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Federal Wage System: Introduction

Federal Wage System: Introduction

U.S. Office of Personnel Management

The Federal Wage System (FWS) was developed to make the pay of Federal blue-collar workers comparable to prevailing private sector rates in each local wage area.

Before the FWS, there was no central authority to establish wage equity for Federal trade, craft, and laboring employees. In 1965, President Johnson 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.

The President 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:

1. Wages will be set according to local prevailing rates.

2. There will be equal pay for equal work and pay distinctions in keeping with work distinctions.

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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 Office of Personnel Management (OPM) on appropriate pay policies for FWS employees.

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 Postal Service employees, legislative branch employees, or employees of private sector contracting firms.

Special pay plans cover certain employees in special circumstances. OPM authorizes special pay plans when unusual labor market conditions seriously handicap agencies in recruiting and retaining qualified employees.

The FWS is a partnership worked out between OPM, other Federal agencies, and labor organizations.

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 Department of Defense (DOD) is the lead agency responsible for issuing FWS wage schedules.

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