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President Bush issued a plan Wednesday designed to limit the pay increase for white-collar federal employees to an average of 2 percent in 2004.

Under a formula included in the 1990 Federal Employees Pay Comparability Act, federal workers covered under the General Schedule would be due a 2.7 percent base pay raise next year. In addition, workers would receive locality pay increases, bringing the overall average pay increase to 15.1 percent. The formula used to compute the raise is designed to close the gap between federal and private-sector salaries, but it has never been fully implemented.

According to the White House, raises under formula set out in the law would cost $13 billion in fiscal 2004. The 2 percent raise would cost $2 billion.

The president has until Sept. 1 to issue an alternative to the pay plan derived from the 1990 law if he views the raise to be inappropriate due to "national emergency or serious economic conditions affecting the general welfare." In a letter to congressional leaders Wednesday, President Bush outlined his alternative. It called for a 2 percent raise, divided between a 1.5 percent across-the-board increase and 0.5 percent in locality pay raises, which are determined by pay surveys conducted across the country by the Bureau of Labor Statistics.

President Bush initially proposed the 2 percent raise in his fiscal 2004 budget, presented to Congress earlier this year.

Bush said he acted to limit raises because "full statutory civilian pay increases...would interfere with our nation's ability to pursue the war on terrorism."

The House and the Senate could still vote for a raise higher than 2 percent, which would take effect unless President Bush vetoed the legislation including the raise provision. The raise is typically included in the annual Treasury-Postal appropriations bill.

In late July, the House Appropriations Committee voted to approve a 4.1 percent civilian federal pay raise next year, to match the amount uniformed military service members are slated to receive.

"If we don't do this, then we lose some of our best employees," said Rep. James Moran, D-Va., at the time. "We may not see it overnight, but more than half the federal workforce is eligible to retire in the next three to five years."

In his statement, however, Bush said he did not believe his decision to limit the civilian raise to 2 percent would affect agencies' ability to recruit and retain civilian workers. "To the contrary," he said, "since any pay raise above the 2 percent I have proposed would likely be unfunded, agencies would have to absorb the additional cost and could have to freeze hiring in order to pay the higher rates."

Bush also noted that the rate at which federal employees are leaving their jobs is "at an all-time low of 1.7 percent this year, well below the average quit rate in private enterprise."

In his letter, Bush again made a pitch for his "human capital performance fund," a $500 million pool of money agencies could use to reward high-performing employees. The fund is included in the 2004 Defense authorization bill (H.R. 1588), which is currently in House-Senate conference.

COMMENTS

• As a federal employee for more than 25 years, starting out as a GS-3, always feeling adequately compensated, with opportunities to progress, never having had to go hungry, without a roof over my head, or no clothes, with health care and retirement benefits that well exceed those of many of our compatriots in the private sector, I cannot but ask why do we complain? A GS-5 secretary in Miami with five years of service makes close to $30,000, a GS-11 in Washington, DC, with the same tenure, almost $55,000. Do you know what your peers in private industry make? Do you know what hours they work? What benefits they have? Let's get a grip on it. President Bush has shown unparalleled leadership, resolve and strength during the most challenging presidency in recent history. I am more than willing to give up my pay raise to support the war on terror and the preservation of our freedom. As a civilian, I have not been asked to serve on the front lines but I consider going without a pay raise a very minor sacrifice when remembering Sept. 11 and honoring what our troops are doing for all of us. Have we all forgotten to not ask what our country can do for us but what we can do for our country? GovExec.com reader Posted January 30, 2004 8:03 AM
• I totally DISAGREE with this proposal. The government is so corrupt and biased when it comes to giving out promotions to their friends, friends of friends and family as it is, now you want to approve a bill where they can GIVE more money to their picks! Enough is enough! If there was a "full proof" way of tracking this and ways to pursue actions against this I would be all for it, but when they decide who gets the special projects and who gets in the spotlight without ever having the rest of the workforce aware of the opportunity, if the opportunity was ever "FOR REAL," this is just another tool to lower, even more, the morale of the workforce because we all could go from section to section and tell you exactly who will be getting the monies. I vote NO! Rosemary McMillan-Crawford Posted October 27, 2003 10:26 AM
• I love the comments from the individual who warns current and potential employees that you better not plan on a decent raise for the next 14 years (2017) until the deficit is eliminated. First thing that came to my mind was, don't worry, they'll all be contractors..... man o' man. GovExec.com reader Posted September 4, 2003 1:10 PM