Document ID: EPA-HQ-OPPT-2012-0674-0003
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2012-11-30T05:00Z

APPENDIX A
                                  WAGE RATES

This appendix describes the derivation of the fully loaded labor rates used in calculating costs of labor. Costs for this report are for year-end 2007.
A.1 	Derivation of Loaded Wage Rates
Unit labor costs are calculated by adding fringe benefits and overhead to the wage or salary to derive a fully loaded labor cost. The basic method is described in Wage Rates for Economic Analysis of the Toxics Release Inventory Program (Rice, 2002). The resulting loaded labor rates are given in Table A-1. Costs are calculated for several labor categories: Managerial, Professional/ Technical, Clerical, and EPA staff.

A.1.1 Derivation of Labor Rates for Managerial, Professional/Technical, and Clerical Labor
	Wages and fringe benefits for managerial, professional/technical, and clerical labor were taken from the Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation (ECEC) data, for December, for manufacturing industries.
	The cost of fringe benefits such as paid leave and insurance, specific to each labor category, are taken from the same ECEC series. Fringe benefits as a percent of wages are calculated separately for each labor category. For example, for December 2007, the average wage rate for professional/technical labor was $33.14; the average fringe benefit was $16.65. Fringe benefits as a percent of wages were $16.65/$33.14, or approximately 50.2 percent.
      An additional loading factor of 17 percent is applied to wages to account for overhead. This approach is used for consistency with Office of Pollution Prevention and Toxics economic analyses for two major rulemakings: Wage Rates for Economic Analyses of the Toxics Release Inventory Program (Rice, 2002) and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPAB, 2002). This overhead loading factor is added to the benefits loading factor, and the total is then applied to the base wage to derive the fully loaded wage. For example, the December 2007 fully loaded wage for professional/technical labor is $33.14 x (1+0.502414 + 0.17) = $55.42.
Fully loaded costs for managerial and clerical labor are calculated in a similar manner, as shown in Table A-1.
A.1.2 Derivation of Labor Rates for EPA Staff
      
      Agency labor costs are calculated based on annual Federal salaries for the Washington-Baltimore area published by the Office of Personnel Management effective January 2007 (OPM, 2007). The average salary for one Full Time Equivalent (FTE) staff is estimated as the salary for a GS-13 Step 5 employee.
Multiplying the annual pay by an assumed loading factor of 1.6 to reflect Federal fringe benefits and overhead, the loaded annual salary of EPA staff was calculated to be $143,976.
The Agency loading factor is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30, footnote 9). The 60 percent assumption was labeled "the benefits multiplication factor" in the EPA Guide, but has been used in many EPA Office of Pollution Prevention and Toxics ICRs to reflect both fringe benefits and overhead for Federal staff. For example, it was used in an August 2000 document supporting ICR No. 1139.06, with the following explanation:
      "The annual costs per FTE are derived by multiplying the annual pay rate by 1.6 (the benefits multiplication factor). The multiplication factor used is recommended in EPA's Office of Policy, Planning, and Evaluation's Instructions for Preparing Information Collection Requests (ICRs) (June 1, 1992). An EPA internal phone call between Carol Rawie (OPPT/EETD/RIB) and Carl Koch (OPPE/RMD/IMB) on May 3, 1994, indicated that the 1.6 factor included not only benefits but also overhead." (ICR No.1139.06)
Table A-1 Derivation of Loaded Wage Rates
                              EPAB Labor Category
                                 Data Sources
                                     Date
                                       
                                     Wage
                                Fringe Benefit
                               Fringes as % wage
                              Over-head % wage[1]
                           Fringe + overhead factor
                                 Loaded Wages

                                       
                                      (a)
                                      (b)
                                 (c) =(b)/(a)
                                      (d)
                                 (e)=(c)+(d)+1
                                 (f)=(a) x (e)
                                  Managerial
BLS ECEC, Private Manufacturing industries, "Mgt, Business, and Financial"[2]
                                    Dec-07
                                    $41.93 
                                    $20.15 
                                    48.06%
                                      17%
                                     1.65
                                    $69.21
                            Professional/
Technical
BLS ECEC, Private Manufacturing industries, "Professional and related"[2]
                                    Dec-07
                                    $33.14 
                                    $16.65 
                                    50.24%
                                      17%
                                     1.67
                                    $55.42
                                   Clerical
BLS ECEC, Private Manufacturing industries, "Office and Administrative Support" [2]
                                    Dec-07
                                    $16.47 
                                    $8.32 
                                    50.52%
                                      17%
                                     1.68
                                    $27.59

                                 EPA staff FTE
Annual Federal staff cost: OPM Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV, area, GS-13 Step 5 pay rates, with 60% overhead. [3]
                                    Jan-07
                                 $89,985/year
                                  $43.12/hour
                                      --
                          [Included in 60% overhead]
                                      60%
                                      1.6
                                 $143,976/year
                                  $68.99/hour
Notes:
[1]An overhead rate of 17% was used based on assumptions in Wage Rates for Economic Analyses of the Toxics Release Inventory Program (Rice, 2002), and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report (EPAB, 2002).
[2]Employer Costs for Employee Compensation Supplementary Tables: December 2007, US Bureau of Labor Statistics, March 12, 2008 (BLS, 2008a).
[3]The Federal salary is the unloaded Federal GS-13 Step 5 salary for calendar 2007, from the Office of Personnel Management salary table for Washington-Baltimore-Northern Virginia (OPM, 2007). The 60% fringes-and-overhead rate is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30, footnote 9).

                             APPENDIX A REFERENCES
BLS, 2008a.  U.S. Bureau of Labor Statistics. Employer Costs for Employee Compensation
      Supplementary Tables: December 2007 (March 12, 2008) at
      http://www.bls.gov/ncs/ect/sp/ecsuptc5.pdf 
     EPAB, 2002. U.S. EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch. Revised Economic Analysis for the Amended Inventory Update Rule: Final Report. Washington, DC. August 2002.
      ICR No. 1139.06. [Information Collection Request for] TSCA Existing Chemical Test Rules, Consent Orders, Test Rule Exemptions, and Voluntary Test Data Submissions: Supporting Statement for Request for OMB Review under the Paperwork Reduction Act. Attachment 5, Wage Rates Estimation, August 29, 2000.
      OPPE, 1992. U.S. EPA, Office of Policy, Planning, and Evaluation. Instructions for Preparing Information Collection Requests (ICRs). Washington, DC, June 1, 1992.
      OPM, 2007. Office of Personnel Management, Salary Table 2007-DCB, Washington-Baltimore-Northern Virginia, DC-MD-PA-VA-WV. Accessed from http://www.opm.gov/oca/07tables/html/dcb.asp
Rice, 2002. Cody Rice. Wage Rates for Economic Analysis of the Toxics Release Inventory Program. Washington, DC: U.S.EPA, Office of Pollution Prevention and Toxics, Economic and Policy Analysis Branch, June 10, 2002.