Bargaining power of federal employee organizations is deceptively potent in the determination of wage and fringe benefits. Both blue and white collar compensation is arrived at through a system in which federal labor unions have broad consultation rights. Blue collar pay is set under the Coordinated Federal Wage System (CFWS). At virtually every level of wage determination labor organizations participate in the decision-making process. 'White collar' pay is set under the authority of the Federal Pay Comparability Act of 1970 (FPCA). The two main features of the FPCA are extensive consultation with management and semi-automatic pay increases. The net result is that both the CFWS and FPCA are a very effective substitute for traditional wage bargaining. The pay gains under the FPCA presently are translated into salary increases for the military. (Modified author abstract).