Uh-Oh: Your 2005 Pay Raise Just Got Smaller

By on December 3, 2004 in Current Events with 0 Comments

If you are a General Schedule (GS) federal employee, don’t spend your 2005 pay raise yet. During the past few weeks, proposals for 1.5% and 3.5% have been prominent in pay discussions. The latest figure: 2.5%. That figure isn’t certain either.

The pay raise path had been following a familiar scenario: the President proposes one amount; Congress approves a higher amount; the higher amount goes into effect; the higher amount becomes effective (retroactively) in the first few months of the next year.

This year has been a little more exciting and it apparently isn’t over yet.

Here’s the latest development.

President Bush sent a letter to the House and Senate on Monday that said “I am transmitting an alternative plan for the locality pay increase payable to civilian Federal employees covered by the General Schedule (GS) and certain other pay systems in January 2005.”

On it’s face, the letter is very similar to the same letter that gets sent to Congress every year transmitting the pay plan.

But here’s the catch: the President is proposing no increase in locality pay for 2005–just an overall pay increase. The result: A 2.5% pay increase instead of 3.5%. The reasons include the cost of the war on terror and the very low “quit rate” of federal employees which is much lower than private sector workers.

Here is what OPM says about the status of the pay raise: “Under current law (5 U.S.C. 5303), the across-the-board portion of the General Schedule (GS) pay adjustment in January 2005 will be 2.5 percent unless Congress enacts legislation providing for a different amount.”

“Under an alternative plan issued by President George W. Bush on November 29, 2004, locality pay percentages will remain at current levels in 2005 unless Congress enacts legislation providing for a different amount.”

The bottom line on events so far: The 2.5% raise will become effective in January 2005 unless Congress approves a different plan.

What will Congress do now? You will have to consult your own crystal ball. The Office of Personnel Management doesn’t make predictions about political possibilities but says “Legislation is pending in Congress that would provide for a 3.5 percent overall GS pay increase in January 2005. If that legislation is enacted, the President will allocate the total increase between an across-the-board increase and locality pay increases by means of an Executive order that will be issued later this year to implement the January 2005 pay adjustments.”

The rationale for the smaller raise is undoubtedly the cost of the war on terror. And one item that is rarely, if ever, mentioned in the national press: the President gets to make a political point. After being repeatedly bashed by federal employee unions throughout the campaign, there is the added benefit of seeing those organizations squirming that worked so hard in the name of federal employees to elect John Kerry. Unfortunately, federal employees may be the loser in this political gamesmanship.

Undoubtedly, the process isn’t over yet. The major players may have more to say before a final decision is made.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.