The Politics of Pay

Move to grant larger military raises in 2010 puts pay parity for federal civilians on the line.

When Congress created the Federal Employees Pay Comparability Act in 1990, it envisioned a pay raise system set by economic formulas and removed from political wrangling.

Nearly 20 years later, the process is more susceptible than ever to political winds.

The legislative face-off that preceded 2010's federal civilian pay raise resembled a high-stakes poker game among the White House, Congress members and federal employee groups. While lawmakers with civil servant constituencies and the unions pushed for higher increases, the White House argued the sputtering economy and high unemployment required sacrifice on the part of federal workers.

Several figures were floated before Congress was forced to finalize the pay raise in the waning days of 2009. But lost in the shuffle was the decades-long, generally bipartisan, tradition of pay parity-the principle that military and civilian federal employees should receive the same annual salary increases. While civilians will see a 2 percent raise with 0.5 percent allocated for locality pay, service members' salaries will increase by 3.4 percent.

Government workforce advocates, who have long focused on pay parity in their push for higher federal salaries, are optimistic that 2010 is an aberration, not a precedent.

"The pay parity issue ended up being an issue, in large part, about the economy," says Colleen Kelley, president of the National Treasury Employees Union and a member of the Federal Salary Council. "We recognize that the Obama administration inherited a number of very real economic problems."

Federal employee groups feel they were hit by a perfect storm-an economic crisis, sky-rocketing deficits, and increased strain on the military due to conflicts in Iraq and Afghanistan. Added to the mix was the legislative process, in which several department spending bills were delayed and then packed into an omnibus bill.

Pay legislation "took such an odd path through Congress," says Randy Erwin, legislative director of the National Federation of Federal Employees, who also sits on the Federal Salary Council. "There was never really an opportunity to make our case."

In his initial budget request, President Obama asked for a 2 percent civilian pay hike, and a 2.9 percent raise for service members. Obama cited the weak economy for the civilian wage recommendation, but said the military raise reflected his administration's commitment to service members and their families. At first, it looked as if Congress was going to reject his request and push for equal raises, a concept lawmakers endorsed in the fiscal 2010 budget resolution. But when it came time to appropriate the funds, the game became more complicated.

In July, the House passed an appropriations bill that included a 2 percent civilian raise. The Senate's version, which never came up for a vote due to the health care debate, included a 2.9 percent increase for civilian workers. The Defense authorization and appropriations bills for fiscal 2010 both included a 3.4 percent raise for military service members, a figure that seemed out of reach for civilian workers, considering the economic and budgetary concerns. Without any sense of where Congress was headed, the Federal Salary Council declined to make a recommendation about how to divide the raise between locality pay and base pay. To add to the confusion, in a letter to Congress, Obama said his administration wouldn't allocate any money at all to locality pay-the first time a president has done so.

When House Majority Leader Steny Hoyer, D-Md., whose district is home to thousands of federal employees, announced the final 2 percent figure, he said the Obama administration had assured him that pay parity would be included in the fiscal 2011 budget request. But even if Obama follows through on the promise, there's no guarantee legislative wrangling won't create another unpredictable outcome.

"There's a good chance we'll be in a similar boat," Erwin says. "I am concerned about the federal pay adjustment in FY 11."

Rep. Stephen Lynch, D-Mass., chairman of the House Committee on Oversight and Government Reform's Federal Workforce Subcommittee says recent emphasis on homeland security and intelligence is a reminder that civilian compensation is important.

"Recent events this past week-the tragic loss of CIA personnel in Afghanistan and the sustained demands on the State and Treasury departments and [Homeland Security Department] workers, while waging two wars-demonstrate the paramount roles played by federal employees and underscore the federal government's need as an employer to attract and retain talented, skilled personnel," Lynch said in a statement released in early January.

The Federal Employees Pay Comparability Act established a formula for federal employee salaries to nearly catch up to private sector salaries by 2000. It also gave the president power to sidestep that formula during times of emergency. Every year since it was passed, the president-whether it's George H.W. Bush, Bill Clinton, George W. Bush or Barack Obama-has invoked that power. Salaries have continued to diverge from the established formula and from private sector pay, according to Bureau of Labor Statistics data. Fully implementing the law today would be unrealistic, because closing a pay gap that has grown for two decades would trigger double-digit raises for federal employees.

Although the law never has been implemented as originally written, Kelley says it is still valuable in the process. It requires the federal government to calculate the salary differences between civil servants and private sector employees in similar fields. In addition, the Federal Salary Council gives unions a say, she says.

"If FEPCA is never going to be followed, then I think it's a fair question to have us all in the conversation. If not FEPCA, what?" Kelley says. "In the meantime, I think the principles laid out in FEPCA cannot be lost."