With the Army, Navy, Air Force and Marine Corps running partial interference, civilian federal workers could get bigger-than-anticipated raises in the future.

In January, civil servants--thanks to a pro-military surge in Congress--will get a 4.8 percent raise, rather than the 4.4 percent President Clinton proposed for both groups.

Congress voted early this year to bump up military pay. It also took control of military pay policy from the White House as part of of the new defense authorization act. It gives military (not civilians) a second raise in July of up to 5.5 percent. Raises will be targeted based on rank and service time. The new law also provides for a series of enhanced military raises through 2006.

The future military raises will be one percentage point higher than annual increases in private-sector pay as measured by the Economic Cost Index. The ECI-plus formula means that if private-sector raises average 3.2 percent, military personnel will get 4.2 percent the following January. By contrast, civil services salaries are pegged to an ECI-minus formula. Big, big difference! More in a minute.

Congress eventually gave feds the same raise as military personnel only because the military got the 4.8 percent first. The January federal raise will "average" 4.8 percent. But it could be higher in some cities and lower in others, depending on how locality pay raises--which are part of the overall increase--are allocated. That decision is a month or two away.

The higher military raises are part of a congressional plan to reverse the decline in military recruiting and retention. But it gives federal unions--in the upcoming election year--some leverage with the White House.

Vice President Gore has worked closely with most federal union leaders. He headed the National Performance Review and dealt with union leaders in reinvention, downsizing and "partnership" programs. At the same time, the Clinton administration was giving feds a series of "diet" pay raises (amounts much lower than those promised by the bipartisan 1990 federal pay law) and eliminating 300,000 federal jobs. Because many of the eliminated positions were middle-management or supervisory jobs, this has cut into the promotion potential for many civil servants.

Union leaders are proud of their "partnership" agreements, which they feel have improved working conditions of employees and given them a say-so in reinvention and downsizing. But merchants don't take "partnership" chits, and even the best (or worst) cook can't transform "partnership" into chow.

If unions have earned an IOU from the Clinton administration, the new military pay raise, and the upcoming political year, are a perfect time to present it to Gore. They could point out that years of diet pay raises have a lifetime effect. The annuities of civil servants are based on length of service and their highest (usually their last) three-year average salary. The cumulative effect of reduced raises over a short time can have a significant, lifetime impact on benefits retirees receive.

The White House chose to shave pay raises because it is not convinced that the pay "gap" between civilian federal workers and private-sector counterparts has been accurately calculated. The White House says a true comparison would include the value of benefits (as well as salary) such as retirement, vacation time and number of holidays. If a so-called "total compensation" concept (comparing the value of pay and perks) was adopted, many administration officials believe, the 20 to 30 percent "gap" between federal and private-sector pay would narrow. Or maybe disappear.

Clearly, many people in the private sector feel--rightly or wrongly--that federal workers are well paid and enjoy superior benefits and job security. But as many feds feel they are underpaid. Many accept what they consider to be lower salaries in return for the government's retirement program. But if pay raises are kept below promised levels, their effect on their pension benefits also becomes an issue. Some feel they are being shortchanged now and will be shortchanged when they retire.

Unions may be able to translate all of the above into a giant IOU they can present to the White House. That could result in a much larger than anticipated pay raise approved next year for payment in January 2001.

Inside/Outside the Beltway

Folks who live and work in the Washington area are, well, different from the rest of America. Especially when it comes to their views on whether feds are overpaid or underpaid. If you doubt it, check this space tomorrow.

Sunday, Oct. 10, 1999