Pay Portions

Last week, the Federal Salary Council recommended an across-the-board pay raise of at least 2.5 percent for 2008. But even assuming that suggestion is followed, there's a lot more to the pay equation.

Your overall pay boost will depend on where you live. That's because in addition to the 2.5 percent, an extra 0.5 percent to 1 percent (depending on the overall raise approved by Congress) will go toward locality pay.

So how does your area stack up?

If you're living in the Washington, D.C., region, you could be headed for the highest overall pay hike in the nation. With locality pay included, federal employees in the capital area could get as much as a 4.49 percent boost, according to Mike Orenstein, a spokesman for the Office of Personnel Management. That figure assumes lawmakers stick with the 3.5 percent raise they've approved in preliminary versions of appropriations bills, rather than the 3 percent President Bush requested.

Holding to that assumption, federal employees in San Francisco would receive a 4.23 percent increase, and employees in New York City would receive a 3.97 percent raise, Orenstein said.

But if Congress does not pass a final spending bill containing the raise before January, it is likely that the president's proposed 3 percent increase would be implemented, Orenstein said. That would leave overall pay increases at 3.49 percent in Washington, D.C.; 3.37 percent in San Francisco; and 3.23 percent in New York City.

The locality-based portion of the raise is distributed so that employees living in areas with the largest pay gaps compared to the private sector receive the largest increases. That strategy is in line with the president's decision last year to change the locality formula so that it takes the pay gap into consideration.

Washington, San Francisco and New York have significantly larger pay gaps, meaning employees in other areas will receive smaller locality-based increases. The "Rest of U.S." category has the smallest pay gap, at 29.63 percent.

The target adjournment date for Congress is Oct. 26. A spokesman for Senate Majority Leader Harry Reid said the Senate is likely to take up the pay raise as part of an omnibus spending bill in the coming weeks.

Pay Equality

If pay parity between military service members and federal civilian employees rings true over the next few years, federal employees may continue to see a slightly higher increase than they'd otherwise receive.

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 Labor Department's Employment Cost Index 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.

Current military compensation law provides a formula that indexes the annual military pay raise to the annual increase in the ECI. The law was modified in the fiscal 2004 Defense authorization act, which called for military increases to be calculated from the yearly growth of the ECI, with an additional 0.5 percent tacked on. But the 2004 law only required the add-on for three years, and called for raises from 2007 on to be equal to just the ECI.

Each year of his tenure except 2007 and 2008, President Bush has proposed a lower pay raise for civilian workers than he has for their military counterparts. But lawmakers generally have ignored the president's recommendations and given both groups the same raise. For 2007, Congress did not officially pass a civilian pay raise, prompting the president to issue an executive order granting employees a 2.2 percent pay hike.

"Military and civilian federal workers alike serve their country faithfully and are facing a widening pay gap," said Colleen Kelley, president of the National Treasury Employees Union. NTEU has pushed for military-civilian pay parity and a raise that is 0.5 percent higher than the ECI for 2008.

The Labor Department is expected to issue the ECI figure that will help determine the proposed 2009 pay raise at the end of this month.