Wage Grade

10/04/2000

U.S. House of Representatives Committee on Government Reform Subcommittee on Civil Service

Chairman Scarborough, Ranking Member Cummings, and Distinguished Members of the Subcommittee, my name is Colleen Kelley and I am the National President of the National Treasury Employees Union. NTEU represents 155,000 federal employees in 24 different government agencies. Many of our NTEU members are covered under the Federal Wage System.

I am pleased that the subcommittee is holding a hearing today on this important issue. The situations in Macon, Georgia and Oklahoma are similar to situations across the country: federal employees covered under the Federal Wage System are not earning what they should be. It is critical that Congress take action to ensure employees covered under the Federal Wage System are paid livable wages comparable to those paid to employees doing similar work in the private sector. The Federal Wage System needs to be reformed.

NTEU wage grade employees across the country -- from the IRS Service Center in Fresno, California to Austin, Texas, from Ogden, Utah to Brookhaven, New York -- have brought concerns to my attention about wide wage disparities between blue collar employees working for the federal government and those doing the same work in the private sector. These employees want one thing: close the gap and pay federal blue collar workers what their counterparts in the private sector earn.

The wage schedule for federal blue collar employees at the IRS Service Center in Austin, Texas is a perfect example of how imperfect the current FWS system is. For instance, an electrician covered under the Federal Wage Schedule is typically a grade 10 employee. Under the federal wage grade schedule for Austin, a federally employed electrician earns anywhere from $15.12 an hour to $17.63 an hour. Yet a journeyman electrician in Austin who is a member of the International Brotherhood of Electrical Workers Local Union earns $21.30 an hour, and the total wage and benefit package for this private sector electrician is valued at $25.83 an hour.

The aim of the Federal Wage System is to ensure that "Federal trade, craft, and laboring employees in a local wage area who do the same kind of work get the same rate of pay." However, the Austin example illustrates how in fact pay equity between the private and public sector blue collar employees does not exist.

Austin employees at the IRS Service Center contend that one of the reasons for the inequity is that the annual wage surveys are not comprehensive enough to get a complete picture of local wages. They feel their situation could be improved if their survey also considered comparable private sector blue collar wages in Dallas and / or Houston, where the FWS rates are typically higher. NTEU believes that the locality regions across the country should be scrutinized to determine whether they are still applicable to the demographic changes in different parts of the U.S.

In working to improve the current FWS system, this committee should also review the outdated methodology used to survey local private sector wages. The current system does not generate local pay schedules which accurately reflect local prevailing wages. Currently, private businesses are not required to respond to the wage surveys. Because of the voluntary nature of the surveys, private sector employers have been more and more unwilling to participate. As a result, in many instances a particular wage rate is set based on a very limited sampling which does not reflect the true prevailing wages for blue collar workers in a given locality. Because the FWS pay scales are based on what data is plugged into the wage-setting formula, it is critical to ensure that the private sector wage data collected is accurate and diverse, and that there is a large sampling of this data. In many instances under the current system, there does not appear to be enough wage data collected to ensure a fair pay scale.

Another area in which this subcommittee can help lift up the low wages for federal blue collar workers is to work to correct the arbitrary pay caps which Congress has imposed on Wage Grade employees since 1979. For example, for Fiscal Year 2000, pay increases for these employees could not exceed 4.93 percent. Unlike federal workers covered under the General Schedule (GS) pay scale, the Wage Grade pay increase provision serves as a cap, not a floor. In addition to a minimum cost of living adjustment GS employees receive each year, they also receive a locality pay adjustment, which is determined by a particular geographical area's wages. And even in regions where private sector wage increases are less than the national average, GS employees still receive the national cost of living adjustment and a minimum locality pay increase.

However, FWS employees are treated much differently. In areas where the local prevailing wage for private sector blue collar workers far exceeds the national average, the pay raise for federal blue collar workers cannot exceed the cap set by Congress. And in regions where private sector wages may not have increased as much as the national averages, federal FWS employees receive a pay increase equal to the private sector wage increases - even though it is less than the pay increase set by Congress. In other words, when local private sector wages go up, federal blue collar wage increases cannot exceed the federal cap; and when local private sector wages are stagnant and grow at a rate smaller than the national average, federal blue collar wages cannot exceed the "local" cap. Under the current system federal blue collar workers are in a lose/lose situation.

For too long, Wage Grade employees have been denied the fair pay adjustments they deserve, and as a result the pay gap between the federal and private sectors has grown significantly. Even in regions where the local pay increase for certain Wage Grade employees may have been on par with increases for similar private sector jobs for a particular year, the twenty one years of disparities in private and federal sector pay has left federal Wage Grade workers lagging far behind. These dedicated federal workers will never be able to recover the pay they have lost over the course of their federal careers. I would strongly urge you to remove these pay caps, and to allow the Congressionally-imposed pay adjustment to serve as a minimum pay increase, as opposed to a limitation.

Finally, I want to express NTEU's support for the proposal being developed by the Office of Personnel Management that would allow agencies to pay recruitment and relocation bonuses and retention allowances to prevailing wage employees. Most agencies depend on maintaining an in-house capability to perform critical blue collar functions, yet in many instances they are not able to compete with private sector employers in offering comparable wage and benefit packages. Agencies have had the authority to offer these incentives to GS employees for some time now and it is time that agencies be given the same authority in order to retain and recruit the best and brightest blue collar employees.

Year after year, federal employees are being asked to do more for less. If we want our government to continue to provide first class services to the taxpayers, we need to ensure that all of our dedicated federal employees - our government's most valuable assets - earn a living wage. This hearing today is a positive step forward in working to improve the wage system for federal blue collar workers. Thank you for your allowing NTEU to share our views on the Federal Wage System. We look forward to continue working with you to address this and other wage and benefit issues for federal employees.