Following the Annual Federal Pay Raise Minuet

The President has proposed an alternative pay plan for federal employees that would give an average raise of 3% for 2008. Congress is on record as preferring 3.5%. Are you surprised at any of these developments?

The President has just recommended an alternative pay plan to Congress. This would mean that the annual pay raise for next year would be limited to an average of 3% instead of the 3.5% that Congress wants. And, since Congress is still mulling over the budget (while sitting in their home districts) for the fiscal year that started on October 1st, the final decision from Congress on how much agencies will get to spend during the current fiscal year and how much pay will be given to active duty federal employees in 2008 won’t be known for days/weeks/months.

So, if the President has recommended a lower pay increase for 2008, it must be time for House Majority Leader Steny Hoyer (D-MD) to come out with a strong statement decrying the action and promising that Congress is willing to spend more money that the President.

Actually, he has already come out with a such a statement. The White House issued the letter yesterday afternoon and the reliable Congressman was speedy enough to have his statement dutifully reported in the Washington Post a short time later. Columnist Steve Barr reports the jaw-dropping news that the Maryland Democrat is "confident that when Congress returns next month to complete our legislative work for the year, we will secure the 3.5 percent pay raise that our hard-working federal workforce deserves."

In short, the usual scenario is playing out on the negotiations process for the annual federal pay raise. Is there a chance that Congress will go along with the lower figure preferred by President Bush? Certainly there is a chance. But it is a small chance. A Congress controlled by the Democrats, many if not most of whom get substantial campaign contributions from organized labor, is unlikely to pass up the opportunity to tout during next year’s election campaign that they stood beside the hard-working federal employees and overrode the Republican tightwad in the White House who was only going to give up an average of 3%.

And what about the worthy arguments for and against a higher pay raise? Many believe that federal employees are underpaid by 10, 20 or 30%. In fact, according to the letter sent by President Bush that sent along an alternative pay plan for 2008: "According to the statutory formula, for Federal employees covered by the locality pay system, the overall average pay increase would be about 15.0 percent."

That, to many and probably to most readers, means they should be getting a raise of 15% or so next year instead of 3 or 3.5% on average.

On the other hand, most taxpayers would be shocked when reading that the average compensation for federal employees in 2006 was $111,180. That figure is compiled by your colleagues in the federal government. In fact, many readers are shocked when they read that figure and sent in disparaging comments to this website taking issue with the figure and expressing disbelief that we would report a figure like that since it could not possibly be true. Since the amount is roughly double the $55,470 average earned by U.S. workers in the private sector, many taxpayers reading the disparity would be upset and writing their Congressman demanding a pay cut.

So which arguments will sway Congress with regard to your 2008 raise?

Frankly, the arguments for and against a higher raise will not make much difference. As we pointed out in an article earlier this year: "If a Congressman has a considerable number of federal employees in his or her district, it is not a hard decision to vote for a pay raise for federal employees. It doesn’t cost the Congressman anything because the money comes from public funds; it gets them a few more votes or maybe a lot more votes from a demographic group that votes on a regular basis; and voting against the raise will generate controversy in the next election. Even those who do not have a large number of federal employees don’t want to generate negative publicity and help their opponent get more campaign contributions from interest groups that care about the issue."

The bottom line: The pay raise scenario is playing out as it usually does. Anything can still happen with regard to your pay raise depending on the ebb and flow of the on-going campaign for next year’s national elections. But an average raise of 3.5% being approved when all is said and done is a pretty good bet. Of course, when the appropriations bills will be approved is a tougher question. Don’t spend the money yet–it may take awhile for the politicians to get tired of issuing press releases and get around to coming back to work and getting the job done.

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