Management

Budget projects ‘largest relative pay cut’ for feds

The president's proposed 2017 budget may offer federal employees a 1.6 percent pay bump, but it's another signal that the private sector is outpacing the government when it comes to compensation.

The President's FY2017 budget is delivered to the Senate Budget Committee in Washington, D.C., on Tuesday, February 9, 2016. (Mike Morones/Staff)
The President's FY2017 budget is delivered to the Senate Budget Committee in Washington, D.C., on Tuesday, February 9, 2016. (Mike Morones/Staff)

The 2017 budget, which was released on Feb. 9, estimates that any raise less than 2.1 percent would be the eighth-consecutive annual increase that came in below the Employment Cost Index, which measures the cost of labor.

The result is a 9 percent gap between federal and private-sector pay, which the White House said would be record-setting in terms of disparity.

"This would be the largest relative pay cut over an eight year period since the passage of [Federal Employees Pay Comparability Act of 1990] by a significant margin," the report said.

The FEPCA bill pegs federal raises to the ECI, but gives the president the ability to set alternative base and locality pay.

The budget points to increased retirement contributions for cutting into federal employee compensation, as well as agency budget constraints when it comes to recruitment and retention incentive programs.

The Obama administration said more engagement programs underway at the Office of Personnel Management, including a greater push for data-driven human resources strategy, would help encourage a modernization of the federal workforce as current employees begin to weigh retirement.

"While the current federal age distribution and potential for a large number of retiring workers poses a challenge, it also creates an opportunity to reshape the workforce and to infuse it with new workers excited about government service and equipped with strong management skills, problem-solving ability, technology skills, and fresh perspectives," the budget said.

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