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Washington, D.C.—The best way to close the persistent gap in pay federal employees face with their private sector counterparts—and which acts as a serious drag on the ability of federal agencies to recruit and retain talented employees, particularly in large cities—is to fully implement a 1990 law designed to close that gap in stages, but which has not been permitted to fulfill that objective.

That view was expressed today by President Colleen M. Kelley of the National Treasury Employees Union (NTEU) in testimony presented to the House Oversight and Government Reform Subcommittee on the Federal Workforce, Postal Service and District of Columbia.

“Regional concerns over the differing levels of locality pay and overall fairness of the current federal system can best be fixed through full implementation” of the Federal Employees Pay Comparability Act of 1990 (FEPCA), President Kelley said.

The subcommittee, chaired by Rep. Danny Davis (D-Ill.), is examining federal compensation issues, including the system of locality pay established by FEPCA. That law was designed to close the public-private pay gap in stages over 10 years; however, as the Federal Salary Council noted, the 2007 gap stood at 23 percent in favor of the private sector.

FEPCA uses a combination of across-the-board and locality pay adjustments indexed to wage increases in the private sector as measured by the Employment Cost Index. There presently are 32 separate federal pay areas, determined largely although not exclusively by the number of federal employees in each, and a catch-all locality pay area known as the rest of the U.S.

In every year since 1995, President Kelley noted in her testimony, the president has exercised authority under FEPCA to submit an alternative pay plan by citing a “national emergency” or “serious economic conditions affecting the general welfare.” The result has been that the locality pay adjustments called for under FEPCA have not been implemented, resulting in the persistent pay gap.

This is a problem for federal employees across the country, but particularly in high-cost areas, including large cities. “By far, the biggest problem for federal employees in large metropolitan areas is this lack of implementation of FEPCA,” Kelley said, noting the union’s continuing support for special pay rates and other recruitment and retention flexibilities, especially in such locations.

Full implementation—instead of changing from a cost-of-labor measure to a cost-of-living measure, as some suggest—“would resolve the problem without changing the underlying tenet of federal compensation, that federal pay should be comparable with the private sector,” she said. The data used under FEPCA accurately depict the huge gaps in pay, particularly in large cities, she added.

The NTEU leader also called on Congress to address the issue of “pay compression,” in which some federal employees do not receive the full raise in a given year. Their pay is capped since pay under the General Schedule, which covers the bulk of federal employees, cannot exceed that of the Executive Schedule pay system. That problem, Kelley said, was seen first in San Francisco, and now has spread to 11 other pay areas. “Federal employees should not suffer because they work hard, get promoted and reach the top of the pay scale,” she said.

She pressed, as well, for congressional approval of NTEU-supported legislation, S. 3013, to address pay inequities in what is known as the non-foreign cost-of-living pay system, covering nearly 50,000 federal employees in Hawaii, Alaska, Puerto Rico and U.S. territories.

That pay system, established in 1948, was then “very sensible,” Kelley said, but now, “this unique system has become outdated and is in need of reform” in a way that does not result in “sudden, unplanned and adverse” changes in pay.