House Republicans Appear Willing to Accept Largest Federal Pay Raise in Six Years

Congressional Republicans do not appear to have any appetite to stand in the way of President Obama giving federal employees a 1.6 percent pay raise in 2017, with appropriators including language in a spending bill released Tuesday to allow the increase.

Lawmakers have until the end of the year to block the raise, but the House Appropriations Committee declined to do so in the fiscal 2017 Financial Services and General Government Appropriations Act unveiled Tuesday. As it has for many years, the committee carved out certain high-level employees who cannot receive any pay increase, including the vice president and any political employee making the equivalent of a $230,700 annual salary.

Another clause of the bill, however, says none of the specific pay freezes “shall prevent employees who do not serve under a political appointment from receiving pay increases as otherwise provided under applicable law.”

The financial services bill is typically the vehicle for federal pay provisions. It funds the Treasury Department, Executive Office of the President, the Judiciary, District of Columbia, Small Business Administration, General Services Administration, Securities and Exchange Commission, and several other independent agencies.

President Obama proposed a 1.6 percent pay raise in his fiscal 2017 budget blueprint, the highest since 2010, when federal employees received an across-the-board increase of 2 percent. Feds received a 1.3 percent raise this year, including the first locality pay adjustment since 2010. Still, in the larger historical context, raises under Obama have been quite low.

If there is no specific legislative language that provides funds or prohibits an across-the-board raise in any bills -- either stand-alone or omnibus legislation -- then the president has the authority to determine a pay raise based on the Employment Cost Index.

The president has until Aug. 31 to formally announce his 2017 pay raise proposal for federal employees. If the president doesn’t inform Congress of his alternative pay plan for feds by that date, then the increase mandated by the 1990 Federal Employees Pay Comparability Act kicks in. Under FEPCA, the raise would be determined by the change in the Employment Cost Index minus 0.5 percent. In 2017, that rate would be 2.1 percent.

Presidents, however, have largely ignored the FEPCA formula in their federal pay raise proposals, preferring to offer their own figure, which they are allowed to do under law. Congress created FEPCA, which provides an annual across-the-board salary boost and a locality pay adjustment for General Schedule employees, to close the public and private sector pay gap.

If the 1.6 percent raise goes into effect, the annual increase will have been below the FEPCA formula for eight consecutive years. In its budget document, the White House projected federal employee pay will have dropped 9 percent compared to the private sector during the Obama presidency.

“This would be the largest relative pay cut over an eight year period since the passage of FEPCA by a significant margin,” the administration said, noting “the second largest eight year drop, from 1990 to 1997, was roughly 2 percent.”

New federal employees’ earnings have been hit the hardest, the budget highlighted, as their pay freezes were combined with higher contributions to their pensions. The White House said their compensation has dropped off more than 10 percentage points relative to the private sector between 2009 and 2015.

Federal employee unions and some lawmakers have vowed to fight for a larger increase next year, with Democrats in both chambers of Congress introducing a measure to give civil servants a 5.3 percent raise.