Announcement of Adjustment of Certain Rates of Pay and Allowances for Federal Civilian and Military Employees

The President announced today that he intends to grant a 7.05 percent across-the-board pay increase for the 1.4 million Federal white-collar employees and a matching increase for the 2 million military personnel. The pay adjustments will be effective on the first day of the first applicable pay period beginning on or after October 1, 1977.

Under the Federal Pay Comparability Act of 1970, the President has responsibility for determining annually the increase needed to maintain comparability between Federal white-collar and private sector salaries for the same level of work. In making his decision on the size of the pay raise, the President is required by the Federal Pay Comparability Act to consider the recommendations of three separate advisory panels.

One recommendation was made by the President's "Pay Agent," which consists of the Secretary of Labor, the Director of the Office of Management and Budget, and the Chairman of the Civil Service Commission, acting jointly. The Pay Agent recommended a 7.05 percent across-the-board increase.

A second recommendation was made by the Federal Employees Pay Council, a five-member group of Federal employee union leaders. The Council argued that an 8.8 percent increase was justified this year.

The third recommendation was made by the President's Advisory Committee on Federal Pay, an impartial group of private sector experts established by law to advise the President on pay matters. The Committee endorsed the Pay Agent's recommendation for a 7.05 percent increase.

The 7.05 percent pay increase will cost about $3.4 billion. There is an allowance currently provided in the budget for this increase. The 8.8 percent recommended by the Federal Employees Pay Council would have cost about $850 million more than the 7.05 percent increase.

Affected by this increase are the salary schedules for Federal civilian employees of the General Schedule, the Foreign Service, and the Department of Medicine and Surgery, Veterans Administration. Federal blue-collar workers and postal employees have their pay adjusted by separate systems.

Additionally affected are the basic pay, quarters, and subsistence allowance schedules of the Uniformed Services. The law gives the President some flexibility in distributing the 7.05 percent increase among these schedules. A final decision on the precise distribution has not yet been made.