The annual tug of war on the next federal pay raise is well underway. The latest possibility: 2.7% for 2007.
President Bush has proposed that federal civilian employees and military personnel receive the same overall average raise of 2.2%. That is one difference as in recent years the initial proposal has been to give military personnel a greater raise than civilians. One major difference this year: Military pay increases from from 2001 through 2006 were set by law. The pay raise was one-half (1/2) percentage point above wage growth in the private sector as measured by the government’s Employment Cost Index (ECI).
That is no longer the case as the law controlling how military pay raises are to be calculated has been changed.
The House Armed Services subcommittee on military personnel has recommended 2.7% for military personnel. That is higher than the 2.2% proposed by the President earlier this year. That creates a strong possiblity of a higher raise for military personnel and, if so, another argument for proponents of a higher federal pay raise for civilians. In recent years, this has been effective and, when the dust settled, civilians did as well as their military counterparts in this area.
In effect, it is a long way until next January and a lot can happen between now and then (including Congressional elections in November). So far, some of the details have changed but the play is still about the same. Federal employees wanting to know what their pay will be in 2007 will probably learn in December how the political process has played out.
By the way, last year, federal retirees got a bigger raise than current employees as a result of how the raises are calculated for the two groups. (See 4.1% for Retirees!) It is too early to tell but that could happen again in 2007. That could be good news for retirees but not so good for current employees who also have to pay higher bills.
In short, save your money; donate as much as you can to your TSP account; and hope for the best. (Also see, Dancing and Playing to the Crowd: Predictions for Your 2007 Pay Raise)