union described the nearly 25% gap as a clear sign that higher wages are necessary for the government to be able to effectively compete with the private sector for talent.

“It is a loss to our country when highly qualified professionals turn away from critical public service jobs because the paychecks can’t keep up with for-profit corporations,” said NTEU National President Doreen Greenwald, a member of the Federal Salary Council. “We call on Congress and the White House to make sure federal salaries don’t lose ground in 2025.”

The wage gap narrowed over the past year in part due to the 5.2% federal pay raise for 2024, NTEU said. It was the largest pay raise for the General Schedule in over 40 years.

But a Federal News Network data analysis in 2023 also showed that federal pay raises haven’t kept pace with private sector salary increases for more than a decade.

The Federal Salary Council calculates the federal-private wage gap by comparing the salaries of federal and private sector jobs with similar duties. The reported 24.72% wage gap is based on data from the Bureau of Labor Statistics and the Labor Department.

Looking at wages alone, the federal-private pay gap has remained above 20% since March 2007. But the current 24.72% gap is not the highest disparity the feds have seen. Between 2015 to 2018, federal salaries were more than 30% behind private sector salaries for similar positions.

Some groups, however, have pushed back against the way the Federal Salary Council calculates the wage gap between the federal and private sectors. For example, the Cato Institute, a libertarian think tank, has said that federal pay exceeds private sector pay when accounting for the value of benefits such as retirement and health care.

Federal pay raise prospects for 2025

Although not yet finalized, most civilian federal employees are expected to receive a 2% federal pay raise for 2025. The 2% raise would account for a 1.7% across-the-board increase, plus an average of a 0.3% locality pay adjustment.

President Joe Biden submitted his 2% federal pay raise recommendation as part of an alternative pay plan he sent to Congress in August.

Unless Congress decides to enact a different federal pay plan for 2025, Biden’s planned 2% raise will take effect once he signs an executive order — something that usually happens each December. And so far, appropriations legislation has remained silent on the 2025 federal pay raise.

In contrast to the General Schedule, the 2025 pay raise for military members is expected to be 4.5%, according to the Biden administration’s proposal.

The 1994 Federal Employees Pay Comparability Act authorized the funding needed to reduce the federal-private wage gap down to 5%. But three decades later, FEPCA has never been fully implemented.

After years of alternative pay plans, the President’s Pay Agent — a three-member panel of leaders from the Office of Personnel Management, Office of Management and Budget, and Labor Department — estimates that it would cost about $22 billion to bring GS federal salaries closer in line with the private sector.

Council’s locality pay recommendations

Each year, a working group for the Federal Salary Council reviews potential changes to GS locality pay areas and the processes for comparing federal and non-federal wages. On Monday, the Federal Salary Council published its recommendations for how it believes the federal pay system should look in 2026.

One of the council’s recommendations, for example, called for establishing locality pay areas for Kennewick-Richland-Walla Walla, Washington, and Syracuse-Auburn, New York. The recommendation comes after three years of the pay disparities in those areas “substantially exceeding” the Rest of U.S. pay disparity, the council said in its report. If implemented, the new locality pay areas would affect the salaries of close to 4,400 federal employees.

Beginning in 2024, OPM finalized four new locality pay areas, increasing the pay rates of more than 33,000 federal employees earlier this year. In total, there are now 58 locality pay areas. That includes a “Rest of U.S.” locality, which covers GS employees who aren’t in a separate locality.

This year, the council’s working group additionally recommended adding Wyandot County, Ohio, to the Columbus, Ohio, locality pay area, as well as adding Yuma County, Arizona, to the Phoenix, Arizona, locality pay area. The recommendations are based on OMB’s map of metropolitan and combined statistical areas. On OMB’s map, those two counties would otherwise be surrounded by regions where employees receive higher pay raises under their locality pay area.

The President’s Pay Agent is expected to review the Federal Salary Council’s most recent recommendations in the coming months.

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