Let’s take a look at pay philosophy’s in public service. Organizations can lead, match, or lag behind what other employers offer employees. In sharp contrast to the strategies of governments in some other advanced democracies, the approach in U.S. governments has generally been to limit pools of job candidates to those prepared to accept that salaries in the public sector are frequently not competitive. Compensation is not seen as a strategic tool to achieve organizational objectives but rather as a cost to be managed and contained (with the controversial exception of performance pay programs).
Public servants have been expected to forgo opportunities for wealth in exchange for opportunities to serve the citizenry, often in challenging and unique ways (e.g., environmental protection, criminal justice, teaching, foreign relations, tax collection). Below-market approach might—arguably—be acceptable for low-skill retailing organizations such as Walmart, but it would clearly be a “penny-wise and pound-foolish” strategy for professionally staffed organizations.
For example, the federal agency with the lowest-paid workforce (despite well-paid medical staff), the Department of Veterans Affairs, has chronic problems related to poor management due to systemic underfunding. Everyone, in any case, seems to have an opinion about what constitutes an appropriate pay policy.
