Likely 2009 raise figure comes in at 3.4 percent

If history is a guide, federal employees will be in line for a 3.4 percent pay raise in 2009, based on figures released Wednesday by the Labor Department.

From September 2006 to September 2007, the change in the Labor Department's Employment Cost Index was 3.4 percent, a figure that President Bush is likely to use as a basis for his pay raise recommendation when he releases his 2009 budget proposal in February.

For the past several years, federal employees have received raises equal to those granted to their military counterparts. Under a 2004 law, military salaries must be increased annually at a rate equal to the change in the ECI for the private sector's wages.

That same law, the 2004 National Defense Authorization Act, previously tacked on an additional 0.5 percent to the change in the cost index to determine the overall military raise. But the law called for raises from 2007 on to be equal to the ECI, without the extra bump.

Contrary to the 2004 law, however, Congress is poised to approve a 2008 pay raise for military and civilian personnel of 3.5 percent, 0.5 percent higher than last year's change in the ECI. The 2008 raise still awaits final approval, as Congress completes the appropriations process.

Meanwhile, military and civilian personnel may be on track to receive the additional 0.5 percent bump through 2012. Under the House version of the fiscal 2008 Defense authorization bill, military members would get a guaranteed pay raise of 0.5 percent above the ECI from fiscal 2009 through fiscal 2012. The provision, if passed in conference committee and signed by President Bush, likely would give federal labor unions an edge in pushing for an equivalent raise for federal civilian employees.

Although the ECI has become the de facto basis for the civilian pay raise, another law on the books is supposed to dictate civilian pay. In 1990, Congress passed the Federal Employees Pay Comparability Act, which established a formula to close the gap between the government and the private sector.

The complex formula would have granted civilian employees an average pay hike much higher than the raises they have received since its passage.

But FEPCA has not been implemented as intended. Instead, each year the president uses a loophole that allows him to override the formula and propose a much lower pay raise. Congress then typically pushes for pay parity between the civilian and military workforce.

A chunk of the 3.4 percent pay hike employees would receive in 2009 if the change in the ECI is used, would be allocated for locality pay.

At the Defense Department, however, across-the-board increases will not be so exact for some employees. Sophisticated new pay systems at Defense and other agencies give management broader discretion in setting pay, effectively providing them the ability to override the 3.4 percent figure.

In 2009, the Pentagon plans to give certain employees in the National Security Personnel System raises based on the quality of their work. For those employees, the governmentwide raise will go to pay pools and will be distributed based on the performance ratings.