Closing the ‘gap’ gap

White-collar federal workers on average are either overpaid by about 16 percent or paid an average of 26.3 less percent compared to their private sector counterparts. Those numbers confirm (maybe) that there is a pay gap. But that’s about it. Could they both be right? Or wrong?

The problem is which one is closest to the mark?

Consider: There hasn’t been a federal pay raise in two years. And Congress may extend that freeze another year, at least.

President Barack Obama, who originally proposed the two-year freeze in November 2010 is now calling for a modest 0.5 percent pay hike in January of next year.



Welcome to the club.

Last November, the Federal Pay Council issued its annual report to the president. The council is made up three experts in labor-relations pay policy as well as six representatives of employee organizations, including the American Federation of Government Employees and the National Treasury Employees Union. The council concluded that even during the economic downturn, the “gap” between federal pay and the private sector had increased 2.25 percent. Their conclusion, feds are underpaid compared to their counterparts in the private sector. It said the pay “gap” varies from city-to-city.

Earlier this year, the Congressional Budget Office issued a federal vs. private-sector pay report. It concluded that, on average, feds are paid an average of 16 percent or more in pay and benefits than their private sector counterparts. When both pay and benefits were factored in, the CBO said, feds with the lowest-level of education (high school diploma) earned 36 percent more than their private sector counterparts. Those with bachelors degrees got 15 percent more in pay and perks. It was only at the top levels (Ph.Ds, and the like) where feds fell behind by 18 percent.

The CBO is a world-class organization. It has a reputation for just-the-facts! The Federal Pay Council is no slouch either. So why the gap gap?

The answer is simple, says Jacque Simon, the director of policy for the AFGE. She’s also an economist and a member of the Pay Council. She says the CBO was asked a carefully-crafted (as in loaded) question designed to make it appear that feds are overpaid. As usual it did a thorough job but, she says, Congress pointed it in the wrong direction.

The CBO study compared wages and benefits and looked at education, experience, occupations and “demographic characteristics” such as age, sex, race, ethnicity, marital status, etc. By doing this, Simon says, it produced a warped picture because women and minorities are paid less in the private sector but are paid the same in a job-for-job-grade-for-grade system like the federal government.

Had the CBO been asked to compare government vs. industry based on pay levels alone, she said, it would have come up with a totally different set of numbers.

Simon was one of the guests last Wednesday on our Your Turn radio show. All the shows are archived on our home page. Federal Times reporters Stephen Losey and Sean Reilly talked about the assault on federal pay and benefits and the status of postal reform. To listen to the show, click here.


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