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REPORT TO CONGRESS

SALINAS-MONTEREY, CALIFORNIA, FEDERAL WAGE SYSTEM WAGE AREA

Blue-collar Federal workers have been paid according to local prevailing private sector rates since the Civil War. A separate wage area for blue-collar Federal workers has existed for Monterey County, California, for decades. Until 1965, each Federal agency had authority to determine local prevailing rates and establish wage area boundaries for its employees. As a consequence, blue-collar Federal workers at the same grade level in the same city working for different agencies were paid different rates. In 1965, President Lyndon B. Johnson addressed this inequity by ordering Federal agencies to coordinate their wage-setting activities under the leadership of the Civil Service Commission. The Commission established the National Wage Policy Committee (NWPC), made up of the heads of the major employing agencies and the heads of the major Federal employee unions, to seek advice on how to merge separate agency pay systems and create a Coordinated Federal Wage System (CFWS). One of the major projects undertaken by the NWPC was to establish criteria for defining the geographic boundaries of the CFWS wage areas. The NWPC recommended that the Commission establish the Salinas-Monterey wage area as a separate wage area.

In 1972, President Richard M. Nixon signed Public Law 92-392, which established the current Federal Wage System (FWS) under section 5341 et seq. of title 5, United States Code. The FWS incorporated most of the existing administrative policies of the CFWS. Since 1972, the Commission and its successor agency, the Office of Personnel Management (OPM), have been responsible for overseeing the administration of the FWS. The FWS now covers about 206,000 trade, craft, and laboring employees who are paid from appropriated funds. These employees are located in 132 separate wage areas throughout the country and in overseas areas.

One of the key statutory principles underlying the FWS is that pay rates are to be maintained in line with prevailing levels of pay for comparable levels of work in the private sector within a local wage area. To carry out this statutory principle, the Department of Defense (DOD) conducts annual wage surveys of private sector employers in each local wage area to determine local prevailing rates. By law, representatives of employee labor organizations are involved in all aspects of the prevailing rate pay-setting process. This involvement extends to the employee unions having a role in defining the boundaries of the FWS wage areas where DOD collects wage data.

The law requires OPM to define the geographic boundaries of FWS wage areas. Generally, separate FWS wage areas exist where large concentrations of Federal employment coincide with concentrations of private sector employment adequate to determine local prevailing rates. OPM consults with the Federal Prevailing Rate Advisory Committee (FPRAC) on all aspects of administering the FWS, including setting local wage area boundaries. FPRAC is composed of five representatives from agency management, five representatives from Federal employee labor unions, and an independent Chairman.

In 1972, based on the recommendations of FPRAC, the Commission continued the Salinas-Monterey CFWS wage area as a separate FWS wage area. FPRAC has not recommended any changes in the definition of the Salinas-Monterey wage area since that time. OPM has never changed the definition of an FWS wage area without receiving a recommendation from FPRAC to do so. In recent years, the Salinas-Monterey Local Wage Survey Committee (LWSC) has recommended that the Salinas-Monterey wage area be combined with the San Francisco wage area. The LWSC bases its recommendation in part upon its finding that General Schedule (GS) employees in Monterey County are in the San Francisco-Oakland-San Jose, California, GS locality pay area. Generally, the 31 white-collar locality pay areas that cover major metropolitan areas are larger than the blue-collar wage areas in those locations, and it is not unusual for more than one blue-collar wage area to be contained within the boundaries of a single white-collar pay area.

This report contains information on the process OPM uses to define FWS wage area boundaries, an analysis of the criteria OPM regularly applies when defining wage area boundaries, an analysis of local labor market conditions in the Salinas-Monterey and San Francisco FWS wage areas, and our recommendations on the definition of the two counties of the Salinas-Monterey wage area.

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