Obama's Budget Laments Small Pay Raise, Noting Feds' Sacrifice

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The Obama administration formalized its 1.6 percent pay raise proposal for 2017 in its budget unveiled Tuesday, but the White House does not appear satisfied with that amount.

Throughout the document, the president made clear civilian federal employees have suffered in his administration. The White House repeatedly suggested federal workers are falling further and further behind their private sector counterparts.

“Throughout the administration,” the budget reads, “relative reductions in federal employee compensation have contributed significant federal savings during a period of rapidly declining federal deficits. Cuts in salaries and benefits over the past six years have already saved the government tens of billions of dollars.”

The White House went on to say the recent stretch of no or small pay raises for feds has been historic. The 1990 Federal Employee Pay Comparability Act created a system in which, absent congressional or presidential intervention, the federal pay increase would mirror the Employment Cost Index. Unless the civilian pay raise is at least 2.1 percent in fiscal 2017, the administration noted, the salary bump would be below ECI for eight consecutive years. That would result in a decrease in federal employee pay of about 9 percent compared to the private sector, according to the White House.

“This would be the largest relative pay cut over an eight year period since the passage of FEPCA by a significant margin,” the administration said, noting “the second largest eight year drop, from 1990 to 1997, was roughly 2 percent.”

New federal employees’ earnings have been hit the hardest, the budget highlighted, as their pay freezes were combined with higher contributions to their pensions. The White House said their compensation has dropped off more than 10 percentage points relative to the private sector between 2009 and 2015.

Obama said in the blueprint the savings for taxpayers would be compounded going forward.

“Using the current pay assumptions for 2017 and assuming ECI-level pay increases in FY2018 and later, these reductions in benefits will save the government an additional $260 billion over the next decade,” the budget states. In a statistic not included in previous budgets, the administration noted that would amount to a sacrifice of more than $100,000 per full-time equivalent employee.

Obama’s proposed 1.6 percent pay raise for 2017 is the highest since 2010, when federal employees received an across-the-board increase of 2 percent. Feds received a 1.3 percent raise this year, including the first locality pay adjustment since 2010. Still, in the larger historical context, raises under Obama have been quite low. Federal employee advocates and unions have said they will fight for a higher raise in 2017. 

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