Federal White-Collar Pay: FY2004 Salary Adjustments (CRS Report for Congress)
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| Release Date |
April 22, 2004 |
| Report Number |
RL31823 |
| Report Type |
Report |
| Authors |
Barbara L. Schwemle, Government and Finance Division |
| Source Agency |
Congressional Research Service |
Summary:
Federal white-collar employees are to receive an annual pay adjustment and a locality-based
comparability payment, effective in January of each year, under Section 529 of P.L. 101-509 , the
Federal Employees Pay Comparability Act (FEPCA) of 1990. In January 2004, they received a 1.5%
annual pay adjustment and a 0.5% locality-based comparability payment under Executive Order
13322, issued by President George W. Bush on December 30, 2003. P.L. 108-199 , enacted on
January 23, 2004, provides a 4.1% pay adjustment for 2004. Under the law, an additional 2.1% pay
adjustment, allocated as an average 1.2% annual and 0.9% locality, was provided to federal civilian
employees under Executive Order 13332, issued by the President on March 3, 2004. OPM published
revised salary tables for 2004 on its website the next day. Although the federal pay adjustments are
sometimes referred to as cost-of-living adjustments, neither the annual adjustment nor the locality
payment is based on measures of the cost of living.
The annual pay adjustment is based on the Employment Cost Index (ECI), which measures
change in private-sector wages and salaries. The index showed that the annual across-the-board
increase would be 2.7% in January 2004. The size of the locality payment is determined by the
President, and is based on a comparison of non-federal and General Schedule (GS) salaries in 32 pay
areas nationwide. By law, the disparity between non-federal and federal salaries was to be gradually
reduced to 5% over the years 1994 through 2002; FEPCA requires that amounts payable may not be
less than the full amount necessary to reduce the pay disparity to 5% in January 2004. The Federal
Salary Council and the Pay Agent recommended that the 2004 locality payments range from 19.45%
in the "Rest of the United States" (RUS) pay area to 47.64% in the San Francisco pay area. The
payment recommended for the Washington, DC, pay area was 28.78%. Because the new locality
rate replaces the existing locality rate, the change in locality rates is derived by comparing 2003
locality payments with those recommended for 2004. This comparison resulted in recommended
increases in locality rates from 2003 to 2004 of 11.90% in the RUS pay area to 25.23% in the San
Francisco pay area, and 17.31% in the Washington, DC, pay area. The nationwide average net pay
increase, if the ECI and locality-based comparability payments were granted as stipulated in FEPCA,
would have been 15.15%. President Bush proposed a 2.0% federal civilian pay adjustment in his
FY2004 budget. On August 27, 2003, he issued an alternative plan to provide the 2.0% adjustment
in January 2004. H.R. 2989 , the Departments of Transportation and Treasury and
Independent Agencies Appropriations Bill, 2004, as passed by the House of Representatives and the
Senate, and as incorporated in H.R. 2673 , the Consolidated Appropriations Act for
FY2004, provides a 4.1% pay adjustment for federal civilian employees. H.R. 2673 was
enacted as P.L. 108-199 .
FEPCA has never been implemented as originally enacted. Since 1995, locality payments have
been much lower than FEPCA requires. Additionally, the Bureau of Labor Statistics surveys
documenting non-federal rates of pay were not approved for use in determining the 2000, 2001,
2002, and 2003 locality payments. A phase-in of BLS survey data was approved for 2004.
