Federal pay lags private sector pay by 35 percent, according to a Federal Salary Council report.  

The Council’s results are based on a model developed by the Bureau of Labor Statistics (BLS).  The pay gap reflects the differences between base General Schedule (GS) rates and private sector pay for the same levels of work.  The amount of the pay gap is hotly disputed by some private forecasters (e.g., Heritage Foundation and CATO Institute).   who maintain that any pay gap, if there is one, favors federal pay.  The General Accountability Office (GAO) has taken the view that there is no single correct way of comparing federal and private sector pay.

The Council reported that by law the 2014 federal civilian basic pay raise would be 1.3 percent.  This is based on the calculated 1.8 percent increase in the Employment Cost Index (ECI) less .5 percent.  In the past, the President has adjusted the calculated pay raise to reflect economic constraints and budgetary conditions.  For example, federal pay was frozen in 2011 and 2012.  For 2013 the president recommended a .5 percent raise, but requested and Congress agreed to hold off on any federal pay raise until after the current Continuing Resolution runs out in March, 2013.  Congress approves the final amount, if any, of a pay raise in annual appropriations legislation.

The Council also recommended 12 areas to be considered for designation as separate locality pay areas:  Albany, NY; Albuquerque, NM; Austin, TX; Charlotte, NC; Colorado Springs, CO; Davenport, IA; Harrisburg, PA; Laredo, TX; Las Vegas, NV; Palm Bay, FL; St. Louis, MO; and Tucson, AZ.

The Federal Salary Council is an Advisory Group on federal pay composed of three experts on labor relations and pay policy and six representatives of federal employee organizations.  The Council submits its recommendations to the President’s Pay Agent (the Secretary of Labor, the Director of the Office of Management and Budget, and the Director of the Office of Personnel Management) which presents final recommendations to the president.