Pay - Annual Adjustment

Most Federal employees paid under the General Schedule (GS) receive annual pay comparability adjustments under the Federal Employees Pay Comparability Act of 1990 (FEPCA). FEPCA introduced a new annual pay-setting process that, beginning in 1994, was to gradually raise Federal pay rates to within 5 percent of non-Federal rates by the year 2002.

Annual pay comparability adjustments under FEPCA consist of two components: a single nationwide basic pay schedule percentage adjustment and varying adjustments in specific localities. The nationwide adjustment is based on the Employment Cost Index (ECI), an index prepared by the Bureau of Labor Statistics that measures the change in non-Federal employers' wages and salaries. The locality pay adjustments apply to specific geographical areas within the continental United States.

The locality and nationwide pay comparability adjustments were intended to deal with the pay gap as well as any annual increases in non-Federal pay rates. At the time of enactment, the estimated pay gap was about 28 percent, and FEPCA required that 20 percent of the gap be closed in 1994, with locality pay adjustments each year thereafter until the pay gap was reduced to 5 percent. FEPCA also authorizes the President to propose lower alternative pay comparability adjustments under certain specified conditions. Since 1994, either the adjustment based on the ECI or the locality pay surveys have been limited by alternative adjustments by the President and Congress. The Office of Personnel Management posts the increase on their Internet site.

Content last reviewed: 12/07/2016-TMH