Obama Issues Plan for 1 Percent Pay Raise Next Year

President Obama issued an alternative federal pay plan late Friday, setting an across-the-board increase for civilian federal employees of 1 percent in 2014.

The figure matches the amount the president requested in his fiscal 2014 budget proposal. Obama issued a separate plan providing 1 percent boost in monthly basic pay rates for military service members. 

In a letter to House and Senate leaders, Obama wrote, “Civilian federal employees have already made significant sacrifices as a result of a three-year pay freeze. As our country continues to recover from serious economic conditions affecting the general welfare, however, we must maintain efforts to keep our nation on a sustainable fiscal course.”

Under Obama’s plan, locality pay levels would remain at their 2013 levels.

Obama declared that his pay proposal “will not materially affect the federal government's ability to attract and retain a well-qualified federal workforce.”

The leader of the largest federal labor union praised the proposal, though without much enthusiasm.

“Although the 1 percent is a pitiful amount that doesn’t begin to compensate for the furloughs and three years of frozen pay, it is a welcome development,” said  J. David Cox, president of the American Federation of Government Employees.”

“To call this raise inadequate is an understatement, but it is good news all the same,” he added.

If the president had not informed Congress of his alternative pay plan for feds by the end of August, then the increase mandated by the 1990 Federal Employees Pay Comparability Act would have kicked in. Under FEPCA, the raise would be determined by the change in the Employment Cost Index minus 0.5 percent. For 2014, that equals 1.3 percent.

Presidents largely have ignored the FEPCA formula in their federal pay raise proposals, preferring to offer their own figure. Congress created FEPCA, which provides an annual across-the-board salary boost and a locality pay adjustment for General Schedule employees, to close the public and private sector pay gap. The latest Federal Salary Council report concluded that federal employees are underpaid relative to private sector workers by approximately 34.6 percent.

The reality, however, is that Congress will end up determining whether federal employees receive a pay raise next year.

So far, lawmakers have not shown much enthusiasm for ending the three-year freeze on federal employees, despite Obama’s repeated calls to do so. None of the House fiscal 2014 spending bills to date contain funds for a civilian pay raise. The House has passed four of the 12 spending bills for fiscal 2014: Defense; Energy and Water Development; Homeland Security; and Military Construction, Veterans Affairs and Related Agencies. The Homeland Security and Military Construction-VA bills did not endorse a civilian pay raise, but didn’t forbid it either.

Kellie Lunney contributed to this report.