The Employment Cost Index (ECI) measures changes in public and private sector costs of wages, salaries and benefits over a 12-month period ending in September, and is used in calculating federal pay raises. According to statistics released Oct. 26, wages and salaries for private industry workers rose 4.1 percent from September 1999 to September 2000.
The data from September 1999 to September 2000 will be used to calculate pay raises for 2002.
Under the Federal Employees Pay Comparability Act (FEPCA), the federal pay increase is calculated by subtracting 0.5 percent from the ECI and then adding a locality adjustment. However, since FEPCA took effect in 1994, the locality adjustment has been left out of the equation.
FEPCA was created to close the pay gap between the federal and private sectors.
To make up for the pay disparity, the Clinton administration has been adding one percentage point for locality pay after subtracting the 0.5 percent. Plugging the 4.1 percent ECI into that formula results in a projected 4.6 percent pay raise for federal employees in 2002.
The ECI last year was 3.2 percent, resulting in a 3.7 percent proposed pay raise for 2001.
"While a 4.6 percent raise would help reflect the continuing excellent contributions of federal employees to the nation, there is a growing realization among lawmakers, both Democrats and Republicans, that more must be done by government to attract and keep the skilled workers it needs now and in the future," said Colleen M. Kelley, president of the National Treasury Employees Union.