Use of Bureau of Labor Statistics Data for Setting General Schedule Pay

Bureau of Labor Statistics

Salary survey data from the Bureau of Labor Statistics (BLS), U.S. Department of Labor, are used to set and adjust General Schedule (GS) rates of pay. BLS is an independent statistical agency responsible for measuring labor market activity, working conditions, and price changes in the economy.

In GS Pay Setting, Prices / Living Costs Are Not Used

It is a misconception among some Federal employees and others that increases in GS rates of pay are based on prices and/or living costs. Measures of price levels, such as the BLS Consumer Price Index (CPI), are not used to set GS pay.

National Compensation Survey

BLS indicators of non-Federal salary levels include the National Compensation Survey (NCS) produced by the BLS Office of Compensation and Working Conditions. NCS is a survey of non-Federal employee salaries, wages, and benefits. The survey is designed to produce data at local levels, within broad regions, and nationwide. See http://www.bls.gov/ncs/.

NCS is used to set and adjust General Schedule pay —

• For annual across-the-board pay adjustments for the base GS under the provisions of 5 U.S.C. 5303, and
• For locality pay in separate geographic areas under 5 U.S.C. 5304.

For those two purposes, two different components of NCS are used as briefly explained below.

Across-the-Board Pay Adjustments

NCS data are used to derive the Employment Cost Index (ECI). The ECI measures changes in labor costs. Annual adjustments to the base General Schedule (i.e., GS pay rates not including locality pay) each January are based on the annual change in the ECI for wages and salaries for private industry workers less 0.5 percentage points, as of September, 15 months preceding the January adjustment. See http://www.bls.gov/ncs/ect/. (The President has authority under 5 U.S.C. 5303(b)(1) to provide an alternative pay adjustment because of national emergency or serious economic conditions affecting the general welfare.)

Locality Pay

Under the law, salary surveys conducted by BLS must be used to set locality pay. These data come from NCS, which in addition to national measures such as the ECI, also provides compensation data at local levels. These data include local wage estimates used by the Federal Salary Council and President's Pay Agent in the GS pay-setting process and are the basis for GS locality rates of pay. (The President has authority under 5 U.S.C. 5304a to provide an alternative level of payment because of national emergency or serious economic conditions affecting the general welfare.)

BLS conducts salary surveys to estimate non-Federal salaries in each of the GS locality pay areas. Each year, BLS provides data from these surveys to the Office of Personnel Management (OPM). As part of the staff support it provides to the Federal Salary Council and the President's Pay Agent, OPM uses the data to calculate local disparities between Federal and non-Federal pay ("pay gaps"). These pay gaps are taken into account every year as part of the Federal pay adjustment process.

Data for NCS locality pay surveys are collected by BLS field economists. The field economists —

• Contact non-Federal establishments to collect the wage data,
• At each participating establishment, use probability sampling methods to choose jobs from which to collect the wage and benefit data, and
• Apply a position classification system to match the selected jobs to both occupation and work level based on a crosswalk between Federal GS occupational series and Standard Occupational Classification (SOC) codes using the OMB SOC Manual. See http://www.bls.gov/soc/socmanu.htm.

Job matching by work level is a critical piece of the BLS data collection process. In addition to requiring that locality pay be set based on BLS surveys, the law also requires that calculation of pay gaps take work level into account. NCS is the only BLS product that provides the work-level detail the locality pay program requires.

Another BLS Survey: Occupational Employment Statistics (OES)

While not designed for the locality pay program, other BLS occupational data such as those from the OES survey are useful in other contexts. See http://www.bls.gov/oes/ OES data —

• Are the most comprehensive BLS source for information on employment for detailed occupations,
• Are the basis for BLS information regarding current and projected occupational employment 10 years in the future,
• Provide general information on employment, wages and salaries by occupation for all metropolitan areas of the U.S.,
• Are used to establish the fixed employment weights for the ECI, which as discussed above are the basis for annual adjustments to the base General Schedule, and
• Cover virtually all wage and salary jobs, including those in Federal establishments.

The OES data are currently not used to calculate pay gaps for the GS locality pay program because OES data do not associate wages and salaries with specific levels of work (e.g., grades). However, to address the need for locality pay data by level of work for more localities than are currently available through the NCS, the President's FY2011 budget proposal calls for the use of a model that would combine wage data by locality from the OES and level of work data from the NCS.

Simplified Example of NCS Pay Comparisons (Engineers)

The table below shows a simplified comparison between salaries for Federal employees under the General Schedule (GS) and non-Federal salaries as published by the Bureau of Labor Statistics (BLS) in National Compensation Survey (NCS) data. To simplify the comparisons, OPM chose full-time, non-supervisory employees in a single occupation nationwide and in two local areas. Specifically, the table shows the number of full-time non-supervisory GS engineers, the average 2008 GS salary nationwide and in the San Jose/San Francisco (San Jose) and Indianapolis GS locality pay areas, the average non-Federal salary from the BLS NCS nationwide survey and surveys in the San Jose and Indianapolis locality pay areas.

The example illustrates the impact of level of work on the relationship between GS and non-Federal salaries. For engineers in the selected locations, certain cells of the table are blank. A blank means that either the Federal Government does not have any employees in that GS grade or location or that BLS did not find enough data to publish at that grade/location. In the actual annual locality pay process, OPM uses data modeled by BLS to fill in the gaps in published BLS data.

NCS national data derived from hourly rates in table 8 of the National Compensation Survey Bulletin at http://www.bls.gov/ncs/ocs/sp/nctb0722.pdf multiplied by 2,087 average annual work hours. San Jose and Indianapolis data were derived from published data at http://www.bls.gov/ncs/ocs/compub.htm. Federal data are from the Central Personnel Data File maintained by OPM.

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