Military Pay, Retiree Pay and Civilian Pay: What’s the Difference?

Will federal employees receive the same pay raise as that given to military personnel in 2006?

Now that we know that the cost of living allowance (COLA) for federal retirees under the Civil Service Retirement System (CSRS) will be as much as 4.1%, several readers have asked variations on the question: "How much will the raise be for current federal emplyees?"

Oftentimes, the reader also wants to know "Will we get the same 3.1% pay raise that military personnel may receive?"

Active duty members, Reserve and Guard personnel, and academy cadets and midshipmen will be receiving a 3.1 percent pay raise in January. But the pay raise for military personnel is handled differently than it is for civilian employees.

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). ECI data for setting the 2006 pay raise show private sector wages rose 2.6 percent.

Under the statute, the military gets another one-half percent or total 3.1 percent raise.

Money to fund the pay raise is provided by legislation. The Senate has passed the defense appropriations bill and House bill also authorizes money for a 3.1 percent increase. In effect, the military pay raise is a done deal.

The same is not true for civilian federal employees. There is no statutory formula geared to inflation or any other guide that provides an automatic annual pay increase.

With the military fighting wars in Iraq and Afghanistan, the chances of the pay raise not passing is very unlikely in any event. Neither Congress nor the President wants to create a morale problem by holding back on the pay raise. There is usually an attempt in Congress to ensure "pay parity" between the military and civilians when discussing the annual pay raise. That has been true this year as well and may ultimately determine the amount federal employees receive next year.

This makes sense because there is not the political or public support for raising civilian salaries. When the public thinks of federal civilian employees, they tend to think of the Social Security clerk they see in an office, people who process Medicare forms or perhaps someone working for the Veterans Administration. They do not think of people getting killed in battle. (See, for example, Congressman Says Country Can’t Afford Higher Federal Pay Raise)

And, as an extra added boost, federal employee unions have done a good job of creating a strong public image of federal employees marching in lockstep supporting Democrats for public office with their time, money and rhetoric–not an image likely to win support from a Republican Congress or Republican president.

Moreover, there are apparently fewer people who want to join the military at a time when putting on a uniform may mean getting killed in or near a combat zone. The military has had difficulty meeting goals for new recruits. And, while there are certainly problems with hiring new federal employees, these problems are often due to a system that makes it difficult for new college graduates to figure out how to apply for a federal job. There is confusion and consternation among readers about veterans preference and how it applies to applicants for federal employment. And readers of, most of whom are current or retired federal employees, say the federal hiring process doesn’t work well.

Recent reports have also indicated an "image" problem for federal employment with the impression among many young Americans that there are more exciting opportunities and less bureaucracy in private sector employment than in working for Uncle Sam.

The bottom line: No one knows what the 2006 federal pay increase will be or when it will pass. It could very well end up at 3.1%–the same rate given to the military. It could also end up being much less depending on what happens in Congress over the next few weeks as the debate rages on how to spend–and save–money in the federal budget.

Politics will determine the 2006 pay raise. The desire to cut back on federal spending on areas where "discretionary spending" is a possibility; the image problem of the federal workforce; and the involvement of federal employee unions in the process will all play a role in the final outcome.

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