Last month, FedSmith published an article entitled Federal Employee Pay Raises and Inflation. The article displayed each federal employee pay raise by year along with the inflation rate for that year and compared the data.
Years Included in Original Article
Several readers did not like the fact that the displayed data only covered the years from 1969-1973 and from 2001-2018. The major complaints seemed to be a concern that the data were being manipulated or were not accurate with the other years left out.
Actually, the reason for not including all data from 1969-2018 (or some other arbitrary starting point) was that the table was quite large and did not look good on a computer screen. And, in any event, it was my belief that the wide range of dates covered periods of high and low inflation and relatively high and low years for annual pay raises. With a fairly long range of data included, it met our goal of providing an overview of how federal pay raises compare to the rate of inflation—a subject of probable interest to a number of readers who had raised the issue.
What Years Are Included in New Data?
To satisfy any concerns, we have compiled a new chart displaying data from 1969-2018 without any years left out. The new chart can be accessed by clicking on the previous link or the end of this article.
The biggest difference in the data is that the earlier article did not include the relatively high inflation figures that were dominant during the four years of the Carter administration (January 20, 1977-January 20, 1981). Inflation during his administration ranged from a low of 6.5% to a high of 13.5%. The inflation rate went up each year.
The high inflation and the impact on the economy were probably major reasons for President Carter losing to Ronald Reagan after one term in office. Inflation went down to a more typical range during the eight years of the Reagan administration. Inflation was abnormally low during the Obama administration. With the current chart, all of these years are now included in calculating the average for inflation and the average pay raise.
How Much of a Difference Is There?
In the original chart, the bottom line was an average pay raise of 3.4% and an average rate of inflation of 2.79%.
Adding the additional years, which brought in the administrations of Presidents Reagan, George H.W. Bush, and Clinton, the figures are a little different. The average federal employee pay raise, after adding in the additional years, is 3.75%. The average rate of inflation, after adding in the additional years, is 4.12%.
In effect, the average raise went up slightly while the average rate of inflation increased from 2.79% to 4.12%.
We do not, of course, know at the time of this writing what the raise will be in 2019. While we realize the average pay raise that became effective in January of 2018 is now history, for consistency with prior years, we did not include the latest pay raise. In other words, for all previous years, the rate of inflation was based on data from the prior year. Any difference would be minor and this approach is more consistent.