Workforce

Calls to ban use of salary history reveal deeper issues in federal pay system

DOJ GEN’s call to OPM to fully ban the use of salary history in federal hiring and pay-setting unearths larger issues with the federal pay system as a whole.

Drew Friedman@dfriedmanWFED

November 18, 2022 5:37 pm

4 min read

A group of Justice Department employees urged the Office of Personnel Management to go a step further in its forthcoming regulations on the use of salary history in the federal hiring and pay-setting processes.

The DOJ Gender Equality Network (DOJ GEN) said OPM should ban agencies from not only the solicitation of, but also any reliance on, job applicants’ past salaries when setting rates of current or future pay.

“If a job applicant or new hire can provide an agency with their past salary as leverage during salary negotiations, and an agency can use it to set pay, then a ban on solicitation will have no effect,” DOJ GEN President Stacey Young said in an email to Federal News Network. “Stopping at solicitation allows job applicants and new hires to get around the ban, and savvy new hires coming from highly paid jobs will take advantage of that.”

The use of salary history perpetuates the gender and racial pay gaps in the federal workforce, according to DOJ GEN, since pay gaps disproportionately affect women and people of color. Although the federal gender and racial pay gaps are smaller than those in the private sector, the employee advocacy group pointed to data from OPM that showed women make 5.9% less than their male colleagues in the federal workforce.

“That disparity remains far more acute for Black, Latina and Native American women. Robust, top-down efforts are needed to eliminate pay inequities entirely,” a Nov. 15 DOJ GEN letter to OPM stated.

OPM has said that it plans to issue regulations on the use of salary history for federal employees, to at least partially address pay issues in the federal workforce. Closing the gender and racial pay gaps that exist in the federal workforce is a priority goal for OPM, according to an agency spokesperson.

“Revising the regulations to address the use of salary history in hiring and pay-setting processes for federal employees to advance pay equity is one of OPM’s strategies for achieving this goal. OPM anticipates issuing these regulations soon,” the OPM spokesperson said in an email to Federal News Network.

OPM declined to comment on the actual content of the proposed regulations, since they have not yet been published. But, a report from September said the agency was on track to issue final regulations on salary history in the third quarter of fiscal 2023.

Ahead of OPM issuing those regulations, DOJ GEN heightened its calls for a full ban on salary history — it’s something the group has pushed for in recent months. Young said she has not received a response from OPM.

Taking a closer look at salary history could have larger positive implications for the federal workforce as well, according to DOJ GEN.

“Common sense dictates that if agencies can use a new hire’s salary history to set pay, then banning only agencies’ ability to ask for past pay will fall short of the policy’s potential,” Young said. “The administration should address pay gaps in the federal government with the most sensible and robust tools available. Knowing that the administration is doing everything in its power to advance the goal of pay equity will also boost employee morale, and help agencies recruit and retain top talent.”

Still others have argued that salary history addresses just a small piece of a much larger pay issue in the federal government. While DOJ GEN said part of the pay gap is a result of the use of salary history in the hiring and pay-setting process, Ronald Sanders, former chairman of the Federal Salary Council from 2017 to 2020, said there’s more to unpack.

“While I don’t disagree with the proposed regulation, or DOJ GEN’s proposed extension of it, you simply cannot view this in isolation,” Sanders said in an email to Federal News Network. “Rather, it reveals and underscores systemic issues that must be corrected if any of this is to be meaningful.”

The rigidity of the General Schedule pay system causes persistent pay inequity in the federal workforce, according to Sanders. He added that the use of salary history only impacts those coming into the federal workforce for the first time. The pay-setting process for current feds looking to change to a different federal position would default to the General Schedule system and OPM’s classification standards.

“The proposed OPM regulation is a tacit admission that any semblance of pay comparability between most federal and non-federal occupations and employers is pretty much dead — something most of us have known for years, and a fact that has been exacerbated by the current hyper-competitive labor market,” Sanders said.

The Federal Salary Council reported earlier this month that in 2022, federal salaries were 24.09% lower than their private sector counterparts. In 2021, the pay gap by the same measurement showed federal wages were behind the private sector by 22.47%. Some have disagreed with this calculation, though, saying that it doesn’t account for the value of benefits. The Cato Institute, a libertarian think tank, said that the average value of benefits in the federal workforce was $44,021 in 2021, compared with $13,486 of average benefits in the private sector.