Categories: Fedweek

Different Measures, Measuring Periods Used

The two types of adjustments don’t track each other and one sometimes is significantly larger than the other. That happened earlier this year, when retirees received a 5.8 percent increase while active employees received a raise averaging 3.9 percent; for 2010, the roles apparently will be reversed. The starting point for raise deliberations typically is the employment cost index, which is a measure of wage growth, not inflation, for the 12 months ending in the third calendar quarter of the year preceding the one in which the raise deliberations are made for the following year—thus, there is an additional year’s lag time compared with the retiree COLA determination. For 2009, the applicable ECI number was 2.9 percent; under federal pay law, a half percentage point is supposed to be shaved off that amount in order to keep employees roughly apace with private sector wage growth, and locality pay is supposed to be paid in addition sufficient to largely close local pay gaps. That system has never been implemented as designed, however, and this year the White House recommended a 2 percent raise, a figure not tied to any indicator. Congress is considering competing plans for either 2 or 2.9 percent, with an outside chance of 3.4 percent as a parity figure with military personnel.

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