An early marker has been set for the January 2021 (not 2020) federal employee pay raise, as the Labor Department has reported the employment cost index measure used under federal pay law.
Under that law, the ECI figure—a measure of growth in wages, not living costs—for the 12 months through each September is supposed to be used in setting the across the board portion in the White House’s subsequent budget proposal for the following fiscal year. A half percentage point is to be shaved off that amount and locality pay is supposed to be paid in addition, varying bys locality. The unreduced figure for the measuring period toward January 2021 was 3.0 percent.
That formula has not been followed in practice, though, due to the potential cost of the indicated locality raises and disagreements over the calculations underlying those figures. In some years the ECI number has played little to no role in a determination of a raise while in others the full or reduced ECI number alone has become the total raise, with locality pay sometimes carved out of it. For 2020, the choice has come down to a 2.6 percent across the board raise or that amount plus an average 0.5 percentage points divided up as locality pay.
The debate over a raise for 2021 will begin with the White House’s annual budget recommendation, typically made in February.