U. S. OFfice of Personnel Management Compensation Administration Facts About the Federal |
The Federal Wage System is a uniform pay-setting system covering Federal
employees paid by the hour. The aim is to make sure that Federal trade,
craft, and laboring employees in a local wage area who do the same kind
of work get the same rate of pay. Successful labor-management partnership
is a hallmark of the Federal Wage System, with labor organizations involved
in all phases of providing an equitable pay system.
The common wage schedules consist of 15 grades, covering most nonsupervisory
employees. Schedules for supervisors and leaders are based on the nonsupervisory
schedules, but are separate from them.
In each pay grade, there are five step rateseach
4 percent apartwith the second step based on the going rate
in private industry.
Night shift differentials are provided as a uniform percentage of the hourly
rates of pay for employees paid under the system.
This uniform pay-setting system guarantees that:
Your pay will be the same as the pay for
other Federal jobs like yours in your wage area.
The Federal Wage SystemWHY
The Government developed the Federal Wage System to bring pay
equity in each geographic area where Federal wage employees work.
Before the Federal Wage System, inequity was not uncommon. A janitor in
one agency in a geographic area could have been paid a certain hourly rate
while a janitor just across town but in a different agency, performing
the same work and with the same seniority, could have been paid substantially
less.
This was clearly unfair, yet for many years there was no central authority
to establish wage equity for Federal trade, craft, and laboring employees.
Then in 1965, President Lyndon Johnson ordered the Civil Service Commission
(predecessor of the Office of Personnel Management) to work with Federal
agencies and labor organizations to study the jumble of different agency
systems and combine them into a single wage system that would be sensible
and just.
The President called for common job-grading standards as well as wage policies
and practices which "would ensure interagency
equity in wage rates based on statistically valid surveys."
He established two basic principles for these policies and practices:
That wages be set according to local prevailing
rates.
That there be equal pay for equal work and pay distinctions in keeping
with work distinctions.
When the Federal Wage System was established by law in 1972,
a joint labor-management Federal Prevailing Rate Advisory Committee with
an independent Chairman was created. Agencies and labor unions are members
of the Committee, which advises the Director of the Office of Personnel
Management on Federal Wage System pay policies.
The Federal Wage SystemWHO
The aim of the Federal Wage System is to pay employees according
to local prevailing rates.
The Federal Wage System regular pay plan covers most trade, craft, and
laboring employees in the executive branch. Postal Service employees are
not covered by the Federal Wage System.
Some Federal Wage System employees are covered by special pay plans in
special circumstances. The Office of Personnel Management authorizes such
plans when agencies are seriously handicapped in recruiting and retaining
qualified employees by using regular pay rates.
The Federal Wage SystemHOW
The Federal Wage System (FWS) is a partnership worked out between
the Office of Personnel Management, other Federal agencies, and labor organizations.
The Office of Personnel Management prescribes the basic policies and procedures
to ensure uniform pay-setting under the Federal Wage System, including
such things as the way wage surveys are designed and conducted, the way
wage schedules are constructed, the way the job-grading system works and
how common job-grading standards are applied, and the establishment of
common pay administration rules.
In order to issue common job-grading standards for major occupations, occupational
specialists from the Office of Personnel Management follow specific steps
to develop new standards and to update existing standards. They make full
occupational studies. These studies include onsite visits to interview
employees, supervisors, and union representatives. Specialists write standards
and ask agencies and unions for comments which are carefully considered
and, where appropriate, incorporated into final job-grading standards.
Federal agencies are required to apply these standards.
The Office of Personnel Management also defines the geographic boundaries
of individual local wage areas and reviews survey job descriptions to ensure
that they are accurate and current.
In addition, the Office of Personnel Management works with agencies and
unions to schedule full-scale wage surveys in which data collectors visit
private industry establishments every 2 years. Wage change surveys, not
requiring personal visits, are conducted in the intervening years. The
two types of surveys are conducted at the local level under the guidance
of Local Wage Survey Committees.
Wage adjustments become effective in accordance with what is commonly referred
to as the 45-day law. This law states that the Government has 45 working
days to put Federal Wage System pay adjustments into effect after each
FWS wage survey starts. Wage schedules are effective with the first pay
period after the 45-day period expires.
Setting the Wages in Your Area
For each wage area, the Office of Personnel Management identifies
the "lead"
agency-that is, the Federal agency
with the most trade, craft, and laboring employees in that wage area.
The lead agency for each wage area is responsible for conducting wage surveys,
analyzing data, and issuing wage schedules under the policies and procedures
prescribed by the Office of Personnel Management. Each lead agency is advised
by an Agency Wage Committee. All agencies
in a wage area pay their hourly wage employees according to the wage schedules
developed by the lead agency.
Labor organizations also play an important role in the wage determination
process by providing representatives to the two Federal Wage System committees
which are deeply involved in this process. The
employee unions having the greatest number of wage
employees under exclusive recognition in each lead agency are
named the "lead" unions and designate two of the five
members of a lead agency's national level Wage Committee. Locally, the
union with the most employees under exclusive recognition in a wage area
designates one of the three members of each Local Wage Survey Committee.
In addition, labor organizations nominate half of the Federal employees
who collect wage data from private enterprise employers. A partnership
team of one labor data collector and one management data collector visits
each surveyed employer.
Comparability: Wage
System and General
Schedule
The Federal Wage System is based on "comparability
with local prevailing rates," which means
that your pay is based on what private industry is paying for similar work
levels in your local wage area. Federal Wage System employees are paid
the full prevailing rate (100 percent) at
step 2 of their grade. At step 5, the highest step,
Federal Wage System employees may be paid 12 percent above the prevailing
rate. In comparison, the General Schedule, a different statutory pay system
covering most "white-collar"
employees, pays employees based on surveys of non-Federal (i.e.,
private industry, State and local government) pay for similar work
levels in a pay locality. There are a number of additional differences
between the two pay systems in terms of geographic coverage, pay ranges,
and how pay is adjusted annually.
Pay Caps and Delays
The preceding sections described the basic structure of the
Federal Wage System and its method of setting wages based on local prevailing
rates. However, during some years, separate legislation may limit or delay
annual wage adjustments for Federal Wage System employees.
If you have any questions about the system, and how it affects you, ask
at your personnel office. The people there will be glad to help.
Page created 18 June 1997