Pay, Politics, and Practical Prognostication

Will the election impact the 2005 pay raise? How does your raise compare to private sector? How much will your check increase with a 1.5 or 3.5 percent increase?

There are still several races to be determined in the election for the House of Representatives, but the Republicans now have a margin of more than 30 seats. The Republicans now have 55 seats in the Senate.

What impact will this have on the 2005 pay raise?

The president has proposed 1.5 percent for civilians and 3.5 percent for the military. But “par parity” is not universally accepted. The most likely outcome is a 3.5 percent for civilians in 2005 although many employees won’t see the extra money until later in the year.

Ernest J. Istook Jr., (R-OK) chairman of the House Appropriations subcommittee that handles the federal pay raise, still backs the President’s proposal for a 1.5 percent increase for federal civilians in 2005. According to a recent report in Government Executive, Congressman Istook isn’t giving up his fight to limit the increase. Reducing the size of the pay raise to 1.5% would save about two billion dollars a year.

The Congressman has noted previously that federal employees have routinely been given a pay raise in excess of the inflation rate and at a higher rate than given to those receiving Social Security– a 30 percent pay raise over the past eight years.

And how about raises in the private sector? According to a recent report in the Wall Street Journal, white collar workers in the private sector will be getting about 3.4 percent in raises this year and about 3.6% next year. According to Hewitt Associates, a human resources consulting firm, white collar raises in the private sector were about 3.6% in 2002 and 3.4% in 2003. From this perspective, the 4.1% raise for federal employees in 2004 isn’t too bad.

But some agency heads who think they are seriously underpaid compared with their private sector counterparts may have a good point. According to the same report, compensation for chief executive officers went up about 7.2% in 2003 to a median of about $2,118,000. Other pay perks such as stock options are not included in this figure.

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 on federal human resources. Follow Ralph on Twitter: @RalphSmith47