Why the 26% Locality Pay Deficit will Only Grow

Can we predict the what the next federal pay raise will be?

Theoretically, the answer should be yes, writes Federal News Radio (FNR), but as with most components of federal policy, the reality is a fair bit more complicated.

As written, we should be able to use the federal code to predict pay raises “more than a year ahead of time, because pay raises are based on the ECI (Employment Cost Index) released two years previously. For example, in 2019, federal employees should be getting a 2.0 percent raise based on the 2.5 percent ECI released by BLS in September 2017. And that’s before locality pay gets applied.”

In reality, however, exceptions and loopholes within the system make predicting future pay decisions much more complicated.

Here’s the actual picture, as outlined by FNR:

Specifically underpinning the uncertainty is the fact that “the same statute that applies the ECI formula to derive federal pay raises also authorizes the president, for reasons of ‘national emergency or serious economic conditions affecting the general welfare,’ to submit an alternate plan to Congress. That’s what’s happened the past several years, from then-President Barack Obama’s 2011 pay freeze to current President Donald Trump’s most recent determination on the 2018 pay raise.”

In keeping with this reality, President Trump wrote the following in announcing the latest federal pay raise back in August: “Under current law, in addition to a 1.9 percent across-the-board increase for the base General Schedule, locality pay increases averaging 26.16 percent and costing $26 billion would go into effect in January 2018. A pay increase of this magnitude is not warranted, and federal agency budgets could not accommodate such an increase while still maintaining support for key federal priorities such as those that advance the safety and security of the American people.”

As a result of this inconsistency, FNR predicts, “because previous administrations, and the current one, have not followed the schedule of locality pay adjustments, that 26.16 percent locality pay deficit will continue to grow and provide justification for alternative pay plans moving forward.”

Posted in Featured News

Tags: Donald Trump, video, Trump Administration

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