# Understanding the 2008 Federal Pay Raise (Maybe)

The federal pay system is complex. Some readers have asked good questions because of confusion about the amount of their pay based on the possibility of an average pay increase of 3% or an average of 3.5%. If you are confused, you are not alone.

Anyone who says he or she fully understands the federal pay system is probably lying–unless he or she has worked with the system within the bowels of OPM for a number of years.

If anything, the system this year is even more confusing.

A few readers have sent e-mails in the past few days with the same question and the same point of confusion. The answer is tantamount to following the pea under the shell. The purpose of this column is to try and alleviate some of the confusion without adding to the murky picture surrounding the 2008 federal raise. Unfortunately, it requires a step-by-step explanation but here goes.

1. President Bush has proposed a raise that would give the average federal employee a raise of 3% next year. Congress has expressed a preference for a raise that would result in the average federal employee getting a raise of 3.5% next year. My guess, based on what has actually happened in recent years, is that the final result will be the 3.5% average. But no one really knows what will happen–either scenario is plausible.
2. While the average federal employee may get a raise of 3% or 3.5%, most federal employees will get a raise that is higher or lower than these average figures. The reason is because of locality pay.
3. So far, so good. Here is where the data start to confuse some readers. If you are a GS 11, Step 2 and live in the Washington, DC metropolitan area, your pay with a 3% average pay increase will be approximately: \$59,573. If the average increase is 3.5%, your pay will be: \$60,149. These are just estimates. When a final decision is made by the elected officials, we will update readers with the more accurate data that will be available at that time.
4. In the past few days, the Office of Personnel Management posted pay tables showing an estimate of federal salaries for 2008, The pay tables are based on the President’s proposal that would give federal employees an average increase of 3% in 2008. The tables do not include an estimate of the salary based on the Congressional proposal of a 3.5% annual pay increase. If our hypothetical federal employee living in Washington, DC checks the OPM pay tables for a GS 11, Step 2, you can scroll down to a chart for the Washington, DC area and follow the chart to see your step, grade and annual pay for that region. At the top of the OPM chart, a sentence reads in big letters: “(TOTAL INCREASE: 3.49%)”

The reason the OPM chart says this is because, with locality pay for the Washington, DC metropolitan area, the annual pay increase will work out to 3.49%--based on an average increase of 3% for the average federal employee. In other words, the OPM chart is only delineating the President’s proposed pay increase; it does not give figures for a possible 3.5% annual pay increase.

Some readers have looked at the FedSmith pay tables that show the two totals referenced above and they have confused the 3.5% average annual pay increase with the 3.49% pay that employees will receive in the Washington area when the locality pay is added in. In reality, if the final decision is to give the higher raise, employees in the Washington area will receive an increase of approximately 4.49% rather than 3.49%.

Here is a chart that shows the 2008 pay raise, by percentage, that federal employees are likely to receive in specific localities around the United States under the two proposals that are still in play for next year’s pay raise. Keep in mind, no final decision has been made and, when all is said and done by the various players in the process, these figures may change.

## 2008 Federal Pay Raise Assuming a 3% Average Raise (left column) or 3.5% (right column) Average Raise

 Atlanta 3.12 3.75 Boston 3.15 3.8 Buffalo 3.05 3.6 Chicago 3.07 3.65 Cincinnati 2.67 2.84 Cleveland 3 3.52 Columbus 2.86 3.21 Dallas 3.11 3.72 Dayton 2.94 3.39 Denver 2.93 3.36 Detroit 2.92 3.34 Hartford 3.14 3.78 Houston 2.8 3.1 Huntsville 2.79 3.07 Indianapolis 2.73 2.96 Los Angeles 3 3.52 Miami 2.85 3.2 Milwaukee 3.02 3.56 Minneapolis 3.05 3.59 New York City 3.23 3.97 Philadelphia 3.05 3.61 Phoenix 3.19 3.88 Pittsburgh 2.84 3.19 Portland, OR 2.97 3.45 Raleigh 2.78 3.06 Rest of US 2.75 2.99 Richmond 2.94 3.39 Sacramento 3.04 3.59 San Diego 3.21 3.91 San Francisco 3.37 4.23 Seattle 3 3.51 Washington, DC 3.49 4.49

Finally, if you want to comment that this system is confusing and complex, that is fine. Keep in mind that I am not trying to defend this system that has evolved. Rather, it is an effort to try and alleviate some of the confusion surrounding a complex subject on a topic that is even more complex than usual this time around.

And, if you want more information, check out the article on “Why are the 2008 Salary Adjustments So Unfair?“. The title is taken from reader comments in various regions with comments that boil down to “I should be getting a higher salary in (my geographic area) than federal employees are getting in (some other geographic area).”

## 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