Federal Pay: FY1998 Salary Adjustments

Federal Pay: FY1998 Salary Adjustments

97-232 GOV
CRS Report for Congress
Received through the CRS Web
Federal Pay: FY1998 Salary Adjustments
Updated January 8, 1998
Barbara L. Schwemle
Analyst in American National Government
Government Division
Congressional Research Service ˜ The Library of Congress

Federal Pay: FY1998 Salary Adjustments
Summary
Federal white-collar employees are to receive an annual pay adjustment and a
locality-based comparability payment under Section 529 of P.L. 101-509, the Federal
Employees Pay Comparability Act (FEPCA). They received a 2.3% annual pay
adjustment and a locality-based comparability payment, costing about 0.5% of the
General Schedule (GS) payroll, in January 1998 under an alternative plan issued by
President Clinton on August 29, 1997. The cost of both pay adjustments is about
$2.2 billion dollars. The net annual and locality pay increases range from 2.44% in
the Indianapolis pay area to 6.52% in the Hartford pay area. In the Washington, D.C.
pay area, the net increase is 2.45%. The alternative plan was implemented by
Executive Order 13071, signed by President Clinton on December 29, 1997. The
FY1998 Treasury, Postal Service, and General Government appropriations bill, P.L.
105-61, was silent on the General Schedule pay adjustment.
Although the federal pay adjustments are sometimes referred to as cost-of-living
adjustments, neither the annual adjustment nor the locality payment has anything to
do with living costs. The annual adjustment is based on the Employment Cost Index
(ECI), which measures the change in private sector wages and salaries. Absent the
alternative plan, the ECI would have required a 2.8% adjustment in January 1998.
The size of the locality payment is determined by the President and is based on a
comparison of non-federal and General Schedule salaries in 32 pay areas nationwide.
If the alternative plan had not been issued, actual locality payments would have
ranged from 6.33% in the “Rest of the United States” (RUS) pay area to 14.13% in
the San Francisco pay area in January 1998. The actual locality pay increase for the
Washington, D.C., pay area would have been 7.84%. The locality payments would
have cost about 7.2% of the GS payroll.
The data on which the locality payments are based is 22 months old by the
effective date of the adjustment. March 1996 data was used to determine the January
1998 locality payments. As of March 1996, the Federal Salary Council reported an
overall gap between non-federal average salaries and General Schedule average
salaries of 30.03%. The average amount needed to reduce this disparity to 5%, as
mandated by law, was 23.84%. President Clinton proposed a 2.8% pay adjustment
for federal employees in his FY1998 budget and said that the question of how it
would be allocated between the annual and locality adjustments would be determined
after consultation with employee organizations and others.
Legislation (H.R. 1240) has been introduced in the 105th Congress to provide
administrative law judges (ALJ) an annual pay adjustment at the same time and of
the same amount as the General Schedule annual pay adjustment. ALJ annual pay
adjustments are linked to Executive Schedule pay adjustments. ALJs received a base
pay adjustment in January 1998 (the first adjustment to base pay since January
1993), and they have received locality payments each year since January 1994.
P.L. 105-61 also provided for a simplified and consolidated pay system for the
United States Secret Service Uniformed Division.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1998 Pay Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Annual Pay Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Locality-Based Comparability Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Combined Annual and Locality Adjustments . . . . . . . . . . . . . . . . . . . . . . . 5
105 Congress Legislation
th
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Congressional Budget Office Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 1. January 1998 Pay Increases Ranked From Highest to Lowest . . . . . . . 9

Federal Pay: FY1998 Salary Adjustments
Introduction
Federal white-collar employees are to receive an annual pay adjustment and a
locality-based comparability payment under Section 529 of P.L. 101-509, the Federal
Employees Pay Comparability Act (FEPCA).1 They received a 2.3% annual pay
adjustment and a locality-based comparability payment, averaging about 0.5% of the
General Schedule (GS) payroll, in January 1998 under an alternative plan issued by
President Clinton on August 29, 1997. The cost of both pay adjustments is about
$2.2 billion dollars. The net annual and locality pay increases range from 2.44% in
the Indianapolis pay area to 6.52% in the Hartford pay area. In the Washington, D.C.
pay area, the net increase is 2.45%. The alternative plan was implemented by
Executive Order 13071, signed by President Clinton on December 29, 1997. The
FY1998 Treasury, Postal Service, and General Government appropriations bill, P.L.
105-61, was silent on the General Schedule pay adjustment.
Although the federal pay adjustments are sometimes referred to as cost-of-living
adjustments, neither the annual adjustment nor the locality payment has anything to
do with living costs. The annual adjustment is based on the Employment Cost Index
(ECI), which measures the change in private sector wages and salaries. Absent the
alternative plan, the ECI would have required a 2.8% adjustment in January 1998.
The size of the locality payments is determined by the President and is based on a
comparison of non-federal and General Schedule salaries in 32 pay areas nationwide.
If the alternative plan had not been issued, the locality payments would have ranged
from 6.33% in the “Rest of the United States” (RUS) pay area to 14.13% in the San
Francisco pay area in January 1998. The actual locality pay increase for the
Washington, D.C., pay area would have been 7.84%. The locality payments would
have cost about 7.2% of the GS payroll.
This report does not cover salary adjustments for federal officials and judges.2
It also does not cover pay adjustments for Members of Congress.3
1 104 Stat. 1427.
2 See: U.S. Library of Congress, Congressional Research Service, Salary Adjustment
Cost Estimates: Federal Officials, 1998, CRS Report 97-880 GOV; Salaries of Federal
Officials, CRS Report 97-164 GOV; and Salary of the President Compared With That of
Other Federal Officials, CRS Report 97-761 GOV, all by Sharon S. Gressle (Washington:
Sept. 24, 1997; Dec. 4, 1997; and Aug. 7, 1997), 6p.; 2p.; and 6p.
3 See: U.S. Library of Congress, Congressional Research Service, Salaries of Members
(continued...)

CRS-2
In January 1997, federal white-collar employees received combined annual and
locality pay adjustments ranging from 2.24% in the Dayton pay area to 4.66% in the
Minneapolis pay area. In the Washington, D.C. pay area, the combined adjustment
was 3.33%. The cost of both pay adjustments was about $2.3 billion dollars.4
FEPCA has never been implemented as originally enacted. In 1994, the annual
ECI-based pay adjustment was not provided and, in 1995, 1996, and 1998 reduced
amounts of the annual adjustment were provided. For the years 1995 through 1998,
reduced amounts of the locality payments were provided.
1998 Pay Increases
Federal white-collar employees are to receive an annual pay adjustment and a
locality-based comparability payment under the Federal Employees Pay
Comparability Act (FEPCA). They received a 2.3% annual pay adjustment and
5
a
locality-based comparability payment, averaging about 0.5% of the General Schedule
payroll, in January 1998 under an alternative plan issued by President Clinton on
August 29, 1997. The cost of both pay adjustments is about $2.2 billion dollars
6
.
The alternative plan was implemented by Executive Order 13071, signed by
President Clinton on December 29, 1997.7
The pay adjustment is calculated as follows. First, the basic General Schedule
(GS) is increased by the annual adjustment percentage, resulting in a new GS
schedule. These new basic GS rates are then increased by the locality payment. The
resulting pay rates (annual + locality) are compared with the 1997 pay rates (annual
+ locality) to derive the net increase in pay for 1998. For example, in the
Washington, D.C. pay area, for an employee at GS-9, step 1, the 1997 basic GS rate
of $29,577 is multiplied by 2.3% to determine the 1998 basic GS rate of $30,257.
This 1998 basic GS rate of $30,257 is then multiplied by the 1998 locality rate for
Washington, D.C., 7.27%, to determine a GS salary with locality pay applied of
3(...continued)
of Congress: payable rates and effective dates, 1789-1998, CRS Report 97-1011; Salaries
and Allowances: The Congress, CRS Report 97-659 GOV; Salaries of Members of
Congress: Congressional Votes, 1990-1997, CRS Report 97-615 GOV; and Salaries of
Members of Congress: An Overview, CRS Report 95-898 GOV all by Paul E. Dwyer
(Washington: Nov. 18, 1997; June 27, 1997; Nov. 5, 1997; and Oct. 8, 1997), 5p., 13p., 9p.,
and 22p.
4 For the 1997 salary adjustments see: U.S. Library of Congress, Congressional
Research Service, Federal Pay: FY1997 Salary Adjustments, by Barbara L. Schwemle, CRS
Report 96-705 GOV (Washington: Dec. 31, 1996), 6 p.
5 104 Stat. 1427.
6 U.S. President (1993-), Clinton, Letter to Congressional Leaders Transmitting an
Alternative Plan for Federal Civilian Employee Pay Adjustments, August 29, 1997, Weekly
Compilation of Presidential Documents, v. 33, Sept. 1, 1997, pp. 1269-1270.
7 U.S. President, 1993- (Clinton), Executive Order 13071, Adjustments of Certain
Rates of Pay, Federal Register, vol. 62, Dec. 31, 1997, pp. 68521-68530.

CRS-3
$32,457. To determine the net annual and locality pay adjustment, the percentage
change between the 1998 GS salary with locality pay applied, $32,457, and the 1997
GS salary with locality pay applied, $31,680, is calculated. The percentage change
between the two salaries is 2.45% for January 1998.
Annual Pay Adjustment
Federal employees under the General Schedule (GS), Foreign Service Schedule,
and Veterans Health Administration Schedule receive the annual pay adjustment.
The President extended the annual adjustment to the Senior Executive Service and
the Senior Foreign Service. Individuals in senior-level and scientific and
professional positions may receive the annual adjustment at the discretion of agency
heads. Administrative law judges and contract appeals board members will receive
an annual adjustment because Executive Schedule pay is being adjusted as well.
Although the federal pay adjustments are sometimes referred to as cost-of-living
adjustments, neither the annual adjustment nor the locality payment has anything to
do with living costs. The annual pay adjustment is based on the Employment Cost
Index (ECI), which measures the change in private sector wages and salaries. Basic
pay rates are to be increased by an amount that is 0.5% less than the percent by which
the ECI, for the quarter ending September 30 of the year before the preceding
calendar year, exceeds the ECI for that same quarter of the second year (if at all).
The ECI required a 2.8% annual pay adjustment in January 1998. This reflected the
September 1995 to September 1996 change in private sector wages and salaries of
3.3% minus .5%, which equals 2.8%. The annual pay adjustment is effective as of
8
the first day of the first applicable pay period beginning on or after January 1 of each
calendar year.
The Federal Employees Pay Comparability Act (FEPCA) authorizes the
President to issue an alternative plan calling for a different percentage than the ECI
requires for reasons of national emergency or serious economic conditions affecting
the general welfare. The alternative plan must be submitted to Congress before
September 1 preceding the scheduled effective date of the adjustment.9 For January
1998, President Clinton issued an alternative plan covering both the annual and
locality pay adjustments on August 29, 1997. Under that plan, a reduced annual
adjustment of 2.3% is being provided.
Locality-Based Comparability Payments
GS employees receive the locality-based comparability payments. The Pay
Agent
10 extended those payments to the Foreign Service, including the Senior
8 U.S. Dept. of Labor, Bureau of Labor Statistics, Employment Cost Index)September
1996, (Washington: Oct. 29, 1996), p. 11.
9 104 Stat. 1429-1431; 5 U.S.C. 5301-5303.
10 The Pay Agent is comprised of the Secretary of Labor (Alexis Herman), Director of
the Office of Management and Budget (Franklin Raines) and Director of the Office of
(continued...)

CRS-4
Foreign Service, Senior Executive Service, and employees in senior-level, scientific
and professional, administrative law judge, and contract appeals board member
positions on December 4, 1997. The locality-based comparability payment
11
s
procedure was established by FEPCA. The payments are to be paid within each
locality determined to have a pay disparity greater than 5%. When uniformly applied
to General Schedule employees within a locality, the adjustment is to make their pay
rates substantially equal, in the aggregate, to the rates paid to non-federal workers for
the same levels of work in the same locality.
Under the law, the Bureau of Labor Statistics conducts surveys that document
non-federal rates of pay in each of the pay areas. The survey results are submitted
to OPM which serves as the Pay Agent’s staff. OPM documents federal rates of pay
in each of the pay areas and compares the non-federal and General Schedule salaries
by grade for each pay area. The average salaries at each grade, both federal and non-
federal, are then aggregated and compared to determine an overall average percentage
pay gap for each area. By law, the disparity between non-federal and federal salaries
is to be reduced to 5%. Therefore, the overall average percentage pay gaps for each
pay area are adjusted to this level.
Under FEPCA as well, a certain percentage of the adjusted gap between General
Schedule average salaries and non-federal average salaries in each pay area is to be
closed each year. In January 1998, 60% of the gap was to be closed. This percentage
was applied to the adjusted percentage gaps in each pay area to determine the locality
rates recommended to the President by the Pay Agent, after receiving advice from the
Federal Salary Council.12
The data on which the locality payments are based is 22 months old by the
effective date of the adjustment. March 1996 data was used to determine the January
1998 locality payments. As of March 1996, the Federal Salary Council reported an
overall gap between General Schedule average salaries and non-federal average
salaries of 30.03%. The amount needed to reduce this disparity to 5%, as mandated
by law, averaged 23.84% for 1998. The Council and the Pay Agent recommended
13
10(...continued)
Personnel Management (Janice Lachance, Acting).
1 1 The President, by Executive Order, delegated to the Pay Agent the authority to
extend locality-based comparability payments to certain categories of positions not
otherwise covered. U.S. President (Clinton), “Delegating a Federal Pay Administration
Authority,” Executive Order 12883, Federal Register, vol. 58, Dec. 1, 1993, p. 63281.
1 2 The Council is comprised of nine members. Three members generally recognized
for their impartiality, knowledge, and experience in labor relations and pay policy, are
William J. Sheffield, Chair; Anthony F. Ingrassia, Vice-Chair; and Margaret A. Coil. The
other six members represent the Public Employee Department, AFL-CIO (John F. Leyden);
American Federation of Government Employees (Bobby L. Harnage); National Treasury
Employees Union (Robert M. Tobias); National Federation of Federal Employees (Sheila
K. Velazco); American Federation of Government Employees, AFL-CIO (Peter A.
Tchirkow); and the American Nurses Association (Geri Marullo).
13 Memorandum for the President’s Pay Agent from the Federal Salary Council, Level
(continued...)

CRS-5
1998 locality payments ranging from 11.14% in the “Rest of the United States”
(RUS) pay area to 24.79% in the San Francisco pay area. The recommended locality
payment for the Washington, D.C. pay area was 14.95%. The locality payments
actually granted, however, are derived by comparing the 1997 locality payments with
those recommended for 1998. This comparison would have resulted in actual locality
increases, from 1997 to 1998, of 6.33% in RUS, 14.13% in San Francisco, and 7.84%
in Washington, D.C..
FEPCA provides the President with the authority to fix an alternative level of
locality-based comparability payments if, because of national emergency or serious
economic conditions affecting the general welfare, he considers the level that would
otherwise be payable to be inappropriate. At least one month before those
comparability payments would be payable, he must prepare and transmit to Congress
a report describing the alternative level of payments he intends to provide, including
the reasons why that alternative level is necessary. President Clinton issued a
14
n
alternative plan for both the January 1998 annual and locality pay adjustments on
August 29, 1997. Under that plan, a locality payment costing about 0.5% of the GS
payroll is being provided. Instead of the required phase-in rate of 60% to close the
pay gap, the 1998 phase-in rate is 29.2%.
The President said that, absent his alternative plan, the locality-based
comparability payment would have cost about 7.2% of payroll in 1998. When
combined with the ECI-mandated annual pay adjustment of 2.8%, the total federal
pay increase would have been about 10%. He said that granting the 10% pay increase
required by statute would have cost $7.9 billion in 1998 and would have been
inconsistent with the agreement to balance the budget by 2002. The President also
said that he granted the bulk of the increase as an annual adjustment because many
federal employees do not receive locality pay. The FY1998 Treasury, Postal Service,
and General Government appropriations bill, P.L. 105-61, was silent on the General
Schedule pay adjustment.
President Clinton had proposed a 2.8% pay adjustment for federal employees
in his FY1998 budget. The cost of the adjustment was estimated at $2.2 billion. The
budget document noted that, “the Administration will consult employee organizations
and others before recommending how to allocate the civilian pay raise between
locality pay and a national schedule adjustment.”15
Combined Annual and Locality Adjustments
13(...continued)
of Comparability Payments for January 1998, (Washington: Oct. 16, 1996), 7 p. and Report
on Locality-Based Comparability Payments for the General Schedule, Annual Report of the
President’s Pay Agent (Washington: 1996), 25 p.
14 104 Stat. 1429-1436, as amended by 106 Stat. 1355-1356 and 1360; 5 U.S.C. 5301-
5302 and 5304-5304a.
15 U.S. Executive Office of the President, Office of Management and Budget, Budget
of the United States Government Fiscal Year 1998, (Washington: GPO, 1997), p. 39.

CRS-6
The net annual and locality pay increases for January 1998 range from 2.44%
in the Indianapolis pay area to 6.52% in the Hartford pay area. In the Washington,
D.C. pay area, the net increase is 2.45%. There are two new discrete pay localities
in 1998: Hartford, CT, and Orlando, FL. New London, CT is included in the
Hartford pay area. As in previous years, Santa Barbara County and a portion of
Edwards Air Force Base are included in the Los Angeles pay area, and St. Mary’s
County is included in the Washington, D.C. pay area. Areas with pay gaps below the
pay gap in RUS will receive the same pay adjustment as RUS. Therefore, Orlando
is included with RUS in 1998.
Looking at just the locality payments authorized, sixteen pay areas)Boston,
Chicago, Cincinnati, Denver, Detroit, Hartford, Houston, Los Angeles, Miami,
Minneapolis, New York, Philadelphia, Sacramento, San Diego, San Francisco, and
Seattle)received larger locality pay rates than Washington, D.C., in January 1998.
Receiving lesser locality pay rates than Washington, D.C., were 15 pay areas)Atlanta,
Cleveland, Columbus, OH, Dallas, Dayton, Huntsville, Indianapolis, Kansas City,
Milwaukee, Orlando, Pittsburgh, Portland, OR, Richmond, St. Louis, and the “Rest
of the United States.”
Looking at the combined annual and locality adjustments, 30 pay areas received
larger combined increases than Washington, D.C.. Only Indianapolis received a
lower combined increase than Washington, D.C. According to OPM, this occurred
because the targets to reduce the pay gaps to 5%, as mandated by FEPCA, increased
in each of the pay areas except for Washington, D.C., and Indianapolis where the
targets declined. Specifically, the target gap in Washington, D.C., declined from
25.12% for the 1997 adjustment to 24.91% for the 1998 adjustment.
Blue-collar workers under the Federal Wage System (FWS) receive a prevailing
rate adjustment that is tied to the federal white-collar pay adjustment. Pay for these
workers will be adjusted by up to 2.88% on the effective dates of the 1998 FWS pay
schedules. Special rate employees, including those receiving law enforcement officer
special rates, receive either the special rate or the locality payment, whichever is
higher. Federal employees in Alaska, Hawaii, and outside the continental United
States receive a cost of living allowance rather than locality pay.16
Despite concerns expressed by the Clinton Administration in 1993 that the
methodology for locality pay was flawed, no proposals have been made to change the
1 6 5 U.S.C. 5941 note, as amended by sec. 515 of P.L. 105-61 (111 Stat. 1306),
provides that the allowance cannot be reduced through December 31, 2000, and mandates
that OPM propose adjustments to the methodology to Congress by March 1, 2000. OPM
is to study the issue and submit a report to Congress proposing appropriate changes in the
method of fixing compensation for affected employees, including any necessary legislative
changes. The study will include an examination of the pay practices of other employers in
the affected areas; a consideration of alternative approaches to dealing with the unusual and
unique circumstances of the affected areas, including modifications to the current
methodology for calculating allowances to take into account all cost of living in the
geographic areas of the affected employee; and an evaluation of the likely impact of the
different approaches on the government’s ability to recruit and retain a well-qualified
workforce.

CRS-7
federal pay law. A 1993 draft memorandum from the Pay Agent to the Federal
Salary Council concluded that “the current methodology is flawed because the
completeness of the data varies greatly among survey areas, because the gaps are not
credible in light of other labor market indicators, and because the single percentage
adjustment for all jobs in a locality is a poor reflection of market realities.”17
105 Congress Legislation
th
H.R. 1240 has been introduced in the House to provide administrative law
judges (ALJs) an annual pay adjustment at the same time and of the same amount as
the General Schedule annual pay adjustment. The bill was introduced by
Representative George Gekas on April 8, 1997. ALJ annual pay adjustments are
linked to Executive Schedule (EX) pay and, under FEPCA, ALJ pay rates were
established as a percentage of EX pay levels. Those base pay rates range from 65%
18
of EX level IV to 100% of EX level IV and as of January 1998 pay from $76,960 to
$118,400. Prior to the January 1998 adjustment, the base pay schedules for ALJs had
been in effect since January 1993. Upon introducing the bill, Representative Gekas
said that, “Through no fault of their own, ALJ salaries were included as a percentage
of the Executive Schedule, which includes Members of Congress and Cabinet
Secretaries.... Many of the younger administrative law judges have fallen behind the
rates of pay of their former Government colleagues. Senior Government attorneys
paid under the General Schedule and the Senior Executive Service have received pay
adjustments during the same period which has caused their rates of pay to exceed that
of administrative law judges.” According to Mr. Gekas, the cost of the bill is
estimated at $4 million.
19
Although ALJs are not automatically entitled to a locality-based comparability
payment, the Pay Agent has extended it to ALJs since January 1994, the first year for
the payments. ALJ pay, with the locality adjustment included, ranges from $82,555
to $125,900 for the Washington, D.C. pay area and from $81,131 to $124,817 for the
RUS pay area as of January 1998. By law, total pay for ALJs is capped at EX level
III, currently $125,900.
Section 118 of P.L. 105-61, Treasury, Postal Service, and General Government
appropriations bill for FY1998, simplified and consolidated the pay system for the
United States Secret Service Uniformed Division. Originally introduced as S. 998
20
by Senator John Warner on July 9, 1997, the bill established a new pay schedule.
Base pay will be adjusted annually at the same time and by the same amount as the
General Schedule annual pay adjustment. Locality-based comparability payments are
authorized, but base and locality pay cannot exceed EX level IV, currently $118,400.
Pay, disregarding any comparability payment, cannot exceed EX level V, currently
$110,700.
17 Draft memorandum from the President’s Pay Agent to Anthony F. Ingrassia, Acting
Chairman, Federal Salary Council, [March 1993].
18 104 Stat. 1427 at 1445-1447.
19 Congressional Record, daily edition, vol. 143, April 8, 1997, pp. E595-E596.
20 111 Stat. 1285-1289.

CRS-8
OPM has preliminarily calculated the impact of the provision. The Assistant
Chief would receive a promotion resulting in a pay increase of 12% to 19%. The
Chief would receive a promotion amounting to a pay increase of 9% to 16%. The
Secret Service calculated the total cost of the change at $150,00021
Congressional Budget Office Study
The Congressional Budget Office (CBO) compared federal salaries with those
in the private sector in a July 1997 memorandum. The analysis was limited t
22
o
federal pay-that is, cash wages-and used the human-capital method, which compares
employees on the basis of education, skill, and work experience. The CBO analysis
added the characteristics of worker aptitude and job tenure. CBO wanted to examine
the apparent contradiction between Bureau of Labor Statistics (BLS) studies which,
on the one hand, “show federal salaries lagging well behind those outside of
government” and studies by labor-market analysts which, on the other hand, “have
maintained that federal employees are substantially overpaid.” The BLS studies focus
on pay for similar jobs while the labor-market studies focus on human-capital.
CBO provides two explanations for the differing viewpoints on federal pay.
First, the gap between federal and private-sector salaries may have been overstated
in previous comparisons of human-capital. CBO’s “more fully developed”
comparisons “show no significant difference in federal and private-sector salaries for
employees who have similar characteristics.” Second, the federal government and the
private-sector employ workers differently. According to CBO, “the federal
government in many cases appears to place employees with given levels of education,
experience, and other human-capital characteristics in higher-ranking positions than
the private sector.” This may occur CBO says because “uncompetitive salaries will
not allow [federal managers to] attract the same kind of experience, education, and
other qualities that private firms get.” Additionally, “Federal managers may also
promote employees to positions for which a private firm would not consider them in
order to raise pay and make salaries more competitive.”
According to CBO, its analysis shows that the government neither over nor
underpays. “The government gets less human capital for some jobs because it pays
less for those jobs, but that for what it does get, it pays about the right amount.”23
2 1 Letter from Edward S. Knight, General Counsel, U.S. Department of the Treasury
to Speaker of the House of Representatives Newt Gingrich, April 17, 1997, 4p.
22 U.S. Congressional Budget Office, CBO Memorandum, Comparing Federal Salaries
With Those in the Private Sector (Washington: July 1997), 31p.
23 Ibid., p. v, 16-17.

CRS-9
Table 1. January 1998 Pay Increases Ranked From Highest to Lowest
Net Combined
Locality
Net Locality
Pay Areas
(Annual [2.3%]/
Payments
Increase
Locality) Increase
Hartford
9.13%
4.32%
6.52%
Denver
8.46%
1.40%
3.64%
San Francisco
12.06%
1.40%
3.59%
Detroit
9.36%
1.22%
3.45%
Pittsburgh
6.21%
1.14%
3.41%
Miami
7.86%
1.12%
3.37%
Sacramento
7.64%
1.08%
3.34%
Chicago
9.21%
1.08%
3.32%
Portland, OR
7.17%
1.04%
3.30%
Kansas City
6.06%
0.96%
3.23%
Cincinnati
7.71%
0.96%
3.22%
San Diego
7.94%
0.87%
3.13%
Richmond
6.12%
0.85%
3.13%
Cleveland
6.35%
0.84%
3.11%
Los Angeles
10.31%
0.85%
3.09%
Minneapolis
7.32%
0.79%
3.06%
Seattle
7.34%
0.72%
2.99%
Huntsville
5.84%
0.66%
2.94%
Boston
8.61%
0.64%
2.91%
Orlando
5.42%
0.61%
2.90%
Rest of the U. S.
5.42%
0.61%
2.90%
Milwaukee
6.19%
0.61%
2.89%
New York
9.76%
0.61%
2.87%
St. Louis
5.71%
0.53%
2.82%
Dayton
6.19%
0.53%
2.81%
Atlanta
6.18%
0.53%
2.81%
Dallas
6.90%
0.50%
2.78%
Houston
11.96%
0.44%
2.70%
Philadelphia
7.67%
0.39%
2.67%
Columbus, OH
6.90%
0.28%
2.57%
Washington, D.C.
7.27%
0.16%
2.45%
Indianapolis
5.63%
0.14%
2.44%
Average
6.94%
--
2.84% (Local Rate)
Note: General Schedule salary tables for 1998 are available on the Internet at http://www.opm.gov.
The average local rate is offset by employees who do not receive locality pay.