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2.7% Pay Raise: Is it "Slip, Slidin' Away"?

By Ralph Smith

Friday, September 22, 2006

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A few weeks ago, we posed the question as to whether the federal civilian raise for civilians would “pull” the military raise up for military personnel. Alternatively, the possibility is that the lower proposed raise of 2.2% for military personnel would result in “pulling” down the rate proposed for civilians. (See Will Your 2007 Raise be "Pushed Up" or Pulled Down?")

We still do not know the answer but there are indications of a possible direction that readers may not like.

Pay parity is an issue that has worked well for federal employees in recent years. Typically, legislators want to give a larger raise to the military. By arguing for parity, civilians have ended up with a larger raise than they may have otherwise received. (See "Patriotism, Pay and Parity")

This year, the parity argument may have a much different impact on the raise for the coming year.

The 2000 defense authorization act directed that annual military raises from 2001 through 2006 would be one-half percentage point above private sector wage growth, as measured by the government’s Employment Cost Index (ECI). Since the pay raise under discussion is for 2007, that is no longer the case. In effect, the process for determining the 2007 raise for the military is open to debate and discussion in Congress so the entire process is going along a different path. In the past several years,. the automatic process for determining the military pay raise worked to the benefit of civilian employees.

The House version of the Defense authorization bill sets the 2007 raise for military at 2.7%. That sounds good but there is a problem.

The House and Senate versions of the DoD appropriations bill both include a 2.2 percent military pay raise.

In effect, the authorization bill establishes Congressional policy but the appropriations bill actually authorizes the money to pay for the policy. Usually, an authorization bill with a raise of 2.7% would eventually be followed by an appropriations bill providing money to pay for the raise.

So far this year, the authorization is for a military pay raise of 2.7% but the appropriations bill is for 2.2%. If that difference still exists after both bills have passed, the higher raise could still be implemented but the military departments would have to make up the difference at a time when money is already tight to pay for existing commitments.

Most legislators do not want to explain to constituents why they would give civilian employees a higher raise than military personnel. The bottom line of these bureaucratic machinations may mean that federal employees will end up with a 2.2% raise instead of 2.7%.

No one knows how the process will play out. What is certain is that the approval process for the next annual pay raise is following a different track for 2007 than it has in recent years.

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