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Federal Pay: FY 1998 Salary Adjustments

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Publication Date: January 1998

Publisher(s): Library of Congress. Congressional Research Service

Series: 97-232

Topic: Government (Government employees)


Federal white-collar employees are to receive an annual pay adjustment and a locality-based comparability payment under Section 529 of P.L. 101-509, the Federal Employees Pay Comparability Act (FEPCA). They received a 2.3% annual pay adjustment and a locality-based comparability payment, costing about 0.5% of the General Schedule (GS) payroll, in January 1998 under an alternative plan issued by President Clinton on August 29, 1997. The cost of both pay adjustments is about $2.2 billion dollars. The net annual and locality pay increases range from 2.44% in the Indianapolis pay area to 6.52% in the Hartford pay area. In the Washington, D.C. pay area, the net increase is 2.45%. The alternative plan was implemented by Executive Order 13071, signed by President Clinton on December 29, 1997. The FY1998 Treasury, Postal Service, and General Government appropriations bill, P.L. 105-61, was silent on the General Schedule pay adjustment.

Although the federal pay adjustments are sometimes referred to as cost-of-living adjustments, neither the annual adjustment nor the locality payment has anything to do with living costs. The annual adjustment is based on the Employment Cost Index (ECI), which measures the change in private sector wages and salaries. Absent the alternative plan, the ECI would have required a 2.8% adjustment in January 1998. The size of the locality payment is determined by the President and is based on a comparison of non-federal and General Schedule salaries in 32 pay areas nationwide. If the alternative plan had not been issued, actual locality payments would have ranged from 6.33% in the “Rest of the United States” (RUS) pay area to 14.13% in the San Francisco pay area in January 1998. The actual locality pay increase for the Washington, D.C., pay area would have been 7.84%. The locality payments would have cost about 7.2% of the GS payroll.

The data on which the locality payments are based is 22 months old by the effective date of the adjustment. March 1996 data was used to determine the January 1998 locality payments. As of March 1996, the Federal Salary Council reported an overall gap between non-federal average salaries and General Schedule average salaries of 30.03%. The average amount needed to reduce this disparity to 5%, as mandated by law, was 23.84%. President Clinton proposed a 2.8% pay adjustment for federal employees in his FY1998 budget and said that the question of how it would be allocated between the annual and locality adjustments would be determined after consultation with employee organizations and others.

Legislation (H.R. 1240) has been introduced in the 105th Congress to provide administrative law judges (ALJ) an annual pay adjustment at the same time and of the same amount as the General Schedule annual pay adjustment. ALJ annual pay adjustments are linked to Executive Schedule pay adjustments. ALJs received a base pay adjustment in January 1998 (the first adjustment to base pay since January 1993), and they have received locality payments each year since January 1994.

P.L. 105-61 also provided for a simplified and consolidated pay system for the United States Secret Service Uniformed Division.