Biden's administration looked at the federal pay system, and it appears to have come to the same conclusion as many of its predecessors: the current method used to determine the General Schedule salaries isn’t working or not well.

However, the latest report by the president's pay agent (Labor Secretary Marty Walsh; acting Office of Management and Budget Director Shalonda Youth and Office of Personnel Management Direct Kiran Ahuja) suggests the administration's thoughts on the subject.

The pay agent stated that "as has been noted by pay agents in previous reports and discussed at other venues, there is a need for major legislative reforms to the white-collar Federal pay system."

Similar suggestions have been made by previous pay agents, from both the Obama administration and the Trump administration, to reform the federal white-collar pay system, as an 2015 report showed.

Previous reports by the Trump administration focussed on how federal pay system rewarded employees longevity over their performance. However, political appointees also pointed out shortcomings in the existing methodology for setting locality pay adjustments.

Biden's latest comments from the pay agent suggest that the federal current pay system rewards certain occupations while leaving the rest behind.

The 2022 report states that the current pay comparison methodology in the locality program does not consider the possibility of non-federal pay in local labor markets being very different between occupational groups. "As it stands now, locality payments within a local labor marketplace may leave certain mission-critical occupations significantly underpaid and overpay others.

The Federal Employee Pay Comparability Act (FEPCA) was passed in the mid-1990s. This is when locality pay first began. This law was initially intended to close the gap between civil and non-federal salaries that federal economists observed.

FEPCA employs a formula to technically authorize the entire amount needed to reduce the gap between federal salaries and non-federal wages in 54 broad "locality areas". This is a 5% reduction.

However, almost every administration has ignored the rates established in law. Experts in the field are now questioning whether FEPCA or the methodology used for setting locality pay made any sense.

It is unclear whether the Biden administration will seek such significant legislative changes to federal pay systems. Previous administrations on this topic have had little success.

President Biden has not nominated any new political appointees for the Federal Salary Council. The panel, which includes top union officials, has yet to meet under this administration to discuss issues related to pay.

The president's pay agent stated that until there is a new council those discussions will be largely in limbo. It declined to comment on the recommendations of the Federal Salary Council.

For example, the previous council couldn't agree whether to adopt OMB's new metropolitan statistical area and combined statistical areas. The adoption of these new areas could change the geographical boundaries of each locality and potentially affect pay for some employees.

According to the pay agent, a new Federal Salary Council must "take a fresh look" at the topic in next year's Federal Salary Council.

A number of recommendations made by former council members were also rejected by the pay agent. They suggested that it consider additional indicators such as retention and recruitment data when making locality-pay decisions.

Although such data may help agencies to identify retention and recruitment challenges, the agent stated that agencies should use this information to determine the best pay and leave flexibility to address these issues.

A small adjustment was approved by the pay agent to the Davenport/Moline, Illinois area pay area. This will allow Carroll County in Illinois to join the particular locality pay area. General Schedule employees may see a slight increase in their pay.

OPM must approve the change through rulemaking. Federal employees in the region will not see any changes to their salaries until then. According to the American Federation of Government Employees, (AFGE), locality pay changes will be beneficial for their members at U.S. Penitentiary Thomson located in northern Illinois. This region has been struggling with staff shortages in recent decades.

Jon Zumkehr, AFGE president for the local representing BOP workers in the region, stated in a statement that "We are beyond happy that our hard-working staff will be moved to the higher-paying locality." This change, along with the 25% retention pay that we have already secured, will help us retain our skilled staff and recruit the additional staff that we need.

The president's pay agent did not make any major changes to the pay areas in localities for 2022.