Early Marker Set for 2005 Raise

An early marker has been set for the January 2005-not 2004-federal pay raise, as the Bureau of Labor Statistics reported that the employment cost index measure used for determining the across-the-board component of that raise was 3 percent in the pertinent measuring period. 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 on top of it in order to close locality pay gaps. That system has never been implemented as designed, however, and in many years the reduced ECI figure-in this case, 2.5 percent-has been proposed as the total raise. However, the Bush administration broke with that formula earlier this year when it proposed a 2004 raise of 2 percent based on consumer price inflation, not private sector wage growth.