Fed executive salaries shrink

Some lawmakers consider whether to restructure federal executive pay.

Is federal executive pay high enough to attract and retain capable 21st-century leaders? Lawmakers seeking an answer to that question asked the Government Accountability Office to review executive pay scales. GAO’s report, released July 21, shows that Senior Executive Service salaries — some of the highest in government — have decreased as much as 17 percent since 1970, when adjusted for inflation.

“Congress has the authority to change compensation plans,” which it did in 2004, said Lisa Shames, an acting director at GAO and a principal author of the report.

According to the report, Congress changed SES pay in 2004 to correct a salary compression problem. About 70 percent of SES executives had reached a statutory pay cap and were receiving the same level of pay. So in 2004, lawmakers moved SES executives to a performance-based pay system that replaced graduated pay steps with a broad pay range.

The new pay system lets agencies raise the SES salary cap after the Office of Personnel Management certifies the agencies’ performance management systems and the Office of Management and Budget concurs.

GAO found that $165,200 was the inflation-adjusted top salary in 2006 for SES employees at agencies with certified performance management systems. By contrast, $152,000 was the top salary for SES employees under performance management systems that OPM has not certified. Comparable inflation-adjusted SES pay in 1970 was $182,880, according to GAO.

GAO found other evidence that the highest-paid federal officials are losing ground to inflation. Employees paid under the General Schedule at GS-15, step 10, in 1970 received $153,247 in inflation-adjusted pay according to the Consumer Price Index. In 2006, GS-15 employees at step 10 received $139,774 in inflation-adjusted wages.

If lawmakers plan any further restructuring of senior executive pay, they should proceed judiciously, U.S. Comptroller General David Walker wrote in a letter to Rep. Jon Porter (R-Nev.), chairman of the House Government Reform Committee’s Federal Workforce and Agency Organization Subcommittee. Walker’s letter was included in the executive pay report.

In his letter to Porter, Walker said the government has not been especially effective at classifying, compensating, developing and motivating employees “to achieve maximum results within available resources and existing authorities.”

In 1989, Congress authorized all three branches of government to appoint members to a commission every four years to recommend salaries for top-level executive, judicial and legislative officials. No commission members were ever appointed, GAO reported.

GAO did not study total compensation benefits. But it reported that federal civilian employees receive about 67 percent of their compensation in salary and wages and about 33 percent in benefits or deferred compensation. GAO reported in an earlier study that wages constitute 71 percent of total compensation for private-sector executives, with benefits accounting for the remaining 29 percent.

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