Federal Wage System
Encyclopedia
The Federal Wage System in the United States
was developed to make the pay of federal
blue-collar workers
comparable to prevailing
private sector rates in each local wage area. The FWS is a partnership worked out between the Office of Personnel Management
(OPM), other Federal agencies, and labor organizations.
ordered the former Civil Service Commission to work with Federal agencies and labor organizations to study the different agency systems and combine them into a single wage system that would be sensible and just. President Johnson called for common job-grading standards and wage policies and practices that would ensure interagency equity in wage rates. He established two basic principles for these policies and practices: Wages will be set according to local prevailing rates
, and; there will be equal pay for equal work and pay distinctions in keeping with work distinctions.
Congress established the FWS by law in 1972. It created a joint labor-management Federal Prevailing Rate Advisory Committee (FPRAC) with an independent Chairman. Agencies and labor unions are members of the Committee. FPRAC studies all matters pertaining to prevailing rate determinations and advises the Director of the OPM on appropriate pay policies for FWS employees.
employees, legislative branch employees, or employees of private sector contracting firms. Special pay plans cover certain employees in special circumstances. The OPM authorizes special pay plans when unusual labor market conditions seriously handicap agencies in recruiting and retaining qualified employees.It is a good Technique to retain employees.
To issue common job-grading standards for major occupations, OPM occupational specialists follow specific steps to develop new standards and to update existing standards. They make full occupational studies, which include onsite visits to interview employees, supervisors, and union representatives. Specialists write standards and ask agencies and unions for comments that are carefully considered and, where appropriate, incorporated into final job-grading standards. Federal agencies are required to apply these standards.
OPM defines the geographic boundaries of individual local wage areas and reviews survey job descriptions to ensure that they are accurate and current. In addition, OPM works with agencies and unions to schedule annual local wage surveys in each wage area.
Wage adjustments become effective in accordance with what is commonly referred to as the 45-day law. This law states that the Government has 45 working days to put FWS pay adjustments into effect after each wage survey starts. Wage schedules are effective with the first pay period after the 45-day period expires. The United States Department of Defense
(DOD) is the lead agency responsible for issuing FWS wage schedules.
For each wage area, OPM identifies a "lead"agency. The "lead" agency is responsible for conducting wage surveys, analyzing data, and issuing wage schedules under the policies and procedures prescribed by OPM. All agencies in a wage area pay their hourly wage employees according to the wage schedules developed by the lead agency.
OPM has identified the Department of Defense as the lead agency for each local wage area. OPM does not conduct local wage surveys.
Under the FWS, each employer bases pay on what private industry is paying for comparable levels of work in a given local wage area. Employees are paid the full prevailing rate at step 2 of each grade level. Step 1, the lowest step in the FWS, is 4 percent below the prevailing rate of pay. Steps 3, 4, & 5, are four, eight, & 12 percent above the prevailing rate of pay, respectively.
(GS) is a separate pay system covering most white-collar civilian Federal employees. Surveys of non-Federal employers, including State and local governments, determine the pay for GS employees. There are a number of other differences between the GS and FWS in terms of occupational coverage, geographic coverage, pay ranges, and pay adjustment cycles.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
was developed to make the pay of federal
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
blue-collar workers
United States civil service
In the United States, the civil service was established in 1872. The Federal Civil Service is defined as "all appointive positions in the executive, judicial, and legislative branches of the Government of the United States, except positions in the uniformed services." . In the early 19th century,...
comparable to prevailing
Prevailing wage
In government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. Prevailing wages are established by regulatory agencies for each trade and occupation employed in the...
private sector rates in each local wage area. The FWS is a partnership worked out between the Office of Personnel Management
Office of Personnel Management
The United States Office of Personnel Management is an independent agency of the United States government that manages the civil service of the federal government. The current Director is John Berry.-History:...
(OPM), other Federal agencies, and labor organizations.
History
Before the FWS, there was no central authority to establish wage equity for Federal trade, craft, and laboring employees. In 1965, President Lyndon B. JohnsonLyndon B. Johnson
Lyndon Baines Johnson , often referred to as LBJ, was the 36th President of the United States after his service as the 37th Vice President of the United States...
ordered the former Civil Service Commission to work with Federal agencies and labor organizations to study the different agency systems and combine them into a single wage system that would be sensible and just. President Johnson called for common job-grading standards and wage policies and practices that would ensure interagency equity in wage rates. He established two basic principles for these policies and practices: Wages will be set according to local prevailing rates
Prevailing wage
In government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. Prevailing wages are established by regulatory agencies for each trade and occupation employed in the...
, and; there will be equal pay for equal work and pay distinctions in keeping with work distinctions.
Congress established the FWS by law in 1972. It created a joint labor-management Federal Prevailing Rate Advisory Committee (FPRAC) with an independent Chairman. Agencies and labor unions are members of the Committee. FPRAC studies all matters pertaining to prevailing rate determinations and advises the Director of the OPM on appropriate pay policies for FWS employees.
Purpose
The goal of the system is to pay employees according to local prevailing rates. The regular pay plan covers most trade, craft, and laboring employees in the executive branch. The FWS does not cover United States Postal ServiceUnited States Postal Service
The United States Postal Service is an independent agency of the United States government responsible for providing postal service in the United States...
employees, legislative branch employees, or employees of private sector contracting firms. Special pay plans cover certain employees in special circumstances. The OPM authorizes special pay plans when unusual labor market conditions seriously handicap agencies in recruiting and retaining qualified employees.It is a good Technique to retain employees.
Procedure
OPM prescribes basic policies and procedures to ensure uniform pay-setting. OPM specifies procedures for agencies to design and conduct wage surveys, to construct wage schedules, to grade levels of work, and to administer basic and premium pay for employees.To issue common job-grading standards for major occupations, OPM occupational specialists follow specific steps to develop new standards and to update existing standards. They make full occupational studies, which include onsite visits to interview employees, supervisors, and union representatives. Specialists write standards and ask agencies and unions for comments that are carefully considered and, where appropriate, incorporated into final job-grading standards. Federal agencies are required to apply these standards.
OPM defines the geographic boundaries of individual local wage areas and reviews survey job descriptions to ensure that they are accurate and current. In addition, OPM works with agencies and unions to schedule annual local wage surveys in each wage area.
Wage adjustments become effective in accordance with what is commonly referred to as the 45-day law. This law states that the Government has 45 working days to put FWS pay adjustments into effect after each wage survey starts. Wage schedules are effective with the first pay period after the 45-day period expires. The United States Department of Defense
United States Department of Defense
The United States Department of Defense is the U.S...
(DOD) is the lead agency responsible for issuing FWS wage schedules.
For each wage area, OPM identifies a "lead"agency. The "lead" agency is responsible for conducting wage surveys, analyzing data, and issuing wage schedules under the policies and procedures prescribed by OPM. All agencies in a wage area pay their hourly wage employees according to the wage schedules developed by the lead agency.
OPM has identified the Department of Defense as the lead agency for each local wage area. OPM does not conduct local wage surveys.
Labor unions
Labor organizations play an important role in the wage determination process by providing representatives at all levels of the wage determination process. The employee unions having the greatest number of wage employees under exclusive recognition designate two of the five members of a lead agency's national level wage committee. Locally, the union with the most employees under exclusive recognition in a wage area designates one of the three members of each Local Wage Survey Committee. In addition, labor organizations nominate half of the Federal employees who collect wage data from private enterprise employers. A partnership team of one labor data collector and one management data collector visits each surveyed employer.Under the FWS, each employer bases pay on what private industry is paying for comparable levels of work in a given local wage area. Employees are paid the full prevailing rate at step 2 of each grade level. Step 1, the lowest step in the FWS, is 4 percent below the prevailing rate of pay. Steps 3, 4, & 5, are four, eight, & 12 percent above the prevailing rate of pay, respectively.
Other systems
The General ScheduleGeneral Schedule
The General Schedule is the predominant pay scale within the United States civil service. The GS includes the majority of white collar personnel positions...
(GS) is a separate pay system covering most white-collar civilian Federal employees. Surveys of non-Federal employers, including State and local governments, determine the pay for GS employees. There are a number of other differences between the GS and FWS in terms of occupational coverage, geographic coverage, pay ranges, and pay adjustment cycles.