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Federal salaries drop almost 35 percent below private sector levels

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Private sector employees enjoy a 34.6 percent pay advantage over their public sector counterparts, up 8.3 percentage points from the gap reported last year, says the Federal Salary Council.

In an Oct. 19 meeting, the FSC says its working group found (.pdf) the disparity comes largely from the federal pay freeze in effect for the last two years, as well as the adoption of new federal methodologies like a reduction in the sample size the Bureau of Labor Statistics uses to establish pay averages.

"This clearly shows that there is a pay gap and that federal employees are underpaid," said J. David Cox, president of the American Federation of Government Employees and a council member.

Unfortunately for federal employees, general salary rates frozen since January 2010 will not thaw until at earliest April 2013.

While general rates are frozen, employees are still eligible for raises and promotions on an individual basis.

In the data presented at the meeting, the council found the biggest gap for federal workers in the areas of Los Angeles, New York City, San Diego, San Francisco and San Jose, and Washington, D.C., and Baltimore.

The BLS data is, by law, supposed to be used to set the annual general schedule pay raises that vary by locality, but it was noted at the meeting that federal pay raises are typically negotiated and set in congressional budget development where pay raises are subject to political disputes over the numbers.

Critics of the FSC typically say that its estimates are not robust enough to represent the current job market in the United States and often cite the Congressional Budget Office for countervailing points. In a January report (.pdf), the CBO compared public and private sector workers, finding the disparity only impacted those with professional degrees or higher. Those with a bachelor's degree or less education fared better than their private sector counterparts.

Republican presidential nominee Mitt Romney has argued that federal workers are overcompensated by between 30 percent and 40 percent. Romney bases the estimate on reports from the Heritage Foundation, whose senior policy analyst James Sherk has publically and repeatedly said the FCS numbers lack credibility.

Council recommendations on the gap will go into a report for the Office of Personnel Management which then reports them to the White House. President Obama recommends a 0.5 percent increase for April 2013.

For more:
- download the FSC working group report (.pdf)
- read the CBO's Jan. 2012 compensation comparison report (.pdf)

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