Reg Jones Expert's View

Well, it’s happened again. President Trump has again advocated freezing federal salary rates in January 2019. Earlier this year, he made the same recommendation in his budget proposal. Most recently, it came in the form of a letter to Congress saying that if legislators don’t pass – and he doesn’t sign – a bill containing a raise by the end of December, there will be no raise.

Sending that letter is something Presidents must do to prevent a large raise from taking effect by default if Congress does not act on a raise before adjourning for the year (which usually happens in late December). That is a result of the Rube Goldberg-like structure of a 1990 federal pay law that was intended to close the officially reported pay gap with the private sector (which was supposed to have happened years ago). For January 2019 that law would require a locality pay raise averaging about 26 percentage points, plus 2.1 across the board, by default.

No one would seriously envision political leaders allowing this to happen but the message acts to block that possibility, remote though it may be, by setting an “alternative” default raise. The difference from recent years when the messages set raises of around 1 or 2 percent as the alternative (Congress allowed them to take effect by taking no position) is that Trump this time would provide no raise if Congress doesn’t act.

But as with virtually all things having to do with federal employee compensation and benefits, there are distinctions to be made. Trump’s message, if it ultimately takes effect, would freeze the General Schedule pay rates but would not necessarily freeze the pay of individual employees. (Note: Wage grade employees are under a separate locality pay system but for years their raises have been equal to those paid to GS employees in the same area.)

Those of you who have been around for a while will remember that federal pay rates were frozen in 2011, 2012 and 2013. What you might not remember is that the freeze didn’t affect other kinds of pay adjustments, such as within-grade increases based on time-in-grade (with acceptable performance) or quality-step increases, a form of performance recognition.

More on General Schedule and locality pay at ask.FEDweek.com

Nor did it prevent salary increases for employees upon promotion, or on temporary assignments to positions at a higher grade. Also, those who moved to a job in a higher-paying locality at the same grade and step still saw an increase in their pay rates. Thus many, maybe even most, employees received some form of pay raise in that time.

It’s almost certain that the same policies would apply if there is a freeze for 2019.

Note that all of those forms of compensation count toward high-3 salary for purposes of calculating a retirement benefit. They also count for purposes including FEGLI Basic and Option B insurance and government contributions to TSP accounts for FERS employees.

Whether there will be a freeze remains to be determined. The Senate has voted in favor of a raise of 1.9 percent, divided into across the board and locality components, and that chamber, the House and the White House will make the decision in negotiations among them. There is still time for you to let your members of Congress know what you think. Based on experience, I can tell you that personal letters have a much greater impact than form letters or phone calls.