Legislation Looks to Wipe Out Federal Workforce Pay Disparities

Hourly and salaried employees in the federal workforce are paid using different pay-setting systems.

Sen. Bob Casey (D-Pa.) points out this fact in a one-page document outlining the key components of The Locality Pay Equity Act, legislation that Casey and Rep. Matt Cartwright (D-Pa.) recently introduced with the intention of eliminating pay disparities among federal workers.

As Casey explained, hourly workers fall under the Federal Wage System (FWS), while salaried workers fall under the General Schedule (GS) pay system.

“Both of these systems allow for workers’ compensation to be adjusted based on their location to account for differences in regional economic conditions,” the third-term senator said, noting that current law does not require the boundaries used to set locality pay for hourly and salaried workers to align. As such, GS employees at some federal facilities are included in more generous locality pay areas while FWS employees at the same location are not.

“This system is unfair,” Casey said. “At federal facilities where these disparities exist, salaried GS and hourly FWS employees live and work in the same areas and are similarly affected by the area’s cost of living, but the GS employees receive greater relative compensation than the FWS employees. These disparities dampen employee morale, create tensions within the workforce and undermine the federal government’s ability to recruit and retain important FWS skilled laborer positions.”

Calling on Congress

Casey and Cartwright cited Tobyhanna and Letterkenny Army Depots in Pennsylvania as examples of such wage gaps at work.

At Tobyhanna, for instance, salaried General Schedule workers are included in the more generous New York-Newark locality pay area, while hourly Federal Wage System workers are included in the less-generous Scranton-Wilkes Barre wage area, they said. At Letterkenny, salaried GS workers are included in the higher-paying Washington-Baltimore-Arlington locality pay area. Their FWS co-workers are included in the less generous Hagerstown-Martinsburg-Chambersburg wage area.

In an effort to address these inequities, the Federal Prevailing Rate Advisory Committee voted twice—2010 and 2012—to consolidate FWS wage areas that lie within GS locality pay areas, the lawmakers wrote. Despite these votes, the U.S. Office of Personnel Management “has not taken action to implement the recommendation.”

The Locality Pay Equity Act would wipe out these wage discrepancies, according to Casey and Cartwright, by mandating that the OPM treat all employees working at the same locations equally.

More specifically, the bill would prohibit OPM from including more than one local wage area within a pay locality. The legislation would also exempt the “Rest of the United States” locality from the requirement, and would guarantee that no employee’s pay will be lowered as a result of these changes, according to the bill’s sponsors.

“Every worker deserves to be treated fairly, regardless of pay schedule, and time has long [passed] for us to address this issue at Tobyhanna and Letterkenny,” said Sen. Casey, in a statement.

“These workers are serving our nation and they deserve fair treatment from their government. This legislation would work to create a fairer compensation system and end these pay disparities.”

Organizations such as the American Federation of Government Employees (AFGE) and the National Federation of Federal Employees (NFFE) have voiced their support for the legislation, with NFFE Legislative Director Randy Erwin saying that blue-collar federal employees in certain parts of the country have long been forced to accept an unfair pay system.

“The unfairness occurs in places where General Schedule employees in a given location are part of a higher-paid locality area, when the blue-collar employees in the same location are in a lower-paid Wage Grade wage area,” said Erwin, in a statement.

“This occurs because the maps for the GS system and the WG system do not align,” he continued, noting that white-collar locality boundaries are drawn to encompass metropolitan labor markets, which are based on census data and commuting rates. Meanwhile, blue-collar locality boundaries are drawn mostly according to the placement of military installations from the 1950s, “a relic of the bygone Cold War era,” said Erwin.

“The bottom line is blue-collar federal employees in areas around major cities are being treated unfairly,” he concluded. “They are being forced to accept lower rates of pay for no other reason except the work they do happens to be classified as ‘blue collar,’ and the federal wage system hasn’t been updated in 60 years. This is not fair, and it needs to be corrected by this Congress.”