President Bush issued a plan Wednesday designed to limit the
pay increase for white-collar federal employees to an average of 2
percent in 2004.
Under a formula included in the 1990 Federal Employees Pay
Comparability Act, federal workers covered under the General
Schedule would be due a 2.7 percent base pay raise next year. In
addition, workers would receive locality pay increases, bringing
the overall average pay increase to 15.1 percent. The formula used
to compute the raise is designed to close the gap between federal
and private-sector salaries, but it has never been fully
implemented.
According to the White House, raises under formula set out in
the law would cost $13 billion in fiscal 2004. The 2 percent raise
would cost $2 billion.
The president has until Sept. 1 to issue an alternative to the
pay plan derived from the 1990 law if he views the raise to be
inappropriate due to “national emergency or serious economic
conditions affecting the general welfare.” In a letter
to congressional leaders Wednesday, President Bush outlined
his alternative. It called for a 2 percent raise, divided between
a 1.5 percent across-the-board increase and 0.5 percent in
locality pay raises, which are determined by pay surveys conducted
across the country by the Bureau of Labor Statistics.
President Bush initially proposed the 2 percent raise in his
fiscal 2004 budget, presented to Congress earlier this year.
Bush said he acted to limit raises because “full statutory
civilian pay increases…would interfere with our nation's ability
to pursue the war on terrorism.”
The House and the Senate could still vote for a raise higher
than 2 percent, which would take effect unless President Bush
vetoed the legislation including the raise provision. The raise is
typically included in the annual Treasury-Postal appropriations
bill.
In late July, the House Appropriations Committee voted
to approve a 4.1 percent civilian federal pay raise next year,
to match the amount uniformed military service members are slated
to receive.
“If we don't do this, then we lose some of our best employees,”
said Rep. James Moran, D-Va., at the time. “We may not see it
overnight, but more than half the federal workforce is eligible to
retire in the next three to five years.”
In his statement, however, Bush said he did not believe his
decision to limit the civilian raise to 2 percent would affect
agencies' ability to recruit and retain civilian workers. “To the
contrary,” he said, “since any pay raise above the 2 percent I
have proposed would likely be unfunded, agencies would have to
absorb the additional cost and could have to freeze hiring in
order to pay the higher rates.”
Bush also noted that the rate at which federal employees are
leaving their jobs is “at an all-time low of 1.7 percent this
year, well below the average quit rate in private enterprise.”
In his letter, Bush again made a pitch for his “human capital
performance fund,” a $500 million pool of money agencies could use
to reward high-performing employees. The fund is included in the
2004 Defense authorization bill (H.R.
1588), which is currently in House-Senate conference.
