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Presidents Pay Agent

Locality Pay Surveys

Under FEPCA, we must use salary surveys conducted by the Bureau of Labor Statistics (BLS) to set locality pay. Commencing with the 1996/97 surveys, BLS implemented a new survey design for its salary surveys. The new survey program, called the National Compensation Survey (NCS) program, was used in all BLS salary surveys started after September 1996. NCS uses probability sampling of occupations within survey establishments, rather than a fixed job list with detailed job descriptions, as had been used in the past.

The new survey process was not immediately accepted for use in the locality pay program. In fact, the Federal Salary Council recommended that the original NCS methods not be used to set Federal pay. After reviewing test data and several years of production surveys, the Pay Agent agreed with the Federal Salary Council's conclusion that the NCS program, as originally configured, should not be used for the locality pay program. However, the Pay Agent did not ask BLS to reinstate the previous methodology. The Pay Agent concluded that the NCS program has several advantages over the previous salary survey program, the Occupational Compensation Survey Program (OCSP). These include offering greater occupational coverage, being less costly, and being less burdensome on respondents.

The Pay Agent also concluded that certain major aspects of the NCS program would have to be improved before it would be prudent to use NCS data for making pay comparisons under the locality pay program. In 2002, Pay Agent and BLS staff implemented three of the five planned improvements in the NCS program, and the Federal Salary Council recommended that we begin to phase in the use of NCS data to set locality pay.

In our 2002 report (for locality pay in 2004), as recommended by the Council, we began phasing in the NCS surveys by averaging the OCSP and NCS results (on a 50-50 basis). In 2003, we continued the phase-in by weighting NCS results 75 percent and OCSP results 25 percent. In 2004, we applied a 90 percent weight to NCS results and a 10 percent weight to OCSP results. Since the 2005 report (for locality pay in 2007), we have used only NCS survey results for the locality pay program.

Four of the five NCS improvements are incorporated into surveys used this year:

1)  The linkage of Federal and non-Federal jobs by developing a crosswalk between General Schedule occupations and the Standard Occupational Classification (SOC) System to permit weighting data by Federal employment.

2)  The development of methods to identify and exclude survey jobs that would be graded above GS-15 in the Federal Government.

3)  The development of an econometric model based on survey data to estimate salaries for jobs not found in the probability samples.

4)  The development and implementation of better methods for grading supervisory jobs selected by probability sampling.

BLS continues to phase in the last improvement, which is the use of a four-factor job grading system with job family guides. This improvement will be completed in 2010, and it is designed to improve grade leveling under the NCS program. All of the improvements are described in the 2002 Pay Agent's Report to the President.

Industrial and Establishment Size Coverage

As required by FEPCA, BLS salary surveys used for the locality pay program include the collection of salary data from private industry and State and local governments, which have large numbers of workers, especially in certain occupations that are unique to government functions. Before 1991, BLS surveys for the pay comparability process covered only private sector goods-producing and service-producing industries.

BLS surveyed a total of 15,357 establishments for the data submitted for the locality pay program. In the 29 separate metropolitan locality pay areas (excluding Buffalo and Raleigh), BLS surveyed 8,216 establishments. The Rest of U.S. (RUS) locality pay survey covered 48 additional metropolitan areas and 70 non-metropolitan counties. A total of 7,141 establishments were surveyed in the RUS area, including establishments in Buffalo. While Buffalo is now a separate locality pay area, BLS has not yet completed work on its geographic redesign and Buffalo continues to represent other locations in BLS' geographic sample.

The industry scope of the surveys includes mining, construction, and manufacturing industries; service-producing industries, including transportation, communications, electric, gas, and sanitary services; wholesale trade; retail trade; finance, insurance, and real estate; services industries; and State and local governments. Households, agriculture, and the self-employed were excluded. The surveys covered establishments with 50 or more workers. In 2007, BLS plans to deliver data covering all establishment sizes. The Pay Agent will review the data and consider the recommendations of the Federal Salary Council before making a decision about whether the data from establishments with fewer than 50 employees should be used in the locality pay program.

Occupational Coverage

Under the NCS program, BLS uses random sampling techniques to select occupations for survey within an establishment. The occupations are selected and weighted to represent all non-Federal occupations in the location and, based on the crosswalk published in Appendix VII of the 2002 Pay Agent's report, also represent virtually all GS employees. OPM provided the crosswalk between GS occupational series and the Standard Occupational Classification (SOC) system used by BLS to group non-Federal survey jobs. OPM also provided March 2005 GS employment counts for use in weighting survey job data to higher aggregates. (BLS completed delivery of the most recent NCS surveys in July 2006, before March 2006 GS employment counts became available.)

Matching Level of Work

In the NCS surveys, BLS field economists cannot use a set list of survey job descriptions because BLS uses a random sampling method and any non-Federal job can be selected in an establishment for leveling (i.e., grading). In addition, it is not feasible for BLS field economists to consult and use the entire GS position classification system to level survey jobs because it would simply take too long to gather all the information needed. This would also place an undue burden on survey participants

To conduct grade leveling under the NCS program, OPM developed a simplified four-factor grade leveling system with job family guides. These guides were designed to provide occupational-specific leveling instructions for the BLS field economists. The four factors were derived and validated by combining the nine factors under the existing FES. The factors were validated against a wide variety of GS positions and proved to replicate current grade levels.

The job family guides cover the complete spectrum of white-collar work found in the Government. BLS has been using the guides in its ongoing surveys and roughly 40 percent of the data this year are leveled under the new approach. Fully implementing the new leveling system will take 4 more years because of BLS' data collection cycle. See Appendix IV of the 2002 Pay Agent's report for a summary of the BLS data collection cycle. Appendix VI of the 2002 Pay Agent's report contains the job family leveling guides.

Jobs above GS-15

For the NCS program, it was necessary to develop generic instructions for identifying white-collar jobs in the random surveys that would be graded above GS-15 (above the highest grade in the General Schedule) if they existed in the Federal Government so that the data could be excluded from pay gap measurements. BLS developed and tested the guidance with assistance from OPM. Appendix V to the 2002 Pay Agent's report explains the process for identifying these jobs in the NCS program.

Grading Supervisory Positions

Grading supervisory jobs presented another problem for the NCS program because the Government does not use the FES approach to grade supervisory jobs. BLS' original NCS methodology included an experimental approach in which BLS first applied the FES to sampled supervisory positions and then added additional factor points for the level of supervision. OPM classifiers believed this experimental approach would not yield the correct grade level and suggested a new approach based on the highest level of work supervised. Under the new approach, BLS would grade the highest level of work supervised using the appropriate four-factor leveling guide, not the supervisory job itself, and then add one grade for a first-level supervisor, two grades for a second-level supervisor, and three grades for a third-level supervisor. BLS used the new approach for the first time this year and we attribute much of the increase in pay gaps to the new method for grading sampled supervisory jobs, especially in the Washington-Baltimore locality pay area where the pay disparity increased 13.99 points since 2005.

Missing Data

While BLS surveys all white-collar jobs under the NCS program, it does not find all jobs at all work levels in each survey area. This is a serious problem with the NCS program because survey results and pay disparity measures can vary considerably based on which jobs are included. The Pay Agent asked BLS to develop an econometric model to provide estimates for jobs not found in NCS. The model is described later in this report and in Appendices II and III.