Abstract
The General Schedule (GS) salary system is broken. It cannot be repaired. It's no longer meeting the needs of government. No elements of the system are consistent with best practice thinking in salary management. It was designed more than 50 years ago for a very different world of work. At this stage it has no defenders.
The Departments of Defense (DOD) and Homeland Security (DHS) have the authorization to develop their own salary systems. They join a growing list of agencies with similar authority—the Federal Aviation Administration, the Internal Revenue Service, Securities and Exchange Commission, and the General Accountability Office. Each of these agencies has argued that the GS system is an impediment to their efforts to accomplish their mission and achieve their strategic goals. The list will continue to grow.
The new model for salary management that has been adopted or proposed in these agencies is based on the broadband concept. Within the bands, pay for performance is the basis for managing salaries. That policy change has been the focus of heated debates. While it is effectively a universal practice for white-collar employees in non-government sectors, it represents a radical and difficult change for public agencies.
The new model also makes it necessary to rethink the strategy for aligning salaries with prevailing market pay levels. The locality pay concept adopted under the Federal Employee Pay Comparability Act (FEPCA) was never allowed to operate as planned, and probably has lost too much credibility to be resuscitated. It also suffers from a change in the way the Bureau of Labor Statistics (BLS) conducts its salary surveys. The issues and problems associated with linking federal pay to market rates are the focus of this article.
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