Letter to the Speaker of the House of Representatives and the President of the Senate Transmitting an Alternate Federal Civilian Pay Plan

August 30, 1988

Dear Mr. Speaker: (Dear Mr. President:)

Under the Federal Pay Comparability Act of 1970, the President is required to make a decision each year on what, if any, pay adjustment should be provided for Federal employees under the General Schedule and the related statutory pay systems.

My pay advisors have reported to me that an increase in pay rates averaging 26.28 percent, to be effective in October 1988, would be required under existing procedures to raise Federal pay rates to comparability with private sector pay rates for the same levels of work. However, the law also empowers me to prepare and transmit to the Congress an alternative plan for the pay adjustment if I consider such an alternative plan appropriate because of ``national emergency or economic conditions affecting the general welfare.''

We had earlier assumed, for budget planning purposes, that economic conditions would only permit a two percent pay increase this year. However, as the revitalization of the Nation's economy has continued on the course this Administration has set, we have seen unemployment drop, and free market forces have resulted in rising pay rates for American workers, particularly in shortage occupations. The Federal Government, as an employer, must compete like any other employer in the labor market for the skilled workers it needs, so we must respond to these rising pay rates. The Senate has passed a bill we support, the Federal Personnel Improvements Act of 1988, which would give us badly needed flexibility in adapting to labor market conditions, but we must also address the issue of adequate Federal pay rates in general.

While it is clear that economic conditions would not permit a pay increase of 26.28 percent, I have decided, after reviewing the reports of my Pay Agent and the Advisory Committee on Federal Pay, and in order to ensure the continued quality of our Nation's civil service, that economic conditions will permit a pay increase in accordance with the following alternative plan:

In accordance with section 5305(c) (1) of title 5, United States Code, the pay rates of the General Schedule and the related statutory pay schedules shall be increased by an overall percentage of 4.1 percent for each schedule, with such increase to become effective on the first day of the first applicable pay period beginning on or after January 1, 1989.

I note that this alternative plan would be consistent with the pay raise that would be provided under the conference agreement on H.R. 4775, the Treasury, Postal Service and General Government Appropriations Act, 1989. I regret that the conference agreement would not let this pay increase apply to all of the Government's Executive Schedule, since it is at the highest levels of the Government's pay system where Federal pay lags most seriously behind private sector pay. However, I will have the opportunity to recommend appropriate pay increases for the Government's senior officials in my budget message this coming January.

Accompanying this report and made a part hereof are the pay schedules that will result from this alternative plan, including, as required by section 5382(c) of title 5, United States Code, the rates of basic pay for the Senior Executive Service.

Sincerely,

Ronald Reagan

Note: Identical letters were sent to Jim Wright, Speaker of the House of Representatives, and George Bush, President of the Senate. The letter was released by the Office of the Press Secretary on August 31.