Federal Pay Rates Frozen; How High Are They Now?

Greg Hannsgen | December 1, 2010

Yesterday, the Obama administration announced that it wants to freeze wages and salaries earned by federal government employees in calendar years 2011 and 2012. Most federal workers might otherwise have received a cost-of-living raise at the start of the new year. There has been some controversy about whether these workers are overpaid. In this post, I report some information that I have gleaned from the web about the pay scale for most white-collar positions in the federal government, which is known as the “general schedule” (GS).

The government’s Office of Personnel Management (OPM) states that “the General Schedule (GS) classification and pay system covers the majority of civilian white-collar Federal employees (about 1.3 million worldwide) in professional, technical, administrative, and clerical positions…”

For 2010, the pay scale for federal GS employees is shown in the table below. This is the table for employees who work in geographic areas where the cost of living is not unusually high. An explanation of the table follows.

Grade Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 Step 10
1 17803 18398 18990 19579 20171 20519 21104 21694 21717 22269
2 20017 20493 21155 21717 21961 22607 23253 23899 24545 25191
3 21840 22568 23296 24024 24752 25480 26208 26936 27664 28392
4 24518 25335 26152 26969 27786 28603 29420 30237 31054 31871
5 27431 28345 29259 30173 31087 32001 32915 33829 34743 35657
6 30577 31596 32615 33634 34653 35672 36691 37710 38729 39748
7 33979 35112 36245 37378 38511 39644 40777 41910 43043 44176
8 37631 38885 40139 41393 42647 43901 45155 46409 47663 48917
9 41563 42948 44333 45718 47103 48488 49873 51258 52643 54028
10 45771 47297 48823 50349 51875 53401 54927 56453 57979 59505
11 50287 51963 53639 55315 56991 58667 60343 62019 63695 65371
12 60274 62283 64292 66301 68310 70319 72328 74337 76346 78355
13 71674 74063 76452 78841 81230 83619 86008 88397 90786 93175
14 84697 87520 90343 93166 95989 98812 101635 104458 107281 110104
15 99628 102949 106270 109591 112912 116233 119554 122875 126196 129517

Each row in the table shows the annual salary in dollars for a particular pay “grade.” The OPM explains GS pay grades as follows: “The General Schedule has 15 grades–GS-1 (lowest) to GS-15 (highest). Agencies establish (classify) the grade of each job based on the level of difficulty, responsibility, and qualifications required. Individuals with a high school diploma and no additional experience typically qualify for GS-2 positions; those with a Bachelor’s degree for GS-5 positions; and those with a Master’s degree for GS-9 positions.”

Each column of the table corresponds to a “step” within each pay grade. Employees who do not qualify for a promotion to a higher grade can sometimes move a step to the right along the row corresponding to their pay grade. According to the OPM, “Each grade has 10 step rates (steps 1-10) that are each worth approximately 3 percent of the employee’s salary. Within-grade step increases are based on an acceptable level of performance and longevity (waiting periods of 1 year at steps 1-3, 2 years at steps 4-6, and 3 years at steps 7-9). It normally takes 18 years to advance from step 1 to step 10 within a single GS grade if an employee remains in that single grade. However, employees with outstanding (or equivalent) performance ratings may be considered for additional, quality step increases (maximum of one per year).”

The usual annual pay raises for federal employees in this compensation system are explained next:

“The GS base pay schedule is usually adjusted annually each January with an across-the-board pay increase based on nationwide changes in the cost of wages and salaries of private industry workers.”

Also, “most GS employees are also entitled to locality pay, which is a geographic-based percentage rate that reflects pay levels for non-Federal workers in certain geographic areas…”

As an example of the locality pay earned by workers in many areas with high costs of living, here is the 2010 schedule for GS employees in the “New York-Newark-Bridgeport, NY-NJ-CT-PA” metropolitan area, one of the most expensive places to live in the United States:

Grade Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 Step 10
1 22916 23682 24444 25202 25964 26412 27165 27925 27954 28665
2 25766 26379 27231 27954 28268 29100 29931 30763 31594 32426
3 28112 29050 29987 30924 31861 32798 33735 34672 35609 36546
4 31560 32611 33663 34714 35766 36818 37869 38921 39973 41024
5 35309 36486 37662 38839 40015 41192 42368 43545 44721 45898
6 39359 40670 41982 43294 44605 45917 47229 48540 49852 51164
7 43738 45196 46655 48113 49571 51030 52488 53947 55405 56863
8 48439 50053 51667 53281 54895 56509 58124 59738 61352 62966
9 53500 55283 57065 58848 60631 62414 64197 65979 67762 69545
10 58916 60881 62845 64809 66774 68738 70702 72666 74631 76595
11 64729 66887 69044 71201 73359 75516 77674 79831 81988 84146
12 77585 80171 82757 85343 87929 90515 93101 95687 98273 100859
13 92259 95334 98409 101484 104559 107634 110709 113785 116860 119935
14 109022 112656 116290 119923 123557 127191 130825 134458 138092 141726
15 128241 132516 136791 141066 145340 149615 153890 155500 155500 155500

As a macroeconomist, I must note that freezing the pay of federal employees will be somewhat detrimental to the effort by the Federal Reserve and the Administration to prevent deflation and/or a double-dip recession, because this action will reduce consumer demand. Also, freezes of federal pay unfortunately could allow private sector employers to cut pay or at least avoid raising pay for some workers who are in the same occupations as the affected government employees. Similar problems can be expected in Europe, where some governments have recently cut wages and benefits for their employees.

The quotations in this post are from this page in the OPM website More details on the GS pay scale are available there. Links to a complete set of GS pay tables like the ones shown above can be found here.

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2 Responses to “Federal Pay Rates Frozen; How High Are They Now?”

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  1. Comment by Anita — December 1, 2010 at 12:48 pm   Reply

    One of my MBA students brought up the issue of federal pay after reading an article that said how many federal employees make more than $120,000. (Or something like that. Unfortunately, I can’t find his/her online post.) I suggested that federal pay attempts to mirror private pay. Do you know of any comparisons?

    • Comment by Greg Hannsgen — December 1, 2010 at 4:50 pm   Reply

      Recently, there have been some reports by the media and various think tanks claiming that workers in the federal government are more highly paid on average than their counterparts in the private sector. For example, a recent CATO Institute study asserts that average annual compensation for workers in the federal government was over $123,000 in 2009. This was purportedly much higher than the average for private sector employees. The $123,000 figure of course includes benefits. CATO claims that the average annual monetary “wage” was about $81,000 that year. The Center for American Progress critiques the CATO study in this short article, arguing that the study does not compare similar positions or workers. It argues that the federal workforce is on average more experienced and more highly educated than the private sector workforce. Another recent critique in a privately published journal about federal employment casts some doubt on CATO’s numbers, using official Office of Personnel Management compensation data. By way of example, the latter article reports that the federal government’s 23,700 lawyers earn an average of $131,000 per year, and that the government employs 1,850 “nuclear engineers,” whose annual salaries average $122,000.

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