Federal Pay Raise 2023

Biden Issues Letter on 4.6% Increase in 2023 Federal Employee Pay Raise

In a letter to the leaders of Congress, President Biden outlines his intentions for a 4.6% overall average increase for the federal employee pay raise 2023 in January. He also stated that he would split the increase into two parts: 4.1 percent would be across the board base pay increase, while the remaining 0.5 percent would go toward locality pay. The federal pay raise 2023 is expected to go into effect on January 1, 2023, or the first day of the first relevant pay period.

Biden believed his alternative pay plan would encourage competition in the labour market for federal agencies and attract and retain the next generation of civil workers. According to a recent article by Military Times on the 2023 federal pay raise, this amount would be the largest annual boost for both soldiers and federal employees in 20 years.

Since 2014, pay had only risen by 1% to 2.6%. Last year, Biden revealed that civilian federal employees would receive an across-the-board pay increase by 2.2% and locality pay would increase by 0.5% leading to an increase in average federal pay raise by 2.7%. Congress did not alter these figures.

2023 Federal Pay Raise 

President Biden’s Federal Pay Raise Intentions in Letter to Congress:

When Congress has not passed a raise amount into law by the end of August, Biden indicated that intent in a letter to Congress, which is a routine but necessary procedure. Often, as in this instance, the presidents’ raise recommendation from their early-year budget message to Congress was reiterated in the late-August letter.

“Federal agencies have witnessed growing recruitment and retention challenges with federal positions experiencing eroded compensation,” Biden wrote. “Multiple years of lower pay raises for federal civilian employees than called for under regular law have resulted in a substantial pay gap for federal employees compared to the private sector. The American people rely on federal agencies being managed and staffed by skilled, talented, and engaged employees, including those possessing critical skill sets, which requires keeping federal pay competitive,” he mentioned.

This 4.6% overall pay increase will be the largest pay boost federal employees will receive since 2002. Although there have been years when the federal raise was increased to the level of the military raise in the name of “pay parity,” the federal pay did not surpass the military raise. This practice has long been in place. Many had hoped for a 5.1% increase to make up for the shortfall in prior years and take recent inflation into account. According to the Bureau of Labour Statistics, inflation since the initial plan in March is 9.1%. The 5.1% wage raise is highly unlikely to occur. Although it is doubtful, any additional funding would likely be given exclusively to the military if it were to exceed the average 4.6% that has been granted.

“As Americans face unprecedented price increases for food, fuel, housing, and other staples, this pay raise demonstrates an understanding of the value of these hard-working civil servants and the jobs they do, as well as displays the administration’s commitment to recruitment and retention of talented federal employees,” said Ken Thomas, National President NARFE, in a comment made to Federal Times.

Analysis of Biden’s budget proposal for 2023 fiscal year

Efforts to encourage possible percentage Increase for 2023 Federal Employee Pay Raise:

A 5.1 percent wage hike was proposed earlier this year by Sen. Brian Schatz of Hawaii and Rep. Gerry Connolly of Virginia. The 5.1 percent wage raise has also received the support of the National Treasury Employees Union (NTEU).

Tony Reardon, National President of the NTEU and a member of the Federal Salary Council, said, “Our argument for a 5.1 percent increase next year just keeps getting stronger. With the latest inflation figures, rising private sector wages, and the new pay gap calculation, it is even more clear that Federal employees need help keeping up with rising costs and the government needs help in recruiting and retaining skilled employees.”

The 2.1 million employees of the executive branch who would be affected by the rise would not include the more than 600,000 workers at the U.S. Postal Service, whose increments are determined through collective agreements. The same inflation rate used to calculate Social Security benefits is also utilized to determine the cost-of-living hikes for federal retirees.

The president’s previously stated wage raises are not guaranteed. Biden’s estimates would be superseded by any compensation increases that Congress might approve for 2023. In the absence of any rate specifications from Congress, Biden’s figures are binding. It is unlikely that the Democratic-controlled Congress will advocate for rates that are lower than Biden’s.

A necessary stage in the process for a pay increase for federal employees in any given year is the President’s letter of intent unless there is a plan to implement the Federal Employee Pay Comparability Act (FEPCA) of 1990. (P.L. 101–509). The federal government is required by the FEPCA to compare GS pay rates to those in the private sector for comparable jobs. Following a long-standing tradition, wage grade employees who work in a GS locality zone are nevertheless given the GS raise even though they are covered by a different locality-based system. Senior career civil servants in the federal government, including senior executives, are eligible for performance-based raises, with the GS raise lifting caps on their pay.

Unless the president suggests alternative federal pay rates, which he did this week shortly before Labour Day, federal employees’ compensation is set at a level “equitable and comparable” with equivalent levels of work in the private sector.

Reflection on Current Federal Pay Raise:

The Federal Employees Pay Comparability Act of 1990 stipulates that locality pay must be adjusted annually and across the board. The Pay Agent, which consists of the labour secretary and the directors of the White House Office of Management and Budget and OPM, has the right to overrule the automatic rate set by the Pay Agent.

According to some, an even larger boost is necessary given the rising cost of living and private sector pay. Currently, federal pay is lower than that of the private sector. The Federal Salary Council discovered a significant pay gap between the public and private sectors in its most recent study, indicating that the private sector pays 22.47% more for similar employment than the public sector.