President moves to limit 2004 federal pay raise

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.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.


When you download a report, your information may be shared with the underwriters of that document.