President Joe Biden pitched an average 2% pay raise for federal employees for 2025.

If that takes effect, it’d be significantly lower than the 5.2% pay raise awarded in January of this year and the 4.6% in 2023 but on par with what government workers received pre-pandemic and with projections that inflation will drop to less than 2% next year.

“It illustrates the administration’s continued strong commitment to the civil service, reflecting the need to attract the talent necessary to serve Americans and recognizing the fiscal constraints Federal agencies face,” Biden said in his fiscal 2025 budget request on Monday.

Many federal agencies implemented this year’s mandatory pay raise without 2024 funding. Still, some Democrats in Congress have already pitched a 7% pay bump for next year, arguing that feds still need to be made whole after years of high consumer prices and recruiting challenges plaguing IT and health care, leaving federal workers vastly underpaid relative the the private sector. Even under Biden, raises have come short of what some lawmakers and federal unions have argued is appropriate.

In fact, it’s only in the last two years that feds saw raises once again exceeding 3%. This year’s pay increase was the largest since President Jimmy Carter’s term. The last time there was a flat 2% pay raise was in 2010. In the decade that followed, pay raises hovered between 0% (during the second Obama administration) and 3%.

“Civilian federal workers right now are working for 27.5% less than their private-sector counterparts,” said American Federation of Government Employees National President Everett Kelley in a statement. “A paltry, 2% raise for civilian federal employees will do very little to close that widening gap.”

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The Federal Salary Council also suggests in its examination of the federal pay scale that the GS base pay increase in 2025 would have to be close to 4% in order to comply with the Federal Employee Compensation Act. But that rule is almost never followed because presidents have used their authority to circumvent it and offer a different rate.

So while a pay raise of some kind is likely to materialize next year unless the president, or Congress, takes some action against it, it won’t be clear for some time what exactly that figure will be.

The President’s budget request also posed a 4.5% pay raise for service members.

“We are extremely disappointed in the way this budget turns its back on the longstanding practice of pay raise parity for civilian and military employees of the federal government,” said Kelley.

In the meantime, Biden acknowledged that pay adjustments cannot stop there.

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Why do federal pay raises lag the private sector?
The federal budget proposal unveiled by the White House in March included an average pay increase of 4.6% for civilian federal workers, matching a planned military pay raise. Historically, with pay lagging in the federal sector, other factors including steady opportunities, competitive benefits and hybrid work to retain talent.
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“In addition to year-to-year pay increases, the administration is pursuing structural reforms to enhance the competitiveness of the federal pay system,” the FY25 budget request said.

Specifically, it mentions addressing pay compression experienced by workers who max out the payscale and see little monetary incentive to remain there. Pay caps imposed by statutes limit how much money federal employees can be paid. If those aren’t adjusted to the times, the nature of the work or the collective education of the workforce, they can feel arbitrary, federal employees groups have said.

Compared to 1950, the 2.2-million strong federal workforce is overall more highly compensated and more experienced than it used to be, explained perhaps by the fact that close to 30% of workers have masters degrees, compared to less than 15% in private industry.

This graph from OPM and the White House show an almost complete shift from lower-grade to higher-grade types of work. (Graph: OPM/President's 2025 Budget Request)

Biden said the administration intends to review this for not just upper-echelon General Schedule employees, but also members of the senior executive service and blue-collar wage grade employees.

The question is how. Last year’s budget proposal made the same call to action. Members of the Government Managers Coalition requested an update on the status of those efforts in July from the Office of Personnel Management.

“This is not a novel proposition,” said the letter. “Both the Biden and Trump President’s Pay Agents have recommended ... that federal compensation reform is critically necessary.”

Biden did point to some specific action items in the 2024 proposal, including increasing Executive Schedule official rates, removing current ceilings in the Federal Wage System, repealing pay limits on bonuses, differential pay, and other adjustments, and lifting special rate restrictions for cyber, STEM and health care workers.

The 2025 pay raise would take effect Jan. 1.

Molly Weisner is a staff reporter for Federal Times where she covers labor, policy and contracting pertaining to the government workforce. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as a copy editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.

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