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IN SEARCH OF EQUITY: AN EXAMINATION OF

LOCALITY PAY

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

POSTAL SERVICE, AND THE DISTRICT

OF COLUMBIA

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

JUNE 26, 2008

Serial No. 110–144

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

——— ———

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

LAWRENCE HALLORAN, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL SERVICE, AND THE DISTRICT OF

COLUMBIA

DANNY K. DAVIS, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JOHN P. SARBANES, Maryland

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio, Chairman

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

KENNY MARCHANT, Texas

JOHN M. MCHUGH, NEW YORK

JOHN L. MICA, Florida

DARRELL E. ISSA, California

JIM JORDAN, Ohio

TANIA SHAND, Staff Director

(III)

C O N T E N T S

Page

Hearing held on June 26, 2008 ............................................................................... 1

Statement of:

Grimes, Charles, Deputy Associate Director, Office of Personnel Management; and Hank Kashden, Deputy Chief for Business Operations, U.S.

Forest Service ................................................................................................ 51

Grimes, Charles ......................................................................................... 51

Kashden, Hank .......................................................................................... 63

Hansen, Kathrene, executive director, Federal Executive Board ................. 24

Kelley, Colleen, president, National Treasury Employee’s Union; Jacqueline Simon, public policy director, American Federation of Government Employees; and Art Gordon, national executive vice president,

Federal Law Enforcement Officers Association .......................................... 72

Gordon, Art ................................................................................................ 90

Kelley, Colleen ........................................................................................... 72

Simon, Jacqueline ..................................................................................... 81

Letters, statements, etc., submitted for the record by:

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 103

Davis, Hon. Danny K., a Representative in Congress from the State

of Illinois:

Prepared statement of ............................................................................... 3

Prepared statement of Hon. Barney Frank ............................................. 8

Prepared statement of Hon. Neil Abercrombie ....................................... 10

Prepared statement of the Federal Managers Association .................... 14

Prepared statement of the Foreign Service Association ........................ 12

Fortun ̃ o, Hon. Luis G., a Resident Commissioner in Congress from Puerto

Rico, prepared statement of ......................................................................... 105

Gordon, Art, national executive vice president, Federal Law Enforcement

Officers Association, prepared statement of ............................................... 92

Grimes, Charles, Deputy Associate Director, Office of Personnel Management, prepared statement of ........................................................................ 54

Hansen, Kathrene, executive director, Federal Executive Board, prepared

statement of ................................................................................................... 27

Kashden, Hank, Deputy Chief for Business Operations, U.S. Forest Service, prepared statement of ............................................................................ 65

Kelley, Colleen, president, National Treasury Employee’s Union, prepared

statement of ................................................................................................... 75

Marchant, Hon. Kenny, a Representative in Congress from the State

of Texas, prepared statement of .................................................................. 22

Simon, Jacqueline, public policy director, American Federation of Government Employees, prepared statement of ..................................................... 83

(1)

IN SEARCH OF EQUITY: AN EXAMINATION OF

LOCALITY PAY

THURSDAY, JUNE 26, 2008

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL

SERVICE, AND THE DISTRICT OF COLUMBIA, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 2:30 p.m. in room

2154, Rayburn House Office Building, Hon. Danny K. Davis (chairman of the subcommittee) presiding.

Present: Representatives Davis of Illinois, Norton, Sarbanes, and

Marchant.

Staff present: Lori Hayman, counsel; William Miles, professional

staff member; and Marcus A. Williams, clerk/press secretary.

Mr. DAVIS OF ILLINOIS. The subcommittee will come to order.

Welcome Ranking Member Marchant, members of the subcommittee, hearing witnesses, and all those in attendance to the

Subcommittee on the Federal Workforce, Postal Service, and the

District of Columbia’s hearing on locality pay and other Federal

pay concerns.

Hearing no objection, the chair will ask unanimous consent to

allow the testimonies of Representatives Barney Frank, Neil Abercrombie, the American Foreign Service Association, the Federal

Managers Association, and the COLA Defense Committee of AHU,

Inc., to be added to the record.

The chair, ranking member, and subcommittee members will

each have 5 minutes to make opening statements, and all Members

will have 3 days to submit statements for the record.

Hearing no objection, so is the order. I will begin.

Again, thanks to all of you who have come. This hearing entitled,

‘‘In Search of Equity: An Examination of Locality Pay,’’ serves as

a followup to a hearing the subcommittee previously held in the

first session of the 110th Congress that broadly examined issues related to Federal pay and administration policies.

Today’s hearing, however, will focus on concerns associated with

locality pay, including calculation, geographical application, and

the determination of an employee’s primary duty station for locality

pay purposes.

Keeping in line with the subcommittee’s efforts and interests in

enhancing the Federal Government’s ability to recruit and retain

a highly qualified work force that can operate and function in a

manner that meets the challenges of the 21st century, it is my

hope that the testimony presented today will help us better underVerDate 11-MAY-2000 14:18 May 05, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 U:\DOCS\48588.TXT KATIE PsN: KATIE
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stand the formula for which locality pay payments are based and

to determine if this basis serves as the most practical methodology

to reflect the realities that Federal employees, particularly those in

high-cost area, face in providing for their general welfare and that

of their families.

Adding locality pay to the base salaries of nearly 2.7 million civilian workers in over 800 different occupations throughout the country, the Federal Government has committed itself to making sure

that its employee compensation systems accommodate workers fairly. However, the question we are examining today is whether the

calculation of locality payments as currently prescribed actually

meets this objective. This is in addition to the pay levels and benefits Federal agencies currently have in place.

In addition to locality pay issues, this hearing is also intended

to explore other recently introduced Federal pay-related proposals

put forth by my colleagues in both the House and the Senate, as

well as by the Office of Personnel Management. These include Senate 3013, the Non-Foreign Area Retirement Equity Assurance Act

of 2008, which converts white collar Federal employees in the nonforeign areas to a locality pay system. Second, OPM’s Locality Pay

Extension Act of 2007, which aims to extend locality pay to white

collar employees in non-foreign areas.

H.R. 1786, introduced by Representative Faleomavaega, would

amend Title 5 U.S.C. to all Federal employees stationed in American Samoa to receive non-foreign area cost of living allowances as

if stationed in Guam or the Commonwealth of the North Mariana

Islands.

H.R. 2375, the Southeastern Massachusetts and Rhode Island

Federal Worker Fairness Act of 2007 seeks to improve pay parity

in the Federal wage system at the prevailing rate for blue collar

Federal employees in certain high-cost areas.

And H.R. 3202, the Foreign Service Overseas Pay Equity Act of

2007, would amend the Forest Service Act of 1980 to extend comparability pay adjustments to members of the Foreign Service assigned to posts abroad and for other purposes.

I would like to thank Representatives Barney Frank and Neil

Abercrombie, as well as the Foreign Service Association and the

Federal Managers Association for submitting their valuable testimony for the record, and I look forward to hearing the testimony

of the other witnesses joining us today as we discuss a wide range

of Federal pay-related issues.

[The prepared statements of Hon. Danny K. Davis, Hon. Barney

Frank, Hon. Neil Abercrombie, the Foreign Service Association,

and the Federal Managers Association follow:]

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Mr. DAVIS OF ILLINOIS. At this time I would like to yield to the

ranking member, Mr. Marchant, for any opening remarks that he

may have.

Mr. MARCHANT. Thank you, Mr. Chairman. Thank you for holding this hearing on locality pay.

As this committee continues to look at ways to recruit and retain

the best employees for Federal service, I believe it is important

that we address each of these longstanding concerns.

One issue before the committee today is whether Congress

should pay the way pay is calculated in Alaska, Hawaii, and the

territories. The Office of Personnel Management has suggested that

switching from the older cost of living allowance system to a more

modern locality pay system could provide more equal treatment between all Federal employees.

One interesting thing about the increasing favor of the use of locality pay is that it confirms that market-based measurements that

respond to private sector changes appear to work once again better

for citizens than Government-based statistics or congressionally

mandated across-the-board pay adjustments regardless of the market or performance factors. This is a lesson that I believe needs to

be applied to other parts of Government, as well.

I understand that there are some differences between the Senate

legislation, Senate 3013, and the original Bush administration proposal, and I will be interested in hearing our witness explain the

difference and recommend improvements.

Thank you very much, Mr. Chairman.

[The prepared statement of Hon. Kenny Marchant follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.

Mr. Sarbanes, do you have any opening comments.

Mr. SARBANES. No, sir.

Mr. DAVIS OF ILLINOIS. Well, thank you very much. Then we will

proceed with our witnesses.

I would like to call our first witness, Ms. Kathrene Hansen. Ms.

Kathrene Hansen is the executive director of the Greater Los Angeles Federal Executive Board. The Federal Executive Boards are responsible for strengthening the management and administration of

Federal activities. Ms. Hansen is also a co-author of a report entitled, ‘‘Imperfect Storm,’’ a Federal Executive Board white paper

issued in July 2006 addressing daunting challenges in determining

Federal pay.

We welcome you, Ms. Hansen. It is the custom of this committee

to swear in all witnesses.

[Witness sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that the witness answered in the affirmative.

Thank you very much again. You have 5 minutes in which to

summarize your statement. Of course, the lights just simply indicate that is time to go, it is time to wind down, and then it is time

to stop.

Thank you very much. We are pleased to have you.

STATEMENT OF KATHRENE HANSEN, EXECUTIVE DIRECTOR,

FEDERAL EXECUTIVE BOARD

Ms. HANSEN. Good morning, Chairman Davis and members of

the subcommittee. Thank you for the opportunity to appear before

you today to discuss the white paper entitled, ‘‘Imperfect Storm:

The Looming Human Capital Crisis in California’s High-Cost Cities,’’ which was prepared in July 2006 by the Greater Los Angeles

and San Francisco Bay Area Federal Executive Boards.

The views in this testimony are my own and do not represent the

views of the administration, the Department of Homeland Security,

or the Federal Executive Boards.

Although she is not testifying today, I would like to acknowledge

Dianna Louey, my counterpart from San Francisco.

In 1988 the FEBs in New York City and Los Angeles published

reports on the recruitment and retention crisis experienced in those

high-cost cities. These reports captured the attention of policymakers in Washington, DC, and the result was the passage of the

Federal Employee Pay Comparability Act. The creation of locality

pay was a major breakthrough, but it did not solve the problems

identified 20 years ago.

Stories we hear in California’s high-cost cities are not the reality

for the Federal worker in most parts of the country. It is surprising

that Federal employees at the GS–13 and –11 and –12 levels qualify for HUD Section 8 rental assistance program. We hear about

employees who sleep in their cars to save up to get into an apartment, employees who get their dental work done in Mexico, and

employees who share an apartment based on their shift assignment.

With the gas price hike, we are seeing an increase in the number

of employees who sleep on a co-worker’s sofa or in a camper in a

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nearby park because they can’t afford both rent and the gas to

drive to work each day. They do all this so they can stay in California because of family obligations or to keep their jobs while they

desperately await a transfer to a lower-cost city.

The key here is that they do their jobs well while they quietly

struggle to survive. That is dedication.

The failure of the current locality pay formula to consider cost of

living and extremely high housing costs has resulted in tremendous

variation in the quality of life for the Federal worker. In many

parts of the country the Federal worker is adequately compensated;

however, in high-cost cities that is not the case. I am not an economist or a statistician, so I cannot tell you why or exactly how the

current locality pay formula creates these inequities, I can only testify that it does.

We learned that there are five aspects of the current locality pay

system that prevents equity: the calculation of the rest of the

United States, not including cost of living in the formula, the composition of the locality pay areas, not closing the pay gap, and not

including the State tax rate.

Based on OPM’s response, we know that they believe that Federal agencies would fully implement the human resource flexibilities available to them so the recruitment and retention problems

could be eliminated; however, that does not appear to be the reality

in the field.

In anticipation of today’s hearing, Dianna and I conducted a

quick e-mail survey of our members to assess what had changed in

the 2-years since we conducted our study. We had about a 17 percent response rate. We found that most agencies continue to experience the same recruitment and retention challenges, and in many

cases the situation has worsened.

Many of the Nation’s most critical infrastructure exists in California’s high-cost cities. To protect them and the millions of residents in these mega cities, the full complement of the Federal

agencies is needed to keep them safe and secure; however, there is

no incentive within the existing Federal pay system for employees

to serve in these high-cost cities.

If the locality pay formula were changed to consider the cost of

living, it would negate the need to explore other options and to

ease the financial strain on the Federal work force in high-cost cities.

In the event of this wholesale formula change, our report highlighted an alternative. Even with the current housing market,

housing is still not affordable for many Federal employees at all

grade levels. In Los Angeles and San Francisco it takes 67 to 85

percent of the average Federal employee’s salary to afford a median-priced home.

DOD has a proven model to reduce the impact of personnel

transfers to high-cost cities. In addition to their base pay, active

duty personnel are given a basic allowance for housing commensurate with their rank based on the housing costs of their assigned

city.

Another factor that creates recruitment and retention problems

at the other end of the pay chart is pay compression. The amounts

at issue are not trivial. For each of the past several years, several

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GS–15 employees in San Francisco and L.A. have been prevented

from receiving thousands of locality pay dollars. In most parts of

the United States the Federal employee is well compensated and

able to live the lifestyle of a typical middle class family. It is heartwrenching to see the financial and quality of life sacrifices that

Federal employees in California’s high-cost cities must make in

order to survive because they have chosen to work for an employer

who by statute is unable to compensate them fairly and equitably

in comparison to their out-of-State peers. In essence, they are penalized for serving in California.

As our survey has clearly confirmed, when a current or prospective employee is trying to decide whether to move or to stay in

California, I guarantee they don’t look at cost of labor, they look

at cost of living. The title of this hearing is, ‘‘In Search of Equity:

An Examination of Locality Pay.’’ I applaud the committee for looking into this matter, because I can assure you that the current locality pay system is far from equitable.

Thank you.

[The prepared statement of Ms. Hansen follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. Again, we appreciate your testimony.

Let me just ask you, in your written testimony you suggest that

locality pay be based on the cost of living versus the cost of labor.

Could you tell me the difference between the two?

Ms. HANSEN. I am not a statistician. I will do my best to explain

it to my understanding.

The employer cost index [ECI], is the basis of the cost of labor,

and they use a national compensation survey to find like positions

to compare to the Federal sector. The intention of FEPCA was to

get within 5 percent of the non-Federal sector. We have no illusions

that we will ever be comparable with the private sector, nor is that

what we seek.

The cost of living is based on the consumer price index, which

is the actual expenditures that a household must spend in order to

survive. It includes housing, it includes fuel cost. I know in the Los

Angeles area a number of private sector companies actually give

their employees every 6 months a cost of living adjustment. And

depending on what is going on with the cost of living, it either goes

up or it goes down. It is something those employees feel like they

understand when their salary goes down because their expenses

have gone down, and so it doesn’t hurt as badly when the salary

is based on cost of living, because that is something that we live

with every day. Cost of labor, there are so many variables. Illegal

immigration is something that we believe has suppressed the salaries in the California area.

The size of the locality pay area makes it so that you are comparing salaries and occupations in radically different economies. For

instance, we appeared before the Federal Salary Council twice and

asked that they make our locality pay area smaller. Even though

the Federal Salary Council admitted that if we just looked at the

coastal counties, the salaries are almost 20 percent higher in their

national salary compensation survey, they have included the two

inland counties, and one of them is actually one of the lowest-cost

labor counties in the Nation. So, it dilutes our locality pay calculation based on cost of labor.

We think cost of living based on a county-by-county basis would

be a lot more realistic.

Mr. DAVIS OF ILLINOIS. You have suggested a variable housing

allowance for employees in high-cost areas. Are there other recommendations that you would make to try and rectify the inequities that you cite relative to these areas?

Ms. HANSEN. Well, the variable housing allowance was one of the

best practices that we learned from the Department of Defense

when we did our survey, and the reason we proposed it was because there is existing data. It is something that we thought could

be done quickly as a stop-gap measure.

In the absence of something like that, if you are talking about

a wholesale revamping of the pay system, of course, we would take

the position that we would prefer the cost of living to be considered, and if that is not a reality then just implementing FEPCA

and closing the gap within the 5 percent, as the law requires,

would be a welcome change to Federal employees in high-cost cities.

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Mr. DAVIS OF ILLINOIS. You cite high-cost areas in California. Do

you see this kind of problem existing in other areas, other parts of

the country?

Ms. HANSEN. I think what we see in California, is that we are

on the front end of where the issue of locality pay may be going

nationwide. Talking to my co-workers and my colleagues nationwide, a couple of them have had me send copies of our survey because they have similar challenges. I know Boston is extremely expensive. They are having struggles in Key West, FL. Chicago is an

expensive town. We are just a little ahead of the curve because our

expenses have gone up so quickly, but I do think that what we are

seeing in California is inevitably going to roll out to other high-cost

cities.

Mr. DAVIS OF ILLINOIS. Well, thank you very much.

I will yield to Mr. Marchant.

Mr. MARCHANT. Thank you.

Ms. Hansen, do you have any sense of how the Federal pay compares? Do you have a survey or do you have a study that shows

what a lawyer with the Justice Department would make as opposed to a lawyer with the same standing in a private firm?

Ms. HANSEN. I don’t have those exact numbers. One thing that

was interesting in trying to capture, when we did our survey in

2001, was private sector salaries, our salaries are so transparent

everybody knows what you make, and so I was calling one of the

want ads, and one of them actually was for a paralegal. I said, hi,

I work for such-and-such, and I was just wondering what you are

paying for this position. It was amazing how subjective it is in the

private sector, and there are so many variables, depending on

where you went to school, who you know, where you live, that is

a hard number to get to.

The Bureau of Labor Statistics collects information in that National Compensation Survey, and I know that lawyers are one of

the positions they looked for, and they have acknowledged when

you look at the pay gap that in the Los Angeles area it is about

44 percent. So on average I guess you could make an assumption,

based on those principles, that they would make 44 percent more,

but that is not a universal.

Mr. MARCHANT. How does the State of California deal with these

same issues with its employees?

Ms. HANSEN. The State of California actually has some challenges, as well. The State of California is a little bit unique in that

we are one area where local government and State government frequently pay more than the Federal salary. That is not typical in

most parts of the country, based on our analysis. And they use the

cost of living variable, and it is a formula that includes both the

ECI and the CPI. But they also look at cost of living.

Within the State I know, for instance, the California State University system, they have a really hard time recruiting at, like, Cal

State Dominguez Hills, which is right in Los Angeles, but Cal

State, somewhere in the San Joaquin Valley where it is cheaper to

live, they don’t have as hard a time recruiting in that facility. So

even within the State there are some variations. There are specific

high-cost pockets.

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This is not a problem that is unique to the Federal Government.

One of the advantages, though, is that in the private sector they

have all kinds of latitude, but within the State of California they

do typically pay better than their Federal counterpart, but they

have some of their own internal challenges throughout the State.

Mr. MARCHANT. So it would be your testimony that a Federal

employee in California is worse off than a similarly situated, similar job, similar benefits, just across the board?

Ms. HANSEN. I can’t say that with 100 percent surety. I know

that when you can find a comparison, for instance, law enforcement, with fire fighters, with a number of administration positions

that we have looked at, particularly with local government—and,

again, I think part of that is because California is Statewide. They

have sort of the same issue that we have. With the Federal perspective you are worried about the national work force, and so, a

problem we are having in a big city in one State is not as pressing.

And in the State of California they are dealing with the whole

State work force, and they don’t want to create inequities within

the State.

So in some parts of the State, absolutely they make more; in

other parts of the State I don’t know is the comparison is that dramatic. I do know that with law enforcement and fire fighters they

can make as much as three times more. Irvine Police Department,

a friend of mine, her son just got out of college and he is a starting

police officer, absolutely no experience, started at $75,000. That is

the labor market we are competing with. I was talking with the

sheriff of Los Angeles County about our recruitment and retention

challenges, and he said, I don’t know how you do it. He said, we

pay so much more and we are having a hard time getting talent.

This is not a unique Federal problem in the State of California,

but I do think it is a trend that we are going to start seeing in all

high-cost areas.

Mr. MARCHANT. And when you try to recruit a Federal employee

into your system from another city, are you having a huge problem

with that?

Ms. HANSEN. Yes. For a number of positions, the advertisement

will be a national recruitment, so somebody applies for a job and

they don’t know where they are going to end up. Oftentimes at the

end of the training that is one of the things they have looked at

doing, is maybe we need to tell them before we spend the money

training them where they are going to go, because what has been

happening, at the end of their training they are told they can either go to L.A. or San Francisco. We benefit in L.A. because we are

cheaper than San Francisco. But that is when you end up with people saying, I wanted to get into the Federal system. I took this job.

I can’t afford to live here, so three buddies and I are going to share

this apartment. They start immediately trying to transfer out to a

lower-cost city.

We really are the training ground. Our public is really more in

the retention area. We can keep the people at the end of their career, in part because they may have some retirement restrictions.

FERS is making that harder, because that retirement system is

more portable. We can get people at the beginning of their careers,

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because when you are in your 20’s it is OK to share an apartment.

It is kind of cool living in California.

But when they get to the point where they are an effective journeyman employee, when they have developed all the training and

they are actually going to make a significant contribution to the effectiveness of their organization, they start thinking about getting

married, having children, buying a house, and then they look

around and say, I can’t do that here. And they flee to lower-cost

cities. It is that portion in the middle that I would argue is the

most essential and we are having the hardest time keeping. And

also at the GS–15 level.

A number of agencies have, because of pay compression, had a

hard time getting people to take positions. There are many, many

GS–15 vacancies that have been vacant for over a year because

they can’t get people to reduce their standard of living dramatically

enough to afford living in Los Angeles or San Francisco.

Mr. MARCHANT. Thank you, Mr. Chairman.

Thank you.

Ms. HANSEN. Thank you.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.

Mr. Sarbanes.

Mr. SARBANES. Thank you.

Could you hazard a guess at what percentage of the locations

across the country would you say are paying at a level that properly accounts for the cost of living there? I mean, is it 25 percent,

is it 50, is it 70, is it 10?

Ms. HANSEN. I don’t know the numbers. I know from our perspective the rest of U.S. category is probably pretty equitable, or

maybe even somewhat overpaid in some parts of the country commensurate with the cost of living. You know, I personally have

family that live in some pretty rural areas, and when I see their

cost of living and their standard of living and they make considerably less than even I do, and yet they can afford to do things that

I can’t. I know in some parts of the country the Federal employee

is one of the highest-paid employees in town.

Mr. SARBANES. So, in other words, somebody might argue that

this discussion is like a trojan horse for just across-the-board pay

increases for Federal employees, and there may be another discussion we can have about pay equity vis-a-vis what the private sector

offers.

Ms. HANSEN. Yes.

Mr. SARBANES. Many of us feel strongly about that. But you are

really getting to the question of there are certain places where the

cost of living is such that the Federal Government is at a severe

disadvantage in terms of being able to hold on to people.

Ms. HANSEN. Yes.

Mr. SARBANES. What I wanted to ask about, I was intrigued by

your discussion in the written testimony about the OPM’s response

to the concerns expressed that the Federal agencies have flexibility

to address some of these concerns, but that you view that as not

solving the problem. The reason I am interested in that is because

we have been doing a lot of talking recently around different pieces

of legislation, last week with the 4-weeks of paid parental leave,

the telework bill that the chairman and others on this committee

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worked on getting through. And a lot of our argument for that is

this is going to make the Federal Government more competitive in

recruiting and retaining people.

What you are suggesting is that we may be fooling ourselves in

areas where the cost of living isn’t being taken proper account of,

so maybe you could just talk about that a little bit more.

Ms. HANSEN. OK. Just this week the Partnership for Public Service did a news release on their survey. This is the first time that

it has shown that salary is the No. 1 variable for young people to

decide whether or not they want to come work for the Government.

Over the years we have heard we want to be the employer of

choice.

Now I am a 24-year career Federal employee, and you all have

taken very good care of us, and the Office of Personnel Management has worked tirelessly to come up with innovations and flexibilities, and we do have, particularly in the area of leave, one area

that I think our benefits exceed many. But even that is a struggle

in the high-cost areas because we can’t use our leave because we

have an average of an 18 percent vacancy rate at most of our agencies. That is even excluding two agencies that reported an 85 percent vacancy. The average would have been a lot higher if I had

put in those numbers, but I did not.

What happens with the HR flexibilities that do not adequately

compensate? In our report we talked about Maslow’s hierarchy of

need. A lot of that—the parental leave, the telework—are nice to

have. It is like you are moving up the scale on Maslow’s hierarchy

of need, but you are not too concerned about those issues when you

really are struggling to put a roof over your head and food on your

table. You are concerned about basic survival. You can’t think

about optimal performance. You can’t think about the nice to

have’s, because all you really care about is getting a roof on your

head, a tank of gas in your car, and food on your table.

Most of our employees are in that survival mode.

Mr. SARBANES. Did you just say there were some things you left

out of this study where it was an 85 percent?

Ms. HANSEN. As far as the vacancy rate?

Mr. SARBANES. What was that you said?

Ms. HANSEN. We have two agencies that reported an 85 percent

vacancy rate.

Mr. SARBANES. What does that mean?

Ms. HANSEN. That they had 85 percent of their positions were

not filled.

Mr. SARBANES. How do you function?

Ms. HANSEN. That is why I didn’t roll them into the average, because I thought it would skew it. Our work force is really stretched.

Mr. SARBANES. How many positions were there in one of those

agencies?

Ms. HANSEN. I didn’t ask that question. We just did a quick, fivequestion survey when we got this invitation.

Mr. SARBANES. OK.

Ms. HANSEN. Most people indicated, I am a small office, but

those particular ones did not.

Mr. SARBANES. OK. Thank you.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Sarbanes.

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Ms. Norton.

Ms. NORTON. Thank you, Ms. Hansen, for this testimony. I

couldn’t be more sympathetic to you, to tell you the truth. Mr. Sarbanes and I live in another very high-cost area where recruiting is

difficult. Indeed, we have to fight very hard just to get the annual

cost of living increase and get that not driven back. But it is not

enough to sympathize with it. You would like the cost of housing

to be taken into effect but you indicate that with labor costs, basing

this matter on labor costs, you say, results in pitting what amounts

to a lot of extremes.

Well, I have a couple of questions about that. I couldn’t imagine

that there wouldn’t be huge extremes in housing costs, or else nobody would be living in California any longer. I am not sure if we

would be jumping from the frying pan into the fire. One would

have to look very closely at that one. That certainly is one question

for me.

They go to labor cost because most of the time that is more closely related, of course, to the cost of living. It is very hard to get the

Federal Government to do anything even mildly reforming, much

less as radical as moving to an index that would help some areas

but not others.

Have you any confidence that the extremes you speak of in the

labor market are not also to be found in California’s housing market, where you have some of the poorest people in the United

States and some of the richest people in the United States and all

across the board because it is such a diverse population? Has anybody investigated that?

Ms. HANSEN. Well, housing numbers we looked. One of the

things that using the DOD basic allowance for housing model is it

is very narrow. If you are assigned to this base, you get a housing

allowance based on the cost of housing around that base. One of

the issues——

Ms. NORTON. The cost of housing for who? I mean, you know, in

the same community you can have very rich people living in

houses, and at the opposite extreme you have some version of what

we do with labor costs, to do with housing costs, and you have confidence that would straighten California out? Who has done it?

Ms. HANSEN. The Department of Defense contracts with an organization called Runzimer. In fact, Runzimer has the contract for

multiple Federal agencies that use housing allowances. It is not

commonly used by anyone except the Department of Defense, but

there are some agencies, for national security purposes, that have

a requirement to have a certain person live in a certain city, and

it is above their grade level.

I met with this gentleman from Runzimer and he was extremely

confident in the surveys that they do.

Ms. NORTON. Housing allowances for any Federal employee?

Ms. HANSEN. Well, they do it for the Department of Defense active duty employees, and they have been doing it for several years.

Ms. NORTON. Any active duty employee?

Ms. HANSEN. Yes.

Ms. NORTON. In a high-cost part of any city?

Ms. HANSEN. Any city. Every active duty——

Ms. NORTON. From the lowest, they give them something?

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Ms. HANSEN. Yes, and they have done it for several years, and

it solved the retention problem the Department of Defense was

having until the last few years.

Ms. NORTON. For civilian employees?

Ms. HANSEN. No. Active duty. And we have a chart in our report

that, although the active duty base pay is lower, when it is supplemented with the housing allowance they consistently make more.

It is on page 10 of the written statement. And I personally was

raised in a military family. My father was a tack sergeant. We had

six kids and my mother never worked, and we lived in high-cost

cities and lived in low-cost cities. Our quality of live never changed.

It really was the great equalizer in allowing you to move at the

need of the agency.

Ms. NORTON. So are you recommending housing allowances or replacement of labor cost figure?

Ms. HANSEN. What we recommend in our report is that the rest

of the United States become the new base. Let’s stop pretending

that is not the new base. That really is the base, our base pay, with

the exception of Alaska, Hawaii, and the territories, which you

guys will be talking about later. Make the rest of the United States

the new base and then add a housing allowance for the communities that it is required. What we speculated was, based on our

research, that there are going to be some cities that aren’t going

to need a housing allowance, that it may already be getting locality

pay above the rest of the United States. And there are other cities

that might need a housing allowance.

We had another chart on cost of housing, financial planners recommend that you spend about 30 percent of your household income

on cost of housing. We took the median priced home, we took the

average employee, based on a locality pay, and in Washington, DC,

it takes 38 percent of a GS–9, Step 3 Federal employee to afford

the median-priced home. These are numbers we got from the Housing and Urban Development. In Houston, it takes 17 percent. Nationwide it takes 23 percent.

So if you look at the rest of the U.S. category, they are right

where they are supposed to be according to financial planners.

They are spending 23 percent of their income. Washington, DC, is

spending considerably more than they should. Houston is spending

considerably less. San Francisco and Los Angeles, we don’t even

bring home 67 or 85 percent of our income.

I also found a report by the Bureau of Labor Statistics for 2004

in Los Angeles, the average household spent 18 percent of their income on gas. That was when gas was $2.14. So if you look at our

GS–9s who are trying to afford housing, not just buying a house,

but even renting, and it is taking 67 percent of their gross income

and they are spending at a minimum 18 percent of their gross income on fuel, I don’t know how they are surviving.

Ms. NORTON. I think that is what the next proposal will be, that

it should be based on how far you have to go to get to work.

Again, my own sympathy for it, nevertheless, drives me to—well,

the closest that you have come to making this sound realistic to me

is what you say about DOD employees. Of course, we have been

successful in getting the cost of living pay to be the same as military employees.

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Ms. HANSEN. A couple of your subcommittee members I noticed

are on the House Armed Services Committee Readiness Subcommittee, which deals with housing issues for active duty military.

Ms. NORTON. And because we have been successful, that is an

analogy that is very important. Of course, while we can see the distinction between active duty personnel and Federal workers, we

have also argued successfully that distinction has been blurred, if

not disappeared, by the nature of the global situation today, when

Federal employees are doing often more vital work related to national security.

My own sense is always to drive down my preference and to

drive down my bias and to think more largely of what is more likely to happen, and right when I came to Congress locality pay was

to be instituted. I was very much a part of that. Instantly it got

driven down in times that were very different, very much better

than this.

These are the kind of figures that are going to be hurled at us.

Everybody will look at the cost to the Government. That is what

they do just to get what we promised every year.

Ms. HANSEN. I know.

Ms. NORTON. And what we promised every year is ridiculous,

and the American people wouldn’t allow it. If, in fact, the average

net pay increase, if the cost of living and the locality pay comparability payments were granted the way the law says, the employees would have been gotten an almost 20 percent raise in 2009.

So we are fooling ourselves, we are fooling employees, and we have

to come up with something that works.

I’ll tell you one thing: Nobody is going to give Federal employees,

nor should they, a 20 percent increase in their wages. This is very

much a failed promise, and it may be, Mr. Chairman, that what we

need to do is to get the housing figures from the Defense Department, see where it covers and who it covers. Obviously, it is easier

to sell when you are talking about our active duty military.

Then, of course, the next thing, we have a lot of military bases

here, so that serves my purposes. But the next thing you would

have to deal with is the rest of the country objecting to housing.

Ms. HANSEN. Yes.

Ms. NORTON. About the only thing I can say for labor costs is

that in most places, that is what we are talking about. We are talking about the cost of labor, and we are not even meeting that

standard—cost of labor there, cost of labor here. If you go outside

of that, I expect more controversy than agreement. I am always

driven to something that, notwithstanding the differences you are

likely to get, won’t look like it is favoring some of us over others

of us.

That is why we go through the Civil Service system, for example.

A lot of us are against pay parity because we don’t know any way

to draw the distinctions between the folks who are supposed to be

doing so much better than others, because there are too many employees. So what people do when they can’t come up with a system

that sounds to me far more rational, the kind of system you have,

they fall back on something that is the lowest common denominator.

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I appreciate your testimony, because it moves us forward to looking at a practical example of having moved beyond the lowest common denominator and an example that is analogous to one we have

insisted upon using for Federal employees with active duty military.

Thank you, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Thank you very much, Ms. Norton.

Let me just ask you, Ms. Hansen, how would you respond to recent arguments that the rest of the U.S. locality pay rates and actual locality rates for certain high-cost areas are incongruent, giving the varying cost of living or labor between different areas?

Ms. HANSEN. Well, I know in Los Angeles, when we look at the

rest of U.S. category—I first moved to Los Angeles in 1990, and it

was when we got the interim geographic allowance of 8 percent because of the emergency that had been documented in Los Angeles,

San Francisco, and New York with regards to recruitment and retention. I never had heard of the Federal Executive Boards, but everybody in Los Angeles knows that FEB has them locality pay.

That is the perception. That is part of why we have all this information, because whether we were seeking it or not we were getting

this information. At that time it felt pretty good.

When you look at the actual locality pay chart, the thinking is,

in Los Angeles what are they complaining about? They are getting

25.26 percent, but when you back out the rest of the United States,

the 13.18 percent, we are really only getting 12 percent more than

the people who live in some place where you can buy a house for

$60,000.

When we did our analysis, even the price of gas varies as much

as $1.25 a gallon, depending on where you are living. So the fact

that we are now only 4 percent above where we were 18 years ago

when we had an emergency and had to get that 8 percent, you

know, we have only made 4 percent progress in 18 years. We can

feel it in our pocketbooks in California.

I hope that answered your question.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Marchant, do you have any other questions?

Mr. MARCHANT. No, thank you.

Mr. DAVIS OF ILLINOIS. Thank you very much. You are excused.

Ms. HANSEN. Thank you.

Mr. DAVIS OF ILLINOIS. Our next panel consists of Charles

Grimes, who is the Deputy Associate Director of the Office of Personnel Management’s Policy Division. Mr. Grimes previously

served as Assistant Director of Compensation Policy in the Internal

Revenue Service’s Strategic Human Resources Division, where he

developed and implemented the senior manager performance based

pay system. Mr. Grimes has over 25 years of operational and policy

compensation experience.

Mr. Hank Kashden is the Deputy Chief for Business Operations

for the U.S. Forest Service. Mr. Kashden started his career with

the Forest Service in 1973 and has worked in a variety of positions,

including Survey Technician, Forest Administrative Officer, Assistant Director in Law Enforcement, and Director of the Budget Department.

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Gentlemen, thank you very much. If you would, stand and raise

your right hands with me.

[Witnesses sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that the witnesses

answered in the affirmative.

Gentlemen, thank you very much. Of course, you know the 5-

minute procedure that we use to summarize your testimony. Your

full written statement is in the record, if you would take 5 minutes

and summarize. The yellow light is an indication that you have a

minute left and hopefully would wind up. The red light indicates

it is time to go.

Mr. Grimes, we will begin with you. Thank you very much.

STATEMENTS OF CHARLES GRIMES, DEPUTY ASSOCIATE DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT; AND HANK

KASHDEN, DEPUTY CHIEF FOR BUSINESS OPERATIONS, U.S.

FOREST SERVICE

STATEMENT OF CHARLES GRIMES

Mr. GRIMES. Mr. Chairman and members of the subcommittee,

my name is Chuck Grimes and I am here today on behalf of Linda

M. Springer, Director of the Office of Personnel Management, to

discuss how locality pay is determined and recent proposals to extend locality pay in lieu of cost of living allowances to Federal employees working in Hawaii, Alaska, Guam, Puerto Rico, U.S. Virgin

Islands, and other U.S. territories and possessions.

Over the years the focus of Federal pay policy has evolved from

simply keeping pace with the overall labor market to effectively

competing within that market. In response to perceived recruitment and retention problems in some high labor costs markets,

Congress enacted the Federal Employees Pay Comparability Act of

1990. Implemented in 1994, FEPCA provides for an annual locality

pay adjustment to narrow the gap between Federal and non-Federal salaries. Locality pay is a single percentage adjustment within

each locality pay area determined to have a Federal/non-Federal

gap greater than 5 percent.

The Federal Salary Council recommends establishment of particular locality pay areas, and the President’s pay agent approves

the areas. There currently are 32 locality pay areas, including a

catch-all rest of the United States [RUS].

The Bureau of Labor Statistics conducts annual salary surveys

in each locality pay area, private sector and State and local governments, for white collar jobs similar to General Schedule jobs. On

behalf of the President’s Pay Agent, OPM’s staff compares the survey results to GS pay to get a pay gap for each area. The President’s Pay Agent considers these pay gaps, along with recommendations from the Federal Salary Council, and submits an

annual report of recommendations to the President.

The President, after considering the Pay Agent’s report, establishes locality pay percentages for each area based on the pay gaps.

However, FEPCA excluded the non-foreign areas from locality pay

coverage, leaving the 50-year-old COLA program in effect. The

COLA program was originally designed to address recruitment and

retention issues resulting from higher cost of living in the non-forVerDate 11-MAY-2000 14:18 May 05, 2009 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 U:\DOCS\48588.TXT KATIE PsN: KATIE
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eign areas. Accordingly, COLA rates are based on cost of living differences between each non-foreign area and Washington, DC.

COLA has tangible effects on employees’ take-home pay and retirement annuity. For instance, some employees like the fact that

COLA payments are not subject to Federal income tax. On the negative side, given that COLA payments are allowances, they are not

considered base pay for retirement purposes. There is a growing

perception that pay and retirement of white collar civilian Federal

employees in non-foreign areas are gradually eroding in relation to

those in the lower 48.

In May 2007 the administration sent a proposal to Congress to

address these issues. We are pleased that Senators Akaka, Inouye,

Stevens, and Murkowski have recently introduced S. 3013, the

Non-Foreign Area Retirement Equity Assurance Act of 2008, to

stimulate discussion on how best to transition from COLA to locality pay. Also, the Federal Managers Association has put forth a

proposal.

The administration’s proposal would phase in locality pay over a

7-year period to limit the impact of locality pay on retirement behavior. During the phase-in period, decreases to COLA would be

limited to 85 percent of the increase in locality pay in order to reduce the impact on take-home pay of increased deductions for retirement contributions and tax liability.

S. 3013 would reduce the phase-in of locality pay to 3 years, and

would set that offset of COLA at 65 percent of the increase to locality pay. The FMA proposal would phase locality pay in over 2 years

with an offset of 75 percent.

In both the administration’s proposal and S. 3013, the RUS rate

subject to their differing phase-in rates, would apply in all areas

in the first year of phase-in, while data are collected, pay gaps are

determined, and recommendations for pay rates made.

The FMA’s proposal would implement the full RUS rate in the

first year and the full rate for Hawaii and Alaska in the second

year. We believe that Hawaii and Alaska would be established as

separate locality pay areas by the Federal Salary Council and the

President’s Pay Agent. Puerto Rico, Guam, and the Virgin Islands

would likely be covered by the RUS locality pay area.

We estimate rates for Hawaii and Alaska would be 20.38 percent

and 27.68 percent respectively. The current rate for RUS is 13.18

percent.

We believe the administration’s proposal addresses the issues in

a responsible fashion with regard to cost. S. 3013, welcomed as a

step forward in resolving these issues, would cost significantly

more due to the shorter phase-in period and reduced offset. The

FMA proposal would cost even more.

The time is upon us to extend locality pay to the non-foreign

areas. Locality pay provides employees in the non-foreign areas a

retirement benefit comparable to employees in the continental

United States. Additionally, locality pay has increased about 1 percentage point over the last few years, unlike COLA, which has a

history of fluctuations, with most areas currently trending downward.

Mr. Chairman, thank you for the opportunity to discuss this important issue with you today and for your support as we work toVerDate 11-MAY-2000 14:18 May 05, 2009 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 U:\DOCS\48588.TXT KATIE PsN: KATIE
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ward a more market-based pay system in our non-foreign areas

which will benefit both employees and agencies. I would be happy

to address any questions you may have.

[The prepared statement of Mr. Grimes follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Grimes.

We will proceed to Mr. Kashden.

STATEMENT OF HANK KASHDEN

Mr. KASHDEN. Thank you, Mr. Chairman, for the opportunity to

appear before this subcommittee to talk about how the Forest Service applies pay and other flexibilities to managing and retaining its

work force. In talking about this subject, I will talk about how we

apply those incentives and pay procedures, and will defer to Mr.

Grimes for policy discussions that may be under consideration.

Recognizing that it is very rare for the U.S. Forest Service to appear before this subcommittee, let me just give you a brief overview

of what the Forest Service is about in terms of our mission.

The mission of the Forest Service is to sustain the health, diversity, and productivity of the Nation’s forests and grasslands to

meet the needs of present and future generations. We tend to distill that in our work force around a model that involves caring for

the land and serving people.

The national forests of America are highly disbursed. We have

155 national forests and 20 national grasslands in 44 States and

in Puerto Rico. We have other major branches of the Forest Service, including a premier research and development branch that is

involved in a wide variety of natural resource and related sciences.

We have a State and private forestry program that supports nonindustrial private landowners, as well as States and tribal areas.

We also have something that is seldom known in the Forest Service. We, through the Department of Labor, administer 22 Job Corps

Civilian Conservation Centers with around 900 employees that

support over 4,000 teenagers and young adults in giving them vocational training with a conservation basis for that education.

The Forest Service has a wide variety of job series, and those include forestry technicians, professional foresters, scientists, teachers, guidance counselors, a variety of ologists—that being geologists

or wildlife biologists—administrative personnel, etc.

We cover a wide geographic area across the entire country. We

have employees in major metropolitan areas around the country.

We have employees in very rural areas. We have employees in very

high-cost resort towns and we have employees in areas that might

be considered to be the end of the Earth.

I think that geography and wide array of job series is one reason

that we might be here today to talk about how we apply pay policies and flexibilities. We have a variety of recruitment and retention challenges.

The foresters in the Forest Service, if you are a graduate forester

you probably have had an aspiration to work for the Forest Service

for many years, and once you are in the Forest Service you will

stay there for your entire career, in all likelihood.

Contrast that with contract specialists, a very high-demand series. Many of our contract specialists have worked for multiple

agencies. They are constantly in demand with other agencies and

even the private sector.

Overall, the Forest Service has a very stable work force. Since

2005, our attrition rate has been 8.6 percent, and that compares to

a nearly equivalent Federal Government-wide rate of 8.4.

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The Forest Service uses a broad suite of OPM-delegated flexibilities and authorities to manage and recruit its work force. A specific

example that I think is relevant to Ms. Hansen’s area is the special

pay rate authority that we use to recruit and retain employees in

targeted occupations where there is a tremendous challenge in offsetting a disparity between a competing employer. This particularly occurs as a major example for the Forest Service in southern

California, where we apply locality pay and special pay rates to our

wildland fire fighters, classified as forestry technicians. That is an

effort to offset the pay disparity found between the Federal salary

and those received by the California Department of Forestry and

Fire Protection for their structural and wildland fire fighters.

We also have other areas that require different incentives. We

use the tool we call in-house the three-Rs dealing with recruitment,

relocation, and retention that allows us to provide incentives in

those categories to attract or retain employees in geographic areas

that are difficult to get employees to, and those are areas that are

not necessarily metropolitan. Clear examples are the high-cost

areas like Glenwood Springs, CO; Jackson Hole, WY; Steamboat

Springs, CO. There we will use a retention or relocation bonus

process to try and bring employees into the system.

I have a couple of examples in the testimony that I can talk to

later should you have any questions about that.

In closing, let me just say that generally speaking, we in the Forest Service are able to staff most of our organization effectively. I

think that is a combination of a reasonable pay rate and a mission

that we are all very, very proud to be part of, and that is caring

for the land and serving people. It is one of the reasons I have been

in the Forest Service for 35 years, and it is one of the reasons that

many of our long-termers are there.

I do acknowledge certainly that there are areas where keeping

that tight hold on the mission is offset by some of the challenges

of locality cost, such as in southern California or in some of those

special high-rate geographic areas such as small towns.

With that, I will close my testimony and be happy to answer any

questions.

[The prepared statement of Mr. Kashden follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much. Again, I appreciate both of your testimonies.

Mr. Grimes, let me ask you, you have heard the testimony of previous witnesses in support of locality pay being based on cost of living as opposed to cost of labor and rethinking the way the locality

pay areas are defined. How do you respond to these notions?

Mr. GRIMES. The notion of locality pay is based, as you mentioned, on the cost of labor, Mr. Chairman. We believe and the administration believes that it is a very equitable way to pay employees. There are a number of factors that drive private sector and the

State and local government pay, and living costs are certainly

among those. Private sector folks and State and local government

folks have to buy houses, as well.

So when BLS surveys the private sector and the State and local

governments and provides that data to us to establish the gaps between Federal pay, private sector, and State and local government

pay, we are able to pay a locality pay that is in accord with those

gaps. Now it is not perfect, but it is a step in the right direction

and we believe that it works.

Mr. DAVIS OF ILLINOIS. OPM has previously suggested that Federal agencies already have wide latitude under the various pay

flexibility initiatives to address recruitment and retention issues. If

this is the case, why do you think many agencies seem to still have

difficulty recruiting and retaining employees in these high-cost

areas?

Mr. GRIMES. I am not sure why they are experiencing the difficulties because they do have the tools to use to recruit and retain.

In fact, we have a report here that we submitted to Congress on

2006’s use of the three-Rs, the so-called three-Rs. There was over

22,000 instances that the three-Rs were used in 2006 amounting to

some $140 million, so those tools do exist and they are being used.

Of course, there is plenty of room to be used more often where

they need to be used. Agencies have the authority to pay up to 25

percent of pay, for example, for a retention allowance. And some

of the limits on the three-Rs can be exceeded if people come in to

OPM and ask. To date, we have been asked once and we granted

it. So we stand ready to hear agency complaints and help them

work through these issues.

Mr. DAVIS OF ILLINOIS. On the issue of non-foreign COLA, I understand that you have been to Hawaii, Alaska, and several of the

territories to discuss the change to locality pay. What have been

the main concerns raised by employees in these areas, and what

has been OPM’s response to these concerns?

Mr. GRIMES. Well, one of the main concerns expressed by a number of employees is that it has taken a long time to address this

problem, and they are heartened by the fact that a bill has been

introduced. There is a worry among a number of employees that

the bill will get too expensive and may not make it through the

process. Certain other employees are concerned about the length of

time it may take to phase in locality pay. Some are concerned

about the offset that we propose being too low and favor the one

that is in the Senate bill. But generally speaking, I think employees are in favor of having us extend locality pay to the non-foreign

areas and would like to get it done.

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Mr. DAVIS OF ILLINOIS. I understand that there is a decision

pending on whether Rhode Island and southeast Massachusetts

prevailing wage rate workers should receive the same pay rate as

those in the Boston area. Is that a correct assessment?

Mr. GRIMES. That is an issue that would be handled by the Federal Prevailing Rate Advisory Committee, and I would be happy to

address that question for the record if you would like to submit it.

Mr. DAVIS OF ILLINOIS. All right.

Let me just ask you, unlike their domestic counterparts, the Foreign Service officers do not receive locality pay when they serve

overseas. This means that a Foreign Service officer who is transferred to Washington, DC, from another location is given an increase in pay. The Foreign Affairs Committee is considering changing the locality pay for these officers. Of course, our committee will

also be looking at various proposals on this issue.

One option is for Foreign Service officers to continue to receive

Washington, DC, locality pay. Another option says that Washington

locality pay is higher than all but a few places in the United States

and for these employees to receive the locality pay for the rest of

the United States.

Or yet another option might be for Foreign Service officers to receive pay that is commensurate with the location where they are

stationed. So, for example, a Foreign Service officer living in London may receive one rate of pay while a Foreign Service officer living in Guatemala might receive another rate.

Does OPM have a position? And should Foreign Service officers

receive District of Columbia locality pay or other locality pay for

the rest of the Nation or for the area where they are living?

Mr. GRIMES. Mr. Chairman, this is a complicated issue. When

Foreign Service officers or others go overseas, they receive a number of allowances and so forth that help them deal with the local

economy.

I am not aware of an OPM position on one option or the other,

but, again, would be happy to provide you any technical information for the record if you would like to submit a question.

Mr. DAVIS OF ILLINOIS. You are aware of the fact that the subcommittee has been looking seriously at the whole question of

telework and actually promoting further utilization of it as a concept. In your opinion, should a teleworker’s locality pay be based

on the employee’s regular workplace or the telework location? And

do you have any opinion as to who should be responsible for the

employee’s travel, the agency or the employee?

Mr. GRIMES. The travel?

Mr. DAVIS OF ILLINOIS. For the employee who may be teleworking from Chicago but has to come in to headquarters whatever period of time or whenever or however many times. Who should cover

that travel expense, the employee or the agency?

Mr. GRIMES. I am not an expert here, but often when someone

teleworks it is probably at least somewhat near where their duty

station is, and their duty station controls how they get paid. If

someone were to telework from a distant city, there probably are

existing rules that govern whether someone would get paid to come

into the office or not. That is not my area of expertise.

Again, I could get it to the right people if you would like.

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Mr. DAVIS OF ILLINOIS. I think that currently the employee is

paying. That is sort of a bone of contention that the employee is

paying travel expense. Obviously, there are people who would think

that this is cutting into the employee’s compensation. It is an issue

that I think certainly bears a tremendous amount of scrutiny, review, and looking at, if we are going to be able to telework to the

extent that certainly the subcommittee would like to see us begin

to do.

Mr. Kashden, let me just make sure that I understand. Your testimony basically suggests that there are no super serious concerns

relative to locality pay in your agency?

Mr. KASHDEN. What I would say, Mr. Chairman, is that looking

across the board at our geography, we are generally in good shape.

Where I certainly acknowledge some issues, is that it is a very hot

issue, if you will, in southern California. Recently, as much as just

a couple of hours ago, I talked to our forest supervisor there in

southern California and, while we are managing our work force

adequately, if you take fire fighters where you have employees

whose roots are in southern California, who are committed to a

profession in fire fighting, just candidly, sir, the Forest Service, in

terms of its annual compensation, would have a hard time competing with the California Division of Forestry or local agencies.

Now, in southern California where we have employees who see

a longer-term career in natural resource management, of which fire

is a part of that, and they are more flexible in their duty locations,

then we are able to compete quite effectively in terms of keeping

them in the organization, although we do acknowledge that the annual compensation package that they receive as part of the fire

fighting job in southern California is less than what they are getting from a competitor. So it is a balance between personal preference in terms of your long-term value, whether you are wedded

to southern California and you want a career in fire, or whether

you want a natural resource career, and those play into those decisions.

Certainly in our contingent of employees in high resort areas it

is also tough. We will find long commutes in order to perform the

mission there. Obviously, these areas have the benefit of being extremely beautiful and desirable places to work and it is a rewarding career in natural resource management, so you get those things

that tradeoff against those economic challenges.

Elsewhere in the country, in San Francisco we have some folks

and certainly Washington, DC, there are some challenges for recruiting. But generally across our geography we are doing fine.

Mr. DAVIS OF ILLINOIS. Well thank you, gentlemen, very much.

We appreciate your testimony. You are excused.

We will now proceed to our third panel. Our witnesses are Ms.

Colleen Kelley, the national president of the National Treasury

Employee’s Union, which is the Nation’s largest independent Federal sector union, representing employees in 31 separate Government agencies. As the union’s top elected official, she leads in

CEU’s efforts to achieve the dignity and respect Federal employees

deserve.

Jacqueline Simon is the public policy director for the American

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resents more than 600,000 Federal and District of Columbia employees throughout the Nation and around the world. Ms. Simon’s

area of specialization includes the Federal budget, Social Security,

and Federal pay systems.

Mr. Art Gordon is the national president of the Federal Law Enforcement Officers Association, a volunteer organization which represents more than 25,000 Federal agents from over 65 different

Federal law enforcement agencies. Mr. Gordon is also the Assistant

Federal Security Director for Law Enforcement with the Transportation Security Administration at the Marshall BWI Airport. Mr.

Gordon has served in various law enforcement positions for over 29

years.

We welcome all three of you and thank you very much.

[Witnesses sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that the witnesses

answered in the affirmative.

Thank you all very much. Of course, your entire statement is included in the record. We would ask that you summarize in 5 minutes and observe the lights. The yellow light is an indication that

you have a minute in which to wrap up, and the red light means

that it is time to stop.

Ms. Kelley, we will begin with you.

STATEMENTS OF COLLEEN KELLEY, PRESIDENT, NATIONAL

TREASURY EMPLOYEE’S UNION; JACQUELINE SIMON, PUBLIC POLICY DIRECTOR, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES; AND ART GORDON, NATIONAL EXECUTIVE VICE PRESIDENT, FEDERAL LAW ENFORCEMENT OFFICERS ASSOCIATION

STATEMENT OF COLLEEN KELLEY

Ms. KELLEY. Thank you very much, Chairman Davis.

I have the privilege of serving on the Federal Salary Council,

which makes recommendations to the President’s Pay Agent on a

variety of issues relating to Federal pay, including locality pay. I

know firsthand that employees face challenges in making ends

meet, especially in light of recent economic woes that include rising

gas prices that affect commuting to work, increased food prices,

prices of commodities, and a declining housing market. Regional

variations add pressure and weigh heavily on many Federal employees trying to provide a good quality of life for themselves and

their families.

Regional concerns over the differing levels of locality pay and

overall fairness of the current Federal pay system can best be fixed

through full implementation of the Federal Employees Pay Comparability Act [FEPCA]. Congress enacted, as we know, FEPCA to

replace the previous nationwide system with a method for setting

pay for white collar employees that uses a combination of acrossthe-board and locality pay adjustments. The raises are indexed to

wage increases in the private sector, as measured by the employment cost index.

The locality component of pay adjustment of FEPCA was supposed to be phased in over a 9-year period. In 1994 the minimum

comparability increase was to be two-tenths of the pay gap. That

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is the amount that was needed to reduce the gap to 5 percent. And

for each successive year the comparability increase was scheduled

to be at least one-tenth of the pay gap.

For 2002 and thereafter, the law authorized the full amount necessary to reduce the pay disparity in each locality area to 5 percent; however, as we know, the schedule under FEPCA has not

been followed. Every year since 1995 the President has exercised

his authority under FEPCA to submit an alternative pay plan citing ‘‘a national emergency or serious economic conditions affecting

the general welfare,’’ and separate legislation enacting a lower pay

raise has been enacted by Congress.

The overall average pay gap in 2007, as we have heard, including

the average locality rate of 16.88 percent, today amounts to 22.97

percent. If FEPCA had been fully implemented, that gap should be

no more than the statute’s 5 percent target. In order to catch up,

Federal employees in San Francisco should receive a locality adjustment of 17.2 percent for 2008 on top of what they already receive. Los Angeles Federal employees should get an additional 10.2

percent in salary for locality pay.

NTEU believes that by far the biggest problem for Federal employees in large metropolitan areas is this lack of implementation

of FEPCA rather than the method that is used to measure the private versus public pay gaps.

NTEU believes it would be a mistake, however, to change from

a cost of labor measurement as required under FEPCA to a cost of

living measure. The current pay system is based on the concept

that Federal pay should be comparable with private sector pay.

The BLS data accurately depicts a huge pay gap in large cities.

Fully implementing FEPCA would solve the problem without

changing the underlying tenets of Federal compensation, which are

based on comparable pay between Federal and private sector employees.

Unfortunately, not all Federal employees in the GS system received the full Federal pay raise that was set by Congress this

year, and they may not receive the entire raise again in 2009.

These employees’ salaries are capped when they bump up against

the Executive Schedule and by law cannot exceed it. This pay compression was first seen in San Francisco, but it now affects other

cities, including Houston, Boston, Chicago, Detroit, Los Angeles,

and Washington, DC. Since Federal retirement is calculated on salary, these caps also can lower retirement amounts, as well.

NTEU recognizes and supports fixing the problem. Federal employees who serve in the Government should not suffer because

they worked hard, got promoted, and reached the top of the pay

scale.

Finally, NTEU supports the efforts to fix the non-foreign COLAs,

the pay system that pertains to Hawaii, Alaska, and the Puerto

Rico and U.S. territories. This unique system that was established

long ago, as we have heard, is outdated and is in need of reform.

NTEU supports S. 3013, legislation introduced in the Senate by

Chairman Daniel Akaka, to transition these employees to the locality pay system based on pay comparability.

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The provisions of S. 3013 are superior to the administration’s

proposals that would be phased in over 7 years and that lack employee protections in a number of areas.

In summary, I would like to emphasize that NTEU’s continued

recommendation is full implementation of FEPCA. NTEU also supports FEPCA’s continued utilization of the cost of labor standard,

since it reflects the basic tenet of pay comparability with the private sector in a way that cost of living comparisons do not.

Finally, NTEU supports removing inequities caused by pay compression and reforming the non-foreign COLA for Alaska, Hawaii,

and the U.S. territories.

Thank you. I will be happy to answer any questions.

[The prepared statement of Ms. Kelley follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much, Ms. Kelley.

We will proceed to Ms. Simon.

STATEMENT OF JACQUELINE SIMON

Ms. SIMON. Mr. Chairman, thank you for the opportunity to testify today.

AFGE is a strong supporter of the market based locality pay systems formed under FEPCA. FEPCA, passed in 1990, promised to

take the politics out of Federal pay and base annual salary adjustments on both the national and regional labor market data collected and analyzed by the Bureau of Labor Statistics. The law was

passed specifically to address what were and still are enormous

gaps between Federal and non-Federal salaries. It affirmed that

comparability with the private sector measured objectively by the

BLS is the best standard for Federal pay.

The Federal Government cannot pay below-market salaries and

expect to be anything other than an employer or last resort, and

we believe that market comparability is not only the best way to

ensure recruitment and retention of a high-quality Federal work

force, it is also the fairest way to set Federal pay.

The case against the locality pay system that has been advanced

by proponents of pay for performance centers on the charge that

the locality pay system is old and needs to become more contemporary. In fact, the employment cost index and locality pay combination has only been around since 1994. They also like to claim

that it is inflexible when, in fact, the current system provides numerous flexibilities.

We know these flexibilities are rarely used because of budget restraints, so it is not that the system itself is either inflexible or antiquated, it is just under-funded. Under-funding is also responsible

for the fact that the Government failed to meet FEPCA’s promise

of closing the Federal/non-Federal pay gap by 2002. Pay gaps in

some localities are still strikingly large. Federal salaries remain behind those in the private sector by huge amounts in many high-cost

U.S. cities, including Washington, Baltimore, New York, L.A., San

Francisco, Boston, and Chicago, to name just a few. Employees in

all these cities have difficulty maintaining a decent standard of living and buying even a median-priced house.

The obvious answer is full funding for FEPCA, but in the absence of that AFGE recommends taking on the housing issue headon. We recommend pilot programs in counties with median house

prices that are at least 25 percent above the median house price

within the locality. Agencies could experiment with a variety of approaches, including programs modeled after the Federal Teacher

Next Door program that allows public school teachers to purchase

homes owned by HUD at half price, and California’s Extra Credit

Teacher Home Purchase program that makes low-interest mortgages and reduced down payments available to teachers.

In addition, agencies should be able to provide lump sum housing

allowances equivalent to those provided to the military.

AFGE’s proposal for pilot programs to ease housing costs for Federal employees in cities with prohibitive real estate prices is not a

proposal to replace locality pay with housing allowances. We

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ity pay for Federal employees working in these cities. These experiments are necessary supplements to annual salary adjustments

based upon both ECI and locality data, not replacements.

AFGE also strongly supports S. 3013, the Non-Foreign Area Retirement Equity Assurance Act of 2008 introduced by Senators

Akaka, Stevens, Inouye, and Murkowski. We support the bill’s

gradual replacement of COLAs with locality pay over a 3-year period and the fact that it ensures that employees’ take-home pay is

not adversely affected during the transition.

The Senate bill also wisely makes the transition to locality pay

voluntary for current employees. We are pleased that employees

who choose to forego locality pay will be permitted to lock in the

2008 COLA rate; however, there are already approved increases in

COLAs awaiting the lengthy rulemaking process in OMB and OPM

that might not be finalized in time to meet the deadline described

in the legislation.

We have requested that language be added to allow the lock-in

to include amounts provided in pending increases in non-Foreign

COLAs. This will let workers in Puerto Rico whose COLA is scheduled to rise by 13 to 14 percent by next year at the latest to obtain

the higher amount if they choose to remain in the COLA system.

Finally, the Senate bill provides an opportunity for both regulation employee Sand those subject to mandatory retirement ages

who become eligible to retire during the transition period to pay

into the Civil Service Retirement Fund so that their annuities will

not be affected by their late entry into the locality pay system.

They deserve the ability to pay into the system to make themselves

whole, and AFGE strongly supports the provisions of S. 3013 that

allow them to do so.

We are also working with the Senate committee to provide two

additional protections to the bill. The first would guarantee that no

non-foreign area will ever receive locality pay that is less than the

rest of the United States. Second, we ask for additional explicit language to create two new localities that cover the entire States of

Hawaii and Alaska, since the dawn of locality pay program funding

at DOL has been cited by the Pay Agent as an excuse for severely

limiting the number of pay localities. In 2006 Orlando, Kansas

City, and St. Louis all had to be dropped in order to make room

for cities with larger pay gaps because budget limits allowed only

32 cities to be surveyed, no more. It would be wrong to eliminate

two existing localities to facilitate the addition of Hawaii and Alaska; likewise, it would be wrong to force Federal employees and

Alaska to remain part of RUS when preliminary data show their

pay gaps are far in excess of those in RUS.

This concludes my statement. I would be happy to answer any

questions.

[The prepared statement of Ms. Simon follows:]

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Mr. DAVIS OF ILLINOIS. Thank you very much.

We will proceed to Mr. Gordon.

STATEMENT OF ART GORDON

Mr. GORDON. Thank you, Chairman Davis. It is an honor to be

here today. I just want to correct one thing: actually, I retired as

a Federal employee as of several months ago after 33 years.

I am the national president of the Federal Law Enforcement Officers Association, representing 26,000 Federal agents. These are the

men and women who carry a badge and a gun and put their lives

on the line every day for all of us.

I just want to trace a little bit of the history of Federal law enforcement pay reform and locality pay for all of you, and I am just

going to summarize it briefly.

In 1988 there was a commission called NACLE, the National Advisory Commission on Law Enforcement. This was set up by Senator Deconcini. They held hearings and they came up with recommendations on Federal law enforcement pay.

The two conclusions they came to were: Federal pay was too low

for the law enforcement occupations and needed to be increased at

all levels; and the only long-term solution to Federal law enforcement pay and benefits was to provide for a separate Federal law

enforcement pay system.

As a result of this, legislation was passed, Public Law 101–509,

on November 5, 1990. It was signed into law. It was the first major

Government-wide pay reform in almost 30 years. What it did, it

granted special emergency pay adjustments to certain pay districts.

It called for a 9-year phase-in of locality pay, which we have spoken about. And it required OPM to provide Congress no later than

January 1, 1993 a plan to establish a separate pay and classification system for Federal law enforcement officers. To this date that

has not been done.

I wish that I was not here to tell you that there are first-year

Federal law enforcement officers who qualify for public assistance.

We should not be able to tell you there are Federal law enforcement officers who commute before dawn to the city in which they

work, then sleep in their cars to catch up on their sleep before reporting to work because they live so far away and cannot afford a

house closer to the city they work in. We should not be able to tell

you they have to re-hire and train people for Federal law enforcement, that there are Federal agents who leave in order to work for

State or local law enforcement agency so they can make a better

salary and get better benefits.

There have been several bills in Congress initiated and introduced by Representative Peter King in the last three sessions of

Congress. The most recent bill, H.R. 4901, mirrors the other two

bills, H.R. 466 and H.R. 566, which were designed to correct the

locality pay inequities for Federal law enforcement.

We now know that many Federal agents leave Federal law enforcement and move to State and local agencies because they cannot afford the cost of staying a Federal agent.

It should be noted that some State and local police departments

are not recruiting from the ranks of Federal law enforcement, so

in effect what is happening is we pay to train qualified candidates

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only to see these individuals leave Federal service to go to a betterpaying law enforcement job.

There is also another issue, which is pay compression. Many Federal agents are at the pay cap, and the reason being is Federal law

enforcement officers receive their salary plus 25 percent of their

salary for law enforcement availability pay, and as a result you

have grade 13 street agents, grade 14 and 15 supervisors all at the

pay cap, and they have no incentive to move up in management

and no incentive to move to higher-cost cities.

I would like to read a statement that Senator Dodd put in the

record when he introduced S. 985 in May 2003. He said, ‘‘All over

America Federal law enforcement personnel are enduring tremendous stress associated with our Nation’s effort to protect citizens

from the threat of terrorism. Unfortunately, that stress has been

compounded by ongoing pressing concerns among many such personnel about their pay. I have heard from officers who have described long commutes, high personal debt, and in some cases almost all-consuming concerns about financial insecurity. Many of

these problems occur when our agents or officers are transferred

from low-cost parts of the country to high-cost areas. I have been

told that some Federal officers are forced to separate from their

families and rent rooms in cities to which they have been transferred because they cannot afford to rent or buy homes large

enough for their family.’’

Again, we need to resolve the Federal law enforcement pay

issues.

I also agree that we should go with full implementation of

FEPCA. I would like to see a leap put above the pay cap to avoid

pay compression. We would support the housing allowances in conjunction with FEPCA. And also we would support the changes for

Alaska and Hawaii and other territories.

Thank you.

[The prepared statement of Mr. Gordon follows:]

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Mr. DAVIS OF ILLINOIS. Well thank you all very much. We certainly appreciate your testimony.

Let me just ask you, Ms. Kelley, your statement suggests that

NTEU supports maintaining the current cost of labor methodology

used for calculating locality pay. In your opinion, how do you see

us being able to address the problems with employee recruitment

and retention in these high-cost areas that we are discussing?

Ms. KELLEY. Well, I think there are a couple of things. There has

been a lot of talk about the recruiting incentives and the flexibilities that agencies have, and the fact is they do have them. They

don’t use them. They don’t use them nearly to the extent that they

can or should. Why they would tell you that? I don’t know. They

might say funding. They might say because they just want to use

it selectively. In my experience they use it very, very selectively

and very rarely. So they have tools that they are not using right

now.

I think the idea of looking at a housing allowance in addition to

FEPCA, not in place of, is something that should be looked at with

a defined criteria so that cities who meet that criteria could be considered for that.

And I also think that the question of cost of labor versus cost of

living, actually, the cost of living would end up being included in

a scenario that was mentioned earlier where private sector employers give cost of living adjustments every 6 months or so. If they are

doing that, then their salary numbers would be increasing, and it

is those salary numbers that are used to compare Federal employees to adjust what the locality pay should be over periods of time.

So eventually that cost of living adjustment that private sector employers are doing would be taken into account when it comes to calculating the locality adjustment for Federal employees.

I think the easiest answer is to fully implement FEPCA. There

was some concern indicated earlier by Representative Norton that

the public would not allow a 17 percent pay raise to Federal employees. Well, if FEPCA had been implemented as it was intended

and there was, say, a 2 percent additional increase given to employees over 10 years, we wouldn’t be looking at a 17 percent increase now that is needed.

So I think fully implementing FEPCA and figuring out how to do

that. And if it can’t be done in 1 year, we would be glad to work

with you, Mr. Chairman, or anyone else to figure out how to do

that.

Mr. DAVIS OF ILLINOIS. So greater utilization of the tools and opportunities that we currently have would, in your mind, go quite

a ways?

Ms. KELLEY. Absolutely. If what was currently in the law was

implemented from a flexibility, recruiting bonuses, incentive, all

that, as well as implementation of FEPCA, as well as in areas

where, like I said, if we could agree on a defined criteria for some

kind of a housing allowance. I would echo, though, that I would

never support it in lieu of locality pay. It would need to be in addition to those areas where it is confirmed that it is needed.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Ms. Simon, your testimony suggests that a possible remedy for

the Federal recruitment and retention problem is to offer workers

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in high-cost areas a housing subsidy. Given the current pressures

that I guess our Federal Government seems to be experiencing relative to pay and relative to budgetary issues and constraints, do

you think it is realistic that agencies will be able to afford the

housing allowance concept?

Ms. SIMON. Well, it depends. You are asking me whether it is realistic for us to afford it. I think that we can afford what we need.

Our Nation has never been wealthier than it is at this moment,

and it is really a matter of priorities and how you decide to distribute the money and the budget.

Everyone has talked for a long time about the impending retirement of the Baby Boom and what is going to take to recruit the

next generation of Federal employees. Reference has also been

made to the fact that people in the Civil Service Retirement System have a tremendous incentive to stay with the Federal Government, even though their salaries were far below the market, because of the nature of the older Federal retirement system. FERS

allows a little more mobility, and I am not sure that the Government is going to be able to get away with paying salaries that are

so far below the market when they try to recruit the next generation.

We think that, as President Kelley suggested and as we propose

in our testimony, the idea of using these housing allowance ideas

ought to be restrained. We are not proposing an equivalent housing

allowance for every Federal employee employed in every single

place in the entire United States. We really thought that in places

where median house prices far exceed the median within a pay locality, housing allowances would be justified and affordable.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Gordon, much of your testimony points to the difference in

pay and benefits between Federal law enforcement agencies and

State and local police departments. What, in your opinion, are the

differences in duties and job functions between the Federal agencies and these other jurisdictions? In other words, is the notion of

equal pay or pay differential based upon essentially the same duties and responsibilities, or are there different duties and responsibilities to the extent that one might say we are not comparing apples with apples, but maybe apples with oranges?

Mr. GORDON. Sir, we are comparing apples to apples. What we

did is we looked, back when we testified in 2004, at the rate of pay

for a detective with 5 years on the job and felt that they were

equivalent to a Federal law enforcement officer’s based on the

standards that Federal law enforcement officers are required to

meet. We felt, based on that, in cities like New York, L.A., and San

Francisco, that there was a big disparity in the salaries and the

Federal agents were making significantly lower money.

The question you asked is if they are doing the same job. Since

2001, since the formation of the FBI Joint Terrorism Task Force,

Federal agents work side by side with NYPD detectives, LAPD detectives, all across the country. They are all doing the same job.

The detectives are deputized as Federal agents. They go out, they

do investigations, they conduct interviews, they do surveillance. So

we believe there is a similarity or comparison as to what they are

doing.

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Mr. DAVIS OF ILLINOIS. Well, I don’t have any other questions,

and I believe that other Members are trying to finish up their day,

so let me thank you all for your testimony and for being with us.

We appreciate your coming.

This hearing is adjourned.

[Whereupon, at 4:14 p.m., the subcommittee was adjourned.]

[The prepared statements of Hon. Elijah E. Cummings, Hon.

Luis G. Fortun ̃ o, and additional information submitted for the

hearing record follow:]

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