President Reagan today recommended a 3.5 percent pay increase, beginning in January, for the federal government's 1.4 million white-collar workers.
Citing economic conditions, Reagan had proposed no pay raise above normal annual step increases for federal employes in the 1984 budget he submitted earlier this year. But White House officials said today that the success of Reagan's economic recovery program "allows a modest increase in federal civilian pay."
A federal report recently concluded that federal workers would have needed a 21.5 percent increase to catch up with private industry pay levels for comparable work. The administration and others have questioned the accuracy of this calculation, however.
The White House estimates that the cost of a 3.5 percent raise effective in January would be $1 billion in fiscal 1984, which begins Oct. 1. About 1.4 million federal civilian white-collar workers would receive the increase beginning with the first pay period next year.
Under existing law, pay increases for the 2.1 million people in the military are linked to pay increases for white-collar workers, the White House said. Under the defense authorization bill pending in Congress, however, the proposed 3.5 percent increase for civilian workers would trigger a 4 percent military pay increase in January.
Congress is also considering a budget bill that would give federal civilian workers a 4 percent pay raise in January. If approved, this would supersede the Reagan proposal for 3.5 percent. The 4 percent raise would cost an estimated $1.2 billion.
Reagan made the recommendation after receiving a report from his pay advisers: Labor Secretary Raymond J. Donovan, Office of Management and Budget Director David A. Stockman and Office of Personnel Management Director Donald J. Devine.
Their report determined that a 21.5 percent raise would be necessary to keep federal workers' salaries comparable with the private sector. The price tag for such a raise would have been $8.5 billion, the White House estimated.
But Reagan has authority to make an alternative proposal, which he did today.
Under the Federal Pay Comparability Act of 1970, white-collar federal civilian workers should get pay adjustments each October to keep their salaries on par with private sector workers doing similar work.
Early each year the Bureau of Labor Statistics surveys wages in approximately 3,300 firms and matches pay rates for about 25 occupations in those companies. It compares the rates paid in the private sector with salaries for federal workers in several hundred occupations within the government's 18-grade pay system.
When the survey is finished, the information is passed on to Donovan, Stockman and Devine. They then determine the "comparability" percentage.
There has been criticism from the administration and others of the current method of calculating comparability. Critics note that the comparability study does not match up federal fringe benefits with those in the private sector. They also point out that it does not include salaries paid state and local government workers whose jobs, in many cases, are much like federal workers'.
The Reagan administration favors a "total compensation" system that would measure the value of pay and fringe-benefit packages in government against those in the private sector.
In 1982, the president's pay advisers said white-collar workers would need an 18 percent raise to catch up with industry. Reagan instead proposed a 4 percent raise, which is what federal workers got.
Other presidents have also rejected the catch-up raises indicated by the BLS study.
According to the pay levels under Reagan's alternative plan, the lowest General Schedule white-collar worker in Grade 1 would earn $8,980. The highest level would be $66,000, the White House said.
Pay increases for the 450,000 federal blue-collar workers are set by a different system. Congress is considering legislation that would limit blue-collar workers to the same raises granted white-collar workers.