Getting It Right: How and Why We Should Compare Federal and Private Sector Compensation

Source: Stephen E. Condrey, Rex L. Facer II and Jared J. Llorens, Public Administration Review, Volume 72, Issue 6, November/December 2012
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In recent years, the debate concerning the status of public sector compensation has grown at all levels of government. At the state and local levels, this debate has largely bypassed the issue of pay and centered on jurisdictions’ ability to maintain traditional defined-benefit retirement systems in light of declining tax revenues. At the federal level, the primary focus has been the extent to which federal employee pay is comparable to private sector pay, and much of this discussion is driven by the requirement in the Federal Employees Pay Comparability Act of 1990 for an annual comparison of federal employee pay with the private sector. Further, this debate has captured broader questions surrounding proper goals for federal pay comparability policy.

Grounded in research and practice, conventional wisdom has held that the ability of an employer to offer competitive pay rates directly affects a number of critical human resource management metrics, from employee retention to job performance. However, while most researchers and practitioners would agree on the broad influence of competitive pay, there is considerable disagreement over proper approaches for determining and setting competitive pay levels….

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