Federal Employees Paid 22.47 Percent Less than Similar Private Sector Workers

Press Release August 5, 2022

Washington D.C. – Federal employees on average earned 22.47 percent less in 2021 than their counterparts in the private sector, according to new calculations released Friday by the Federal Salary Council. 

It was the first update to the pay gap in two years and shows that the federal government remains at a disadvantage when competing for skilled workers in today’s labor market. 

“The pay gap is not just a Washington D.C. problem. It exists in cities and small towns across America, where federal employees live and work delivering important services that taxpayers depend upon every day,” said NTEU National President Tony Reardon, a member of the Federal Salary Council. “The Council is well aware of the difficulties that federal agencies face competing for workers who frequently find higher salaries in the private sector, which is why this pay gap is a valuable piece of information for our elected officials to consider when setting salaries for the federal workforce.” 

The White House has proposed a 4.6 percent average increase for federal workers in 2023. NTEU has endorsed legislation for a 5.1 percent increase, which Congress or the White House could choose to enact.  

“Our argument for a 5.1 percent increase next year just keeps getting stronger,” Reardon said. “With the latest inflation figures, rising private sector wages and the new pay gap calculation, it is even more clear that federal employees need help keeping up with rising costs and the government needs help in recruiting and retaining skilled employees.” 

The 22.47 percent pay gap accounts for the locality pay adjustments federal employees receive in certain areas of the country with a higher cost of living and higher overall wages.Federal employees in 2022 received an average pay increase of 2.7 percent, which may have helped narrow the gap from 23.11 percent in 2020. The Federal Employee Pay Comparability Act (FEPCA) was passed in 1990 specifically to narrow that gap, but it’s never been fully implemented. 

The Federal Salary Council determines the pay gap using U.S. Department of Labor data that compares the salaries of public and private sector jobs with similar duties. The Office of Personnel Management provided the salary information to the council in its meeting Friday. 

In just one example of how the pay gap affects federal hiring, NTEU has witnessed entry level job candidates for the IRS in Kansas City lured away by higher hourly wages offered by employers in the retail industry. 

Also Friday, the Federal Salary Council agreed to recommend new locality pay areas for federal employees in Fresno, Calif.; Spokane, Wash.; Reno, NV; and Rochester, NY. It also voted to add several communities to existing locality pay areas, including Huron County, Mich.; Dukes and Nantucket Counties, Mass.; and Pacific and San Juan Counties, Wash. This means salaries in those areas would be eligible for a slightly higher increase to account for higher overall wages in those communities. NTEU strongly supported these new and expanded locality pay areas.  

The Federal Salary Council’s recommendations are sent to the President’s Pay Agent, which is made up of the Secretary of Labor and directors of the Office of Management and Budget and the Office of Personnel Management.  

NTEU represents about 150,000 employees in 34 federal agencies and offices.