15.9% Pay Raise? Not in 2007 But It Has Happened

“Pay parity” for military and civilian employees has been a rallying cry for federal pay increases for the past several years. This year, that is already a reality in proposes pay raises. So, will everyone be happy? Not likely.

Pay is a popular topic with readers who probably have more perspectives and opinions on the subject than any other.

In recent years, pay parity with military personnel has been a mantra for organizations and individuals clamoring for a higher pay increase for federal employees.

For 2007, President Bush has recommended pay parity for both military and civilian personnel. A casual observer of the federal pay process might think this resolves the problem. Pay parity has been the yardstick for some arguing for a higher pay increase for the past several years. (See, for example, Military Gets 4% Pay Raise; 3.5% Pay Raise for Military–What About Civilians?)

My guess: The complaints about federal pay for 2007 will be just as loud this year as in the past despite a proposal for pay parity.

Here’s why. President Bush has proposed a 2.2% increase in pay for both military and civilian personnel. Clearly, there is parity in the proposal. There is one difference this year though. The formula for calculating the military pay increase has changed.

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).

In January 2006, federal employees got a 3.1% average pay increase. So did the military. The employment cost index used as the measuring stick was 2.6%. So, 2.6 + 0.5 = 3.1%

The law governing the increase in military pay increases has expired. The 2.2% proposed raise for military and civilian personnel matches the rise in the employment cost index for the time period used as a guide in recent pay raises.

The 2.2% raise, if it goes through as proposed, would be the smallest raise for federal employees since 1996 when the raise was 2%. There have been years when there was no pay raise at all (1956, 1986, and 1994) The highest was in 1945 when the raise was 15.9% (don’t get too excited; there was a pay cap of $10,000 and World War II no doubt played a big role in the pay raise that year.

Here is how the raises for white collar federal employees have gone in recent years after the political wrangling has been completed and the bureaucratic dust has settled (we know that some federal employees got more and some got much less; these are the average raises only based on figures from OPM):

2006 3.1%
2005 3.5%
2004 4.1%
2003 4.1%
2002 4.6%
2001 3.7%
2000 4.8%
1999 3.6%
1998 2.8%

What wiill your raise be in 2007 as an active federal employee? One safe prediction: It will be less than federal employees got in 1945. It will probably be less than the rate of inflation in 2006. Beyond that, no one really knows. (See Dancing and Playing to the Crowd: Predictions for Your 2007 Pay Raise)

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