In August, President Donald Trump sent his alternative pay plan for fiscal 2027 to Congress. In that plan, which Congress must still approve, he proposed no “across-the-board” pay increase for most federal civil servants. However, in so doing, he also proposed a substantial increase for a subset of those federal employees; that is, virtually all federal civilian law enforcement officers (LEOs), along with a similarly substantial increase for uniformed service members in our military.
That alternative pay plan may be politically motivated, and it certainly leaves a lot to be desired in terms of dealing with inflation, but it also has systemic implications. Thus, in my view, it’s probative evidence that the federal government’s system of annual pay adjustments for its employees is badly broken and needs to be fixed.
But unless and until that happens, we should take advantage of what the president has done this year. Let me explain why.
A short history lesson
First, a bit of history that the media tends to gloss over. When Congress passed the Federal Employees Pay Comparability Act in 1990, it specifically said that any annual adjustment(s) to the pay of federal civil servants be linked to the Employment Cost Index (ECI), something measured by the Bureau of Labor Statistics. But not to the cost of living, as measured by the venerable Consumer Price Index (CPI) or some other similar metric.
And to state the obvious, the ECI is not the same as the cost of living, and if anyone doesn’t like that, they need to get the law changed. But whether it should or should not (a decision I’ll leave to legislators), it’s evidence that the system is broken.
But there’s some good news here. The president’s plan, as flawed as it and the system that spawned it may be, finally abandons a single “one size fits all” across-the-board pay raise in favor of at least two increases: One for federal law enforcement officers and one for everyone else. That’s not good if you’re one of the latter and have to deal with rampant inflation, and while I’m sympathetic, that’s the law. It’s also another matter.
A “single number” pay raise is nonsensical
However, back to the president’s alternative plan. The traditions of past years notwithstanding, a “one-size-fits-all” pay increase is supposed to reflect national increases in the cost of employment. That just doesn’t comport with the reality of today’s much more differentiated labor market. Add to that the fact that important aspects of compensation, things like fringe benefits and pensions, are not even included in that comparison, and you compound the problem.
Nor does that single number reflect a far more differentiated and varied federal workforce. Not when the federal government is comprised of a whole alphabet soup of agencies, each with its own mission, its own budget and consequently, its own human capital needs, all competing for talent using their own unique combination of pay, mission and culture.
I saw as much in the five agencies I worked for as a senior executive. The Air Force’s military and civilian human capital needs were far different than those of the other military services, but together, they were even more different than the IRS’s. Or the agencies covered by the 1989 Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), or those consolidated under the Department of Homeland Security.
And I won’t even begin to describe the differences amongst the three-letter agencies bound together in the so-called intelligence community.
In other words, federal agencies are all different when it comes to mission, and that translates to differences in compensation. As a result, a single “one-size-fits-all” number narrowly focused on their pay is just nonsensical. Yet, one can argue that at the same time, all of these agencies are part of our national government, so why shouldn’t they be treated the same?
President’s alternative (accidentally?) opens the door
If so, what’s the solution? In my view, it’s a “both/and” strategy that balances all of those factors. And even if it’s by accident, the president’s alternative pay plan opens that door.
By offering his alternative, Trump has finally, albeit unintentionally, destroyed the myth (and I use that word deliberately!) that that single, monolithic “one-size-fits-all” number, no matter what it is, can effectively address all of the various costs of employment and costs of living that federal employees have to contend with, both positive and negative. And setting aside some of that number for “locality pay” increases doesn’t do it either.
Trust me, I know how strained, and constrained, those increases really are. So, mythical it is, and it’s been one almost as long as we’ve been bound by FEPCA. And so long as it is, the best we can do is provide alternatives; in this case, a different across-the-board pay increase for a particular occupational group.
In that regard, I would go even further, building on the precedent set by this accidentally more differentiated approach to pay. How? By also increasing the pay of other critical occupational groups across the federal civil service, like cybersecurity or IT.
In that regard, BLS surveys tell us that all federal cybersecurity ninjas, regardless of locality, deserve more pay just to stay reasonably competitive. And they are not alone. A number of other occupational groups, like most GS-2010 IT specialists, credentialed civilian procurement officers, prison guards and almost every certified member of the Senior Executive Service and its equivalents do too.
It’s also something all the Federal Salary Council’s members, including those representing federal employees, secretly knew: That some civil servants in some occupations and in some localities were underpaid, nationally as well as locally, but some employees in other occupations were also overpaid as well. And we all knew that those pluses and minuses were all well hidden by a single, across-the-board increase that vainly tried to offset the cost of living.
It’s no wonder that many like me feel that the system is broken.
But here’s the immediate bottom line: The cost of living is different than the cost of employment, the latter required by law, and unless and until FEPCA is changed, federal employees will not keep pace with inflation. But President Trump’s alterative pay plan at least takes a more differentiated approach (again, intendedly or otherwise). So, we ought to take full advantage of it.
Ron Sanders is a fellow of the National Academy of Public Administration and a retired member of the civil service with more than 20 years as a member of its Senior Executive Service. In addition to his private sector and academic posts, he served as director of civilian personnel at the Defense Department, chief human resources officer for IRS, associate director of the Office of Personnel Management for strategy and policy, and associate director of national intelligence for human capital. The opinions expressed in the above post are his and his alone.
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