Clinton orders 3.7 percent federal pay raise

President Clinton issued an order Thursday that will provide a 3.7 percent average pay increase for white-collar federal employees next year.

The raise will be divided between an across-the-board 2.7 percent raise and locality pay adjustments that will vary according to the metropolitan area in which employees work.

Clinton had to take the action to prevent a much larger pay increase from taking effect under the 1990 Federal Employees Pay Comparability Act. Under the act, a formula was created to close the gap between federal and private sector salaries over 10 years beginning in 1994. That formula would have resulted in a raise estimated to be as high as 16.6 percent next year. But a loophole in the law allows the President to issue smaller raises each year under certain conditions. The Clinton administration has always used that loophole because it believes the FEPCA methodology is flawed and because it does not want to increase federal spending with the higher FEPCA-formulated raises.

In his Thursday order, Clinton said he was issuing an alternative pay plan because the higher raise mandated under the law would be likely to shock tight labor markets across the country. Implementing the full increase "would invite serious economic risks--in terms of the workings of the nation's labor markets; inflation; the costs of maintaining federal programs and the impact of the federal budget on the economy as a whole," Clinton said.

Congress must still provide the funds for implementing the pay raise. Language authorizing the increase was included in the fiscal 2001 Treasury-Postal spending bill. But that bill has yet to be signed into law. Clinton vetoed the measure in late October. Congress won't take up the bill again until it returns for a lame-duck session Dec. 5.