36  Monthly Labor Review • September 20

Federal Employees’ Pay

Fifty years of BLS surveys

on Federal employees’ pay

The process of adjusting compensation for General 

Schedule (GS) Federal employees has changed considerably

over the past 50 years; the change significantly affected

the BLS occupational wage survey programs

John E. Buckley

John E. Buckley is a labor

economist in the Division of

Compensation Data Analysis

and Planning, Office of

Compensation and Working

Conditions, Bureau of Labor

Statistics. E-mail: buckle

john@bls.gov

I

n the winter of 1959–60, the Bureau 

of Labor Statistics (BLS) conducted 

its first survey specifically designed to 

compare salaries of white-collar workers 

in private industry with the salaries established in the 15 Federal General Schedule (GS) grade levels that covered a large 

majority of Federal white-collar workers. 

The National Survey of Professional, Administrative, Technical, and Clerical Pay 

(generally referred to as the PAT or PATC

survey) was the result of a 1957 request “to 

design a survey that would provide information on salaries in private enterprises 

that could be compared with salaries in 

the Federal Civil Service.”1 The request 

came from the Bureau of the Budget and 

the Civil Service Commission (now, respectively, the Office of Management and 

Budget and the Office of Personnel Management). Ultimately, the PAT became the 

model for future surveys designed for setting Federal GS pay levels.

Over the years, the Federal pay-setting 

process has been a topic of considerable 

debate, partly because of the large numbers 

involved—approximately 1.18 million GS

employees received a 2009 pay increase, 

and the annual cost for the 1 percent of 

payroll that the President allocated for 

locality pay was estimated at $756 million—and partly because of concerns over 

survey procedures and pay-setting methodologies. A brief overview of the Federal workers’ 

pay-setting process follows.

A look back: 1883–1962

The path leading to the first PAT survey begins 

with the (Pendleton) Civil Service Act of 1883,2

which failed in its goal to establish a merit 

system for Federal employment. Instead, individual departments controlled the pay process, 

and salaries and duties were not correlated.3 The 

Classification Act of 19234 corrected the correlation omission by specifying that positions 

must be classified and graded according to duties and responsibilities; the Act also established 

a central classifying agency—the Personnel 

Classification Board—serving all departments.

The Classification Act of 19495 superseded 

the 1923 Act in order to “bring position-classification closer to the needs of Government...

and to clarify...and coordinate the distribution of authority between the (Civil Service) 

Commission and the various departments.”6 

The 1949 Act used work-level descriptions to 

extend a centralized job evaluation system to 

all white-collar positions, with the goal of ensuring that each job be compensated according to its relative place in a single hierarchy 

of positions. The Act also aimed at making a 

job evaluation system the centerpiece of Federal compensation. Merging several separate 
Monthly Labor Review • September 2009  

“schedules” of pay rates into one “General Schedule,”7

the Act provided no timetable for adjusting GS pay rates, 

and changes were made sporadically by Congress. In the 

13 years from 1949 to 1962, the average time between GS

pay adjustments was about 31 months and ranged from 22 

months to 44 months. The Federal Salary Reform Act of 

1962 established procedures for conducting annual surveys 

of private industry for use in determining Federal pay adjustments. After the 1962 legislation was enacted, GS workers’ pay was adjusted annually, except in 1963 and 1983, 

when no adjustment was made; in 1972, when there were 

two pay adjustments; and in 1986, when President Ronald 

Reagan issued an alternative plan that froze Federal pay 

until January 1987, when a 3-percent increase became effective. The 1962 Act also shifted the focus on Federal GS

compensation to pay reform, especially in regard to private 

industry and Federal pay comparability. The main focus of 

the 1883, 1923, and 1949 Acts was on classifying positions 

according to duties and responsibilities, along with applying the same standards across all Federal agencies.

Federal Salary Reform Act of 1962

The Salary Reform Act of 19628 specified the BLS as the 

agency authorized to conduct annual surveys of private 

industry to collect salary rates that could be used to set 

the salaries of Federal GS workers doing the same level of 

work and having comparable duties and responsibilities. 

Thanks to the 1957 request to conduct a white-collar survey and the 1960 completion of the first PAT survey, the 

BLS was well placed to respond to the 1962 congressional 

mandate. The survey covered professional, administrative, 

technical, and clerical occupations that were linked to the 

15 GS occupational grades used by the Salary Survey Liaison Committee (composed of staff from the Civil Service 

Commission and the Bureau of the Budget) to make the 

private-Federal comparisons and prepare the required report for the President.

The occupational descriptions used in the survey were 

jointly developed by the Civil Service Commission (now 

the Office of Personnel Management, or OPM) and the BLS, 

with the Commission being responsible for ensuring that 

each level would incorporate the work characteristics necessary to determine a specific GS grade. The BLS was responsible for making sure that the descriptions were recognizable 

in a private-enterprise setting. The scope of the survey under 

the 1962 Act, in terms of industrial coverage and geography, 

was the responsibility of the Commission and the Bureau of 

the Budget, with the BLS providing advice.

The 1959–60 PAT survey was limited to selected privateindustry establishments in a sample of 60 Standard Metropolitan Statistical Areas (SMSAs) selected to represent the 

188 SMSAs identified at that time. The scope of the survey 

excluded establishments in Alaska and Hawaii because of 

the Federal practice of paying added cost-of-living allowances to employees in those two States. (The Non-Foreign 

Area Retirement Equity Assurance Act of 2009 was introduced in Congress to extend the current locality pay program 

to those States. The legislation sometimes is cited as the 

Non-Foreign Area Retirement Equity Assurance (AREA) 

Act of 2009.) Also, coverage of the transportation industry 

was limited to local and suburban passenger railroads, deepsea waters, and air transportation, and the services industry 

was limited to engineering and architectural services and 

research, development, and testing laboratories. Establishments with fewer than 100 employees were excluded from 

the 1959–60 survey; for the 1961 through 1965 surveys, the 

minimum establishment size was 250 workers.

The scope of the survey also had to reflect Government 

pay policy, as determined by the Civil Service Commission and the Bureau of the Budget. At that time, pay policy called for national estimates, but no regional or local 

findings. From the beginning, the BLS role was to select a 

sample of establishments; collect, review, and tabulate salary data; and transmit published data to the appropriate 

authority (currently, OPM) for its use to compare Federal 

and private pay. 9

After the 1962 comparisons were made and a report 

with recommendations sent to the President, the President 

sent the report to Congress recommending eventual full 

private-Federal comparability. The 1962 Act provided two 

new salary schedules. The first raised the annual salaries of 

all Classification Act (GS) employees an average of 5.6 percent, effective October 1962; the second, effective January 

1964, raised salaries of GS grades 1 through 15 an average of 

4.1 percent. Section 5332 of the Act, as amended, defined 

the GS as “a schedule of annual rates of basic pay, consisting 

of 15 grades, designated ‘GS-1’ through ‘GS-15.’”

Although the 1962 Act brought about improvements 

in the Federal pay-setting process, each pay adjustment 

still required an act of Congress, along with the usual accompanying political debate and delays. The passage of 

the Federal Pay Comparability Act of 197010 established 

procedures for adjusting GS pay by executive action, eliminating the yearly need for special legislation.

Federal Pay Comparability Act of 1970

As with earlier Federal pay legislation, the Federal Pay 

Comparability Act of 1970 provided for an agent—known 
Federal Employees’Pay

38  Monthly Labor Review • September 20

as the President’s Pay Agent—that had the responsibility 

for interpreting the comparability law and providing the 

President with recommendations on pay adjustments. Initially, the Agent comprised the directors of what are now the 

Office of Personnel Management and the Office of Management and Budget. A 1977 Presidential Executive order 

added the Secretary of Labor, forming a three-party Agent.

Under the 1970 Act, the Agent was empowered to create a five-member Federal Employees Pay Council and 

was required to meet with the Council, whose membership consisted of union officials. The Agent must “give 

thorough consideration to the views and recommendations of the Council” in three essential areas:

The coverage of annual surveys conducted by the 

BLS,

The process used to compare Federal and private pay 

for the same work levels, and

The pay adjustment required to achieve comparability.

The 1970 Act also specified that the Council’s views on 

Federal pay adjustments be included in the Agent’s report 

to the President. Ultimately, the final recommendation on 

these pay issues rested with the Agent. In addition to creating the Council, the Act established the Advisory Committee on Federal Pay, consisting of three private-sector 

pay experts. After reviewing the Agent’s and the Council’s 

recommendations, the Committee made its own recommendations to the President and included any other information that it believed appropriate.

Definitions

The 1962 and 1970 Acts included references to paying 

Federal GS workers salaries comparable to the salaries of 

private-industry employees doing the same level of work. 

The Federal Employees Pay Comparability Act of 1990 

(FEPCA), discussed later, has a similar reference, but expanded the comparison to non-Federal employees, thereby 

including State and local governments. The President’s Pay 

Agent had the task of interpreting “comparable” salaries of 

employees doing the “same level of work.” Regarding the 

comparability requirement, George Stelluto noted that 

Private enterprise pay rates, even within narrowly 

defined work levels, vary substantially among the 

many types of establishments in which the work is 

performed. Entry-level professional engineers (recent college graduates), for example, had private-sec-

•

•

•

tor salaries ranging from about $975 to more than 

$1,600 a month in March 1977—a salary spread of 

more than 65 percent.11

Stelluto followed up with a question: 

How then does the Federal Government make its 

salaries “comparable” to the widely dispersed rates 

paid by private enterprise?

The Agent determined that under the 1962 Act “private 

industry” would denote all classes of private-enterprise 

establishments with sufficient numbers of workers in the 

occupations surveyed to influence the survey estimates 

materially. Because it was thought that establishments 

with few employees typically would pay lower wages than 

larger establishments, using the rates of small establishments for Federal pay comparison purposes became an 

issue. The 1959–60 PAT survey excluded establishments 

with fewer than 100 employees. From 1961 through 1965, 

establishments with fewer than 250 employees were excluded from the survey. In 1966, the minimum size was 

lowered in some industries and ranged from 50 employees 

in finance, insurance, and real estate to 250 in manufacturing and retail trade.

To address the requirement of the 1962 and 1970 

Acts to develop data that would reflect the “same level 

of work” in comparisons of Federal and private-industry 

pay, the PAT surveys produced data by level for occupations designated by the Agent. In the March 1977 survey, 

for example, 19 white-collar occupations comprising 81 

work levels were studied. Work levels are an established 

hierarchy of the difficulties and scope of the primary duties and responsibilities of individual jobs related to either 

a grade or salary level. The PAT survey levels ranged from 

one, for messengers, to eight, for professional engineers 

and chemists. The occupations studied produced data for 

the 15 GS Federal grades, except GS-10. The list of occupations and descriptions used for Federal pay-setting 

purposes was kept up to date from the passage of the 1962 

legislation through the mid-1990s. The boxes on pages 

39 and 40 respectively provide a brief explanation of the 

current process that is followed in obtaining occupational 

levels and an example of definitions of grades GS-7 and 

GS-12 of a multilevel occupation.

The National Compensation Survey (NCS) uses a “generic 

leveling” technique to match occupations by level. Initially, a 

10-factor leveling system was used to determine the level of 

selected occupations; the 10-factor system is being phased out 

by the 4-factor system shown in the box on page 39. A major 

difference between the two systems is that the 4-factor sys-
Monthly Labor Review • September 2009  

tem slots each selected occupation into 1 of 24 knowledge 

guides. In an article on the use of the NCS in predicting 

wage rates, Brooks Pierce noted that

These [generic] data elements are “generic” in the 

sense that they do not rely on identifying the occupation in question. This facilitates the collection of 

these data for random samples of jobs that cover the 

broad range of occupations in the economy. It also 

gives some basis for comparing or classifying occupations that are distinct but that may have similar 

duties and responsibilities.12

Differences in definition for each level of a multilevel 

job reflect the complexity of the job. In the box on page 

40, the GS-7 accountant performs “under general supervision, work of considerable difficulty and responsibility,” 

while the GS-12 accountant performs, “under general 

administrative supervision, [work] with wide latitude for 

the exercise of independent judgment.” Further, the GS-7 

does “work of considerable difficulty and responsibility,” 

whereas the GS-12 does “work of a very high order of difficulty and responsibility.” And so on. 

Developing issues

In the middle and late 1980s, Federal agencies had considerable difficulty recruiting and retaining high-caliber 

employees to carry out the Government’s increasingly 

complex mission. To ease the problem, the Office of Personnel Management extended the application of special 

pay rates to certain groups of workers in selected localities. In spite of these efforts, the Federal Government’s 

recruitment and retention problems persisted. In hearings 

before a congressional subcommittee, Constance B. Newman, former Director of the Office of Personnel Management, stated, “Every agency in the Government is having 

some type of problem with the pay system. Continued 

fragmentation of the Government-wide pay system will 

only frustrate and delay the needed solution...we must 

have a pay system that is more flexible and responsive 

to the labor market.” 13 Congress and the White House 

agreed that sweeping changes were needed; FEPCA was 

the vehicle used to make those changes.

FEPCA (1990)

In November 1990, President George H. W. Bush signed 

into law the Federal Employees Pay Comparability Act 

(FEPCA) of 1990,14 marking a major milestone in legislation related to the compensation of Federal white-collar 

workers. Current Federal pay adjustments are made under 

this Act, three features of which stand out:

The creation of a locality-based pay system to replace 

the single general schedule that largely disregarded 

locality pay differences found in the private sector, 

•

Determining work levels

During the final step before data on wage rates 

and hours worked are collected, each sampled job is 

evaluated to determine the work level of its duties and 

responsibilities. This process is known as point factor 

leveling, because it categorizes certain aspects of a job 

into specific levels of work with assigned point values. 

Points for each factor are then totaled to determine the 

overall work level for the job.

In point factor leveling, an occupation is matched to 

a level within each of four factors:

• Knowledge

• Job controls and complexity

• Contacts (nature and purpose)

• Physical environment

Each factor consists of several levels, with associated descriptions and assigned points. The description within each factor best matching the job 

is chosen. Points for the four factors are recorded 

and totaled. The point total determines the overall 

work level of the occupation. The knowledge and 

job controls and complexity factors are given more 

weight than the contacts and physical environment 

factors.

A full discussion of the leveling process appears 

on the Internet at http://www.bls.gov/ncs/ocs/sp/

ncbr0004.pdf (visited Sept. 8, 2009).
Federal Employees’Pay

40  Monthly Labor Review • September 20

A timetable for reducing gaps that may exist between 

the pay of Federal and non-Federal employees doing 

comparable work in the same locality, and

Specifying “non-Federal” workers rather than “pri-

•

•

vate industry” for pay comparability purposes. This 

feature essentially adds State and local government 

workers to private-industry workers as the industry 

scope against which Federal Government workers 

are to be compared in respect of pay.

The 15 GS grade levels are codified under section 

5104 of Title 5. Following are definitions for two levels 

of a multilevel occupation (for example, accountants) 

and how the duties and responsibilities of those levels 

differ:

(7) Grade GS–7 includes those classes of positions

the duties of which are— 

 (A) to perform, under general supervision, 

 work of considerable difficulty and responsibil-

 ity along special technical or supervisory lines 

 in office, business, or fiscal administration, 

 or comparable subordinate technical work in 

 a professional, scientific, or technical field, re-

 quiring in either case— 

 (i) considerable specialized or supervisory 

 training and experience; 

 (ii) comprehensive working knowledge of 

 a special and complex subject matter; pro-

 cedure, or practice, or of the principles of 

 the profession, art, or science involved; 

 and 

 (iii) to a considerable extent the exercise 

 of independent judgment; 

 (B) under immediate or general supervision, to 

 perform somewhat difficult work requiring— 

 (i) professional, scientific, or technical 

 training; and 

 (ii) to a limited extent, the exercise of 

 independent technical judgment; or 

 (C) to perform other work of equal impor-

 tance, difficulty, and responsibility, and re-

 quiring comparable qualifications.

Determining work levels: an example

(12) Grade GS–12 includes those classes of positions the duties of which are— 

 (A) to perform, under general administrative su-

 pervision, with wide latitude for the exercise of 

 independent judgment, work of a very high or-

 der of difficulty and responsibility along special 

 technical, supervisory, or administrative lines 

 in office, business, or fiscal administration, 

 requiring— 

(i) extended specialized, supervisory, or 

 administrative training and experience 

 which has demonstrated leadership and 

 attainments of a high order in specialized 

 or administrative work; and 

 (ii) intimate grasp of a specialized and com-

 plex subject matter or of the profession, 

 art, or science involved; 

 (B) under general administrative supervision, 

 and with wide latitude for the exercise of 

 independent judgment, to perform profes-

 sional, scientific, or technical work of marked 

 difficulty and responsibility requiring extended 

 professional, scientific, or technical training 

 and experience which has demonstrated lead-

 ership and attainments of a high order in 

 professional, scientific, or technical research, 

 practice, or administration; or 

 (C) to perform other work of equal impor-

 tance, difficulty, and responsibility, and requir-

 ing comparable qualifications.

(From “U.S. Code Collection, §5104. Basis for grading positions” (Ithaca, NY, Cornell University Law 

School, no date), on the Internet at www.law.cornell.

edu/uscode/search/display.html?terms=grade&url=/

uscode/html/uscode05/usc_sec_05_00005104----

000-.html (visited Sept. 8, 2009).)
Monthly Labor Review • September 2009  

Once again, the legislation named the BLS as the agency 

in charge of conducting surveys for use in determining 

locality pay levels. To accommodate the requirements of 

the Act, the traditional occupational pay surveys of the 

BLS were changed considerably, with resources formerly 

dedicated to three specific survey programs (the PAT, Area 

Wage Survey, and Industry Wage Survey) now being used 

to carry out an improved and expanded locality pay program. The new program, which evolved over the years into 

the NCS, permitted the presentation of occupational and 

industrial detail that was either unavailable in the past or 

available only at the national level. The NCS provided the 

following improvements, on a locality basis, to the numerous private- and public-sector users of BLS data:

Improvement in coverage of State and local government establishments,

Expansion of private-industry coverage to all nonagricultural establishments (except private households) 

with 50 or more employees (now 1 or more),

Expansion of professional and technical jobs,

Expansion, in the mid-1990s, to cover all jobs, using a probability-selection-of-occupations technique, 

rather than the collection of a limited number of jobs 

on a predetermined list, 

Publication of measures of sampling error and response rates, and

Improvement of the analytic potential of the statistical database.

The Act retained the three-party President’s Pay Agent 

function, making it responsible for interpreting FEPCA, 

selecting and defining the pay localities, determining the 

occupational and industrial scope of the area surveys, designating the minimum size of the establishments to be 

surveyed, establishing appropriate pay lines based on BLS

data, and preparing and submitting annual reports to the 

President.

A Federal Salary Council, consisting of nine members 

appointed by the President, also was established by FEPCA

to provide views and recommendations on a variety of related topics to the Pay Agent, including the establishment 

or modification of pay localities, the coverage of annual 

surveys conducted by the BLS, the process of comparing 

Federal and non-Federal pay, and the level of comparability payments needed to eliminate or reduce pay disparities. 

Three of the Council members are chosen on the basis of 

their impartiality and knowledge in the field of labor rela-

•

•

•

•

•

•

tions and pay policy, and the remaining six members are 

from employee organizations that represent substantial 

numbers of Federal GS workers.

Under FEPCA, the Pay Agent is required to “give thorough consideration to the views and recommendations 

of the [Federal Salary] Council and...individual...members....” The Pay Agent also is required to “give thorough 

consideration to the views and recommendations of employee organizations not represented on the Council....” 

The Pay Agent’s report to the President must include the 

views or recommendations of these groups or individuals.

FEPCA: plan and performance 

The 1990 legislation established a plan for annual adjustments to Federal employees’ pay through the early part 

of the 21st century. Beginning January 1994, annual salary adjustments for most GS employees would consist of 

two parts. The first part would equal the national percent 

increase for wage and salary workers in private industry 

as indicated by the BLS Employment Cost Index (ECI), 

minus one-half percentage point. (The ECI is a quarterly 

measure of change in total compensation costs for civilian 

workers, with separate estimates for the cost of wages and 

salaries and the cost of benefits.)15 The second part, based 

on BLS special area occupational pay surveys, may not “be 

less than one-fifth of the amount needed to reduce the 

pay disparity of the locality involved to 5 percent.”16

The second of these two increases would close the pay 

gap (to within 5 percent) by making additional adjustments from 1995 through 2002. That is, a three-tenths 

adjustment to the pay gap was to be made in 1995, twofifths in 1996, and so on, until the gap would be no greater 

than 5 percent in 2002. Workers in localities that are already within the 5-percent band would get the national 

ECI increase (minus one-half percentage point), but not 

the locality adjustment.

Under FEPCA, the President has the authority to fix an 

alternative level of comparability payments in situations 

where there is a “national emergency or serious economic 

conditions affecting the general welfare.” The first pay 

adjustment under FEPCA was effective in January 1994. 

Alternative plans were submitted for pay increases effective in 1995–98, 2001, 2003–05, 2007, and 2008; no alternative plans were submitted for pay increases effective in 

1994, 1999, 2000, 2002, 2006, or 2009.

From 1994 to 2009, Congress either added to the President’s proposed adjustment or equaled the higher rate 

recommended for the military. The pay gap was scheduled 

to be eliminated (to within 5 percent) in 2002. Table 1 
Federal Employees’Pay

42  Monthly Labor Review • September 20

Table 1.

 

[In percent]

Atlanta ..................................................................................................... 25.29 26.35 1.06

Boston...................................................................................................... 33.73 27.74 –5.99

Buffalo...................................................................................................... – 22.39 ...

Chicago ................................................................................................... 33.05 22.52 –10.53

Cincinnati................................................................................................ 27.18 12.90 –14.28

Cleveland................................................................................................ 22.54 20.23 –2.31

Columbus............................................................................................... – 20.65 ...

Dallas........................................................................................................ 27.11 25.53 –1.58

Dayton ..................................................................................................... 24.79 15.05 –9.74

Denver ..................................................................................................... 28.85 18.80 –10.05

Detroit...................................................................................................... 30.43 19.74 –10.69

Hartford................................................................................................... – 25.05 ...

Houston................................................................................................... 39.22 16.52 –22.70

Huntsville................................................................................................ 26.50 21.99 –4.51

Indianapolis........................................................................................... 24.30 18.47 –5.83

Los Angeles............................................................................................ 34.85 22.64 –12.21

Miami ....................................................................................................... – 21.74 ...

Milwaukee.............................................................................................. – 18.33 ...

Minneapolis........................................................................................... – 21.87 ...

New York ................................................................................................. 35.29 25.75 –9.54

Philadelphia........................................................................................... 31.04 20.40 –10.64

Phoenix.................................................................................................... – 25.27 ...

Pittsburgh............................................................................................... – 20.13 ...

Portland, OR............................................................................................ – 23.23 ...

Raleigh..................................................................................................... – 12.79 ...

Richmond............................................................................................... – 15.97 ...

Sacramento............................................................................................ 24.35 24.18 –.17

San Diego ............................................................................................... 25.38 26.05 .67

San Francisco......................................................................................... 37.44 25.98 –11.46

Seattle...................................................................................................... 25.60 26.45 .85

Washington, DC .................................................................................... 27.23 36.85 9.62

Rest of United States. ......................................................................... 21.20 14.28 –6.92

Average ................................................................................................... 25.78 23.25 –2.53

Table 1.

1993

 (locality pay not included)

Locality pay disparities, 1993 and 2008, and percentage-point changes in disparities between 

1993 and 2008

Locality pay area 2008

 (locality pay included)

Percentage-point change

in disparity between

1993 and 2008 

NOTE: Dash indicates that the area was not used for locality pay purposes in 1993 or that there was no survey that ye

SOURCE: Table 4 of the 2008 Pay Agent’s Report to the President on Locality Pay for 2010 and enclosure in the Appendicesto the Annual Report of

the President’s Pay Agent, 1993.

Disparity

shows the estimated pay disparity in 1993 and 2008; it 

also indicates that, in terms of performance, the disparity 

was not reduced as planned.

The pay disparity narrowed for 17 of the 21 areas for 

which comparisons could made, most notably the 22.70-

percentage-point shrinkage in Houston (from 39.22 percent to 16.52 percent) and the 14.28-percentage-point 

shrinkage in Cincinnati (from 27.18 percent to 12.90 percent.) The disparity for Washington, DC, widened by 9.62 

percentage points over the period, from 27.23 percent to 

36.85 percent. The disparity widened slightly in Atlanta, 

from 25.29 percent in 1993 to 26.35 percent in 2008. The 

gap also widened slightly for San Diego and Seattle. The 

wide gap in pay disparity among localities reflects, in part, 

both the pay levels in the areas when the first comparisons 

were estimated and subsequent changes in local economies and survey methods.

Issues

Before the first FEPCA pay adjustments were effective, 

two issues emerged that proved to be persistent: occupational coverage and the appropriateness of the methodology used to set Federal white-collar workers’ salaries. 

Under its PAT survey, the BLS collected data for a predetermined list of occupations that was developed jointly 
Monthly Labor Review • September 2009  

with OPM. As noted earlier, published survey results were 

sent to OPM for setting Federal GS pay. This arrangement 

continued during the 1991–96 period, when the program 

was designated the Occupational Compensation Survey 

(OCS). Because of budgetary constraints and the issue of 

respondent burden, the BLS once again was compelled 

to merge three surveys: the occupational wage (locality) survey, the ECI survey, and the Employee Benefits 

Survey. At that time, the new NCS dropped the use of 

a predetermined occupational list, the method preferred 

by the Pay Agent. In its place, to select occupations, the 

BLS employed the probability-selection-of-occupations 

technique mentioned earlier.

In addition to dealing with the issue of occupational 

coverage, the Agent had other concerns that were spelled 

out in a five-point action plan in 1999. The first four 

points, already incorporated into the NCS, produced the 

following improvements:

1. A linkage between Federal and non-Federal jobs, accomplished by developing a crosswalk between General 

Schedule occupations and the Standard Occupational Classification (SOC) system to permit weighting data by Federal 

employment.

2. The development of methods to identify and exclude 

survey jobs that would be graded above GS-15 in the Federal Government.

3. The development of an econometric model based on 

survey data to estimate salaries for jobs not found in the 

probability samples.

4. The development and implementation of better 

methods for grading supervisory jobs selected by probability sampling.17

The last point, which will be completed in surveys delivered to the Pay Agent in 2011, involves a four-factor 

job-grading system with families of jobs to be used as 

guides to improve grade leveling under the NCS. The BLS

continues to phase in this improvement. In the meantime, 

updated OCS data were used by OPM for several years 

while the improvements were being implemented. All of 

the improvements are described in the 2002 Pay Agent’s 

report to the President.18

In its 2007 report, the Pay Agent included the following paragraph:

 The new survey process was not immediately accepted for use in the locality pay program. In fact, 

the Federal Salary Council recommended that the 

original NCS methods not be used to set Federal pay. 

After reviewing test data and several years of production surveys, the Pay Agent agreed with the Federal 

Salary Council’s conclusion that the NCS program, 

as originally configured, should not be used for the 

locality pay program. However, the Pay Agent did 

not ask BLS to reinstate the previous methodology. 

The Pay Agent concluded that the NCS program has 

several advantages over the previous salary survey 

program, the Occupational Compensation Survey 

(OCS) program. These include offering greater occupational coverage, being less costly, and being less 

burdensome on respondents.19

The other outstanding issue, the method for determining 

the pay-setting process, was the subject of the aforementioned April 2002 White Paper20 published by OPM, which 

identified three factors that contribute to the “credibility 

gap” in setting Federal pay. Shortcomings were found in 

FEPCA’s

definition of comparability,

methodology and precision, and

summary statistic

Comparability. The White Paper contends that (1) FEPCA’s definition of comparability is reflected in its statutory principle that “Federal pay rates be comparable with 

non-Federal pay rates for the same levels of work within 

the same local pay area” and (2) its two-dimensional concept—grade and locality—“bears little resemblance to the 

reality of labor markets.” The document goes on to explain 

that “labor market shortages and excesses are described 

and analyzed in terms of occupations, skills, specialties, 

and locations, not grade level.”21

A section titled “Labor Markets Are Not Supermarkets” contends that grade, being the major determinant of 

base pay, presumes that workers in the same GS grade are 

equal. For example, the Federal Government will pay GS-12 

budget analysts, GS-12 attorneys, and GS-12 human resource 

specialists the same amount of money, unless agencies document the need to do otherwise. The narrative goes on to say, 

“Most employers do not make this presumption, because 

they recognize that employees in different occupations are 

not interchangeable. For example, a GS-13 attorney is not 

a satisfactory substitute for a GS-13 biologist.”22

Methodology. The second factor underlying FEPCA’s 

credibility gap, according to the White Paper, is that its

•

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•
Federal Employees’Pay

44  Monthly Labor Review • September 20

methodology presumes an unrealistic level of precision and requires lengthy deliberation, both at the expense of relevance and strategic utility. Under FEPCA, 

general pay increases are based on changes in the Employment Cost Index (ECI). Locality payments, which 

are calculated to one one-hundredth of one percent, 

are based on surveys of salaries in each locality pay 

area. Because these surveys are extensive and statistically rigorous, significant time lags occur between 

data gathering and pay-setting and implementation. 

After adding the time that the Federal budget planning and appropriation processes must necessarily 

entail, the result is a tenuous relationship between pay 

adjustments and current market conditions.23

Summary statistic. The third factor diminishing FEPCA’s 

credibility is that 

its statutory language requires the calculation of a 

single average pay gap in each locality pay area. Even 

though sophisticated methods of weighting are used to 

take into account the actual presence and distribution 

of Federal work, the result nonetheless disguises and 

ignores substantial differences in the degree to which 

Federal and non-Federal salaries for particular occupations or grades differ. By its very nature an average 

[median] is describing a set of values half of which are 

higher and half are lower than the summary statistic. In 

this instance, the average the law requires us to use in 

describing a “pay gap” is no Golden Mean, but more of 

a Great Muddle that describes nothing very meaningfully and masks the relevant differences across occupational levels of work in each locality pay area, to the 

strategic detriment of the entire approach.24

On December 2, 2008, the Pay Agent sent its latest 

annual report to the President. It included the following 

paragraph, which had a theme similar to that in other annual reports going back to at least 2003: 

We continue to believe in the need for fundamental 

reforms of the white-collar Federal pay system. As we 

have previously reported, the Pay Agent has serious 

concerns about the utility of a process that requires a 

single percentage adjustment in the pay of all whitecollar civilian Federal employees in each locality pay 

area without regard to the differing labor markets for 

major occupational groups or the performance of in1965................... 3.6 1980 9.1 1994 ............... .0 2.2

1966................... 2.9 1981 4.8 1995 ............... 2.0 .6

1967................... 4.5 1982 4.0 1996 ................ 2.0 .4

1968................... 4.9 1984 4.0 1997 ................ 2.3 .7

1969................... 9.1 1985 3.5 1998 ................ 2.3 .5

1970................... 6.0 1986 .0 1999 ................ 3.1 .5

1971................... 6.0 1987 3.0 2000 ................ 3.8 1.0

1972................... 5.5 1988 2.0 2001 ................ 2.7 1.0

1972................... 5.1 1989 4.1 2002 ................ 3.6 1.0

1973................... 4.8 1990 3.6 2003 ................ 3.1 1.0

1974................... 5.5 1991 4.1 2004 ................ 2.7 1.4

1975................... 5.0 1992 4.2 2005 ................ 2.5 1.0

1976................... 5.2 1993 3.7 2006 ................ 2.1 1.0

1977................... 7.0 – – 2007 ................ 1.7 .5

1978................... 5.5 – – 2008 ................ 2.5 1.0

1979................... 7.0 – – 2009 ................ 2.9 1.0

NOTE:  In1972twopayadjustmentsweremade,in1983nopayadjustment

was made, and in 1986 President Reagan issued an alternative plan that froze

Federal pay untilJanuary 1987, when a 3-percentincrease became effective.

 Table 2. Federal General Schedule (GS) employee pay increases, 1965–2009

 Year Increase Year Increase

Pre-FEPCA Post-FEPCA

 Year GS

increase

Locality pay 

adjustment 

GS increase 

plus locality 

pay adjustment 

SOURCE:  Pay Structure of the Federal Civil Service (Office of Personnel

Management, annually, 1965–2006); General Schedule (GS) Locality Pay 

Tables (Office of Personnel Management, annually, 2007–09).

[In percent]
Monthly Labor Review • September 2009  

dividual employees. In addition, we continue to have 

major methodological concerns about the underlying 

model for estimating pay gaps.25

Although the Federal white-collar pay issue has been 

discussed for several decades, it shows no sign of being 

resolved to everyone’s satisfaction. The estimated 2008 

Federal GS payroll of $75.8 billion provides sufficient 

reason to examine the pay-setting process closely to ensure that the Federal worker is equitably compensated 

and that the American taxpayer receives full value for 

the amounts expended. Table 2 shows year-to-year percent increases in Federal GS employee pay from 1965 to 

2009. 

Besides the Federal GS pay system, there are numerous 

other Federal pay systems, some of which are established 

Foreign Service pay plans and salary schedules for 

Officers (pay plan FO) and Personnel (FP) were established under the Foreign Service Act of 1980. Other 

Foreign Service pay plans linked to Federal pay schedules are Chiefs of Mission (FA), linked to the Executive Schedule, and Senior Foreign Service (FE), linked 

to the Senior Executive Service. (See shortly.) Under 

title 38, the Veterans Health Administration in the Department of Veterans Affairs provides unique pay plans 

for their physicians and dentists (VM), podiatrists and 

optometrists (VP), and nurses (VN). 

The Executive Schedule (in 5 U.S.C.5311–5318) was 

established by Congress to cover top officials in the executive branch. As mandated in subchapter II of chapter 53 of Title 5, United States Code, this schedule has 

five levels, each with a single rate. In 1989, the Ethics 

Reform Act linked Executive Schedule increases to increases in the Employment Cost Index (ECI). 

The Senior Executive Service (SES) (in 5 U.S.C. 5382) 

covers most managerial, supervisory, and policy positions 

in the executive branch that are classified above GS-15

and do not require Senate confirmation. SES pay is set 

by the President at the same time as the annual increases 

are authorized for the GS. 

The National Security Personnel System (NSPS) (in 

5 U.S.C. Chapter 99) is a U.S. Department of Defense 

system designed to create a civilian workforce that is 

focused on competency and based on performance, 

putting the right people in the right jobs at the right 

time. The NSPS accelerates the Department’s efforts to 

create a Total Force (military, civilian, Reserve, National 

Guard, and contractors) that operates as one cohesive 

unit, with each individual performing work most suited 

to his or her personal skill set. The key components of 

the NSPS are a classification system, a compensation 

structure, and a performance management system.

SOURCE: “Federal Pay Systems” (Office of Personnel Management, no date), on the Internet at www.

opm.gov/feddata/html/paystructure/2004/fedPaySystems.asp (visited Sept. 8, 2009).

Examples of pay systems established by law 

by individual laws and some by administrative determination. The box on this page presents some examples of 

major Federal pay systems established by law.

THE BUREAU OF LABOR STATISTICS CONTINUES to 

work with the Office of Personnel Management and others in the Federal pay community to carry out its commitment to produce accurate and timely data for policymakers and other users. The wage and salary information that 

the BLS collects is part of its broader measures of compensation that includes detailed information on employee 

nonwage benefits. The past 50 years have seen constant 

changes and improvements in BLS programs. If the past 

is any guide, the next 50 years will be just as challenging 

and rewarding, and, as in the past, the BLS will be ready 

for the task.

Notes

1 See L. Earl Lewis, “Federal pay comparability procedures,” Monthly Labor 

Review, February 1969, pp. 10–13.

2 Ch.27, 22 Stat 403, Jan. 16, 1883.

3 Wage Chronology: Federal Classification Act Employees, 1924-68 Bulletin 

No. 1604 (Bureau of Labor Statistics, 1968), p. 1.

4 Pub.L. No. 67–516, ch. 265, 42 Stat 1488, Mar. 4, 1923.
Federal Employees’Pay

46  Monthly Labor Review • September 20

5 Pub.L. No. 81–429, ch. 782, 63 Stat 954, Oct. 28, 1949.

6 Wage Chronology, p. 1.

7 A Fresh Start for Federal Pay: The Case for Modernization, White Paper 

(Office of Personnel Management, April 2002), p. 5, on the Internet at www.

opm.gov/strategiccomp/whtpaper.pdf (visited Sept. 8, 2009). The Office of 

Personnel Management’s position classification standards used in determining the occupational series may be viewed on the Internet at www.opm.gov/

fedclass/html/gsseries.asp (visited Sept. 8, 2009).

8 Pub.L. No. 87–793, Part II, 76 Stat 832, 841, Oct. 11, 1962.

9 For a discussion about computing pay adjustments, see George L. Stelluto, “Federal pay comparability: facts to temper the debate,” Monthly Labor Review, June 1979, pp. 18–28, especially pp. 22–23. Other materials for the current 

article were taken from Stelluto’s and Lewis’s articles without attribution.

10 Pub.L. No. 91–656, 84 Stat 1946, Jan. 8, 1971.

11 Stelluto, “Federal pay comparability,” p. 20.

12 Brooks Pierce, “Using the National Compensation Survey to Predict 

Wage Rates,” Compensation and Working Conditions (Bureau of Labor Statistics, 

winter 1999), pp. 8–16; quote from p. 9.

13 Statement presented at hearings before the House of Representatives 

Subcommittee on Compensation and Employee Benefits, Mar. 14, 1990.

14 Pub.L. No. 101–509, Section 529, 104 Stat 1389, 1427, Nov. 5, 1990.

15 See “Employment Cost Trends” (Bureau of Labor Statistics, no date), on 

the Internet at www.bls.gov/ect (visited Sept. 8, 2009).

16 Subchapter I, Section 5302, of FEPCA uses the following terminology in 

defining pay disparity:

(6) the term “pay disparity,” as used with respect to a locality, means 

the extent to which rates of pay payable under the General Schedule 

are generally lower than the rates paid for the same levels of work by 

non-Federal workers in the same locality; except as otherwise required 

in this subchapter, a pay disparity shall be expressed as a single percentage which, if uniformly applied to employees within the locality who 

are receiving rates of pay under the General Schedule, would cause the 

rates payable to such employees to become substantially equal (when 

considered in aggregate) to the rates paid to non-Federal workers for 

the same levels of work in the same locality.

17 See “President’s Pay Agent,” on the Internet at www.opm.gov/oca/

payagent/index.asp (visited Sept. 8, 2009).

18 Ibid.

19 Ibid.

20 A Fresh Start for Federal Pay, p. 14. (See note 7.)

21 Ibid., p. 12.

22 Ibid., p. 48.

23 Ibid., pp. 14–15.

24 Ibid., p. 15.

25 See “Memorandum for the President” (Washington, DC, The President’s 

Pay Agent, Dec. 2, 2008), on the Internet at www.opm.gov/oca/payagent/

2008/2008PayAgentReport.pdf (visited Sept. 8, 2009).