Has the federal pay raise been cancelled? It depends on who is talking

(Image Source: MGN)
(Image Source: MGN)(KALB)
Published: Aug. 30, 2018 at 4:10 PM AKDT
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President Trump said Thursday that he’s rescinding a Jan. 1, 2019, 2.1 percent pay raise for civilian federal workers, including the big federal workforce of Alaska — but Congress has other thoughts.

If Trump prevents the raise, it could be harmful for a state like Alaska, which depends on the economic power of its federal workforce.

“It’s always been a huge player in Alaska,” said Neal Fried, a state labor economist.

But Karina Borger, a spokesperson for U.S. Sen. Lisa Murkowski, said Trump may not get the chance to cut worker pay increases because the latest appropriations bill has a 1.9 percent civilian pay hike — and it’s virtually untouchable.

Trump’s message came in a letter to Congress on Thursday,

Trump said he is using his authority under federal law to reset the raises to zero. The law allows such authority if he determines a “national emergency” or “serious economic conditions” exist.

Trump said the national deficit required him to act, blocking cost-of-living increases that average 25.7 percent, or about $25 billion. He didn’t say how much the treasury would save from the 2.1 percent raises alone.

“Specifically, I have determined that for 2019, both across-the-board pay increases and locality pay increases will be set at zero,” Trump wrote.

In a statement Thursday, one of the big government worker unions, the AFSCME, said Trump was wrong to try to reduce the deficit by canceling the increases.

“The working people we count on to carry out the vital missions of our federal agencies deserve basic fairness and respect,” the union said. “But after giving out nearly $2 trillion in tax breaks to the wealthiest corporations and individuals, and earlier this month claiming credit for ‘the greatest economy in the history of America,’ President Trump now has the gall to plead poverty when it comes time to pay his own civilian workforce.”

Congress, with its authority to set appropriations, is poised to get the last word. The pay raise that Trump canceled is contained in a formula, but Congress has a new appropriations bill with its own raise.

Borger, Murkowski’s aide, said the new appropriations bill is in a House-Senate conference committee. It would give workers a 1.9 percent raise on Jan. 1 — meaning the cut by Trump would amount to two-tenths of a percent, a tiny fraction of a penny.

The financial services appropriations with the 1.9 percent pay raise passed the Senate Aug. 1 by a 92-6 vote, Borger said — a bipartisan number which makes it virtually veto-proof.

Trump’s budget proposal, submitted in February, contained virtually the same message about federal salaries as his letter, Borger said. But the Senate chose to pass the increase when it decided that federal workers needed the raise.

“The president proposes, Congress disposes,” Borger said.

In places like Alaska, those raises can have an economic impact well beyond the affected worker.

According to the Alaska Department of Labor, the state has about 15,000 federal workers — fewer than state or local governments, but it’s a stable workforce that was expected to remain unchanged in 2018, when many other segments declined. The federal workforce is about 0.05 percent of total nonfarm employment in Alaska, but with its high salaries, it is one of the more important segments, Fried said.

The average salary of a federal worker in Alaska is $79,428, compared to the state’s overall average of $53,208, Fried said. And because federal employment amounts to fresh money into the state, it’s a “basic industry” like mining or oil, not a cash recycler like retail, Fried said.

Alaska usually ranks in the top five in federal employment, behind obvious places like the District of Columbia, Maryland and Virginia, Fried said. Years ago, before the economy became more diverse, federal employment was the single most important economic factor in many locales, including Anchorage, he said.

“Places were almost defined by that,” Fried said.

In Anchorage, the federal workforce was projected to total about 8,300 in 2018, according to the state. In Fairbanks, it was 3,000, and 1,450 in Southeast Alaska.

“Federal government, the smallest piece of Alaska’s government sector, shed 100 jobs in 2017 after gaining 300 the year before,” the Labor Department said in the January edition of its publication “Alaska Economic Trends.” “Federal employment is forecasted to remain flat in 2018, as no indicators of change are on the horizon and the next federal budget is uncertain.”

Correction: An earlier version of this story said Borger predicted the 1.9 percent raise would survive the House-Senate conference committee. She did not directly say that.