Two million federal employees just got one step closer to an average 5.2% pay raise next year.

President Joe Biden wrote a letter to leaders of the House and Senate on Thursday formally declaring the boost for all federal civilian employees, thereby setting his intent to give employees the largest base pay increase in nearly four decades.

The across-the-board pay increase will be 4.7% and locality pay increases will average an additional 0.5%, starting Jan. 1.

“We must attract, recruit, and retain a skilled workforce with fair compensation in order to keep our government running, deliver services, and meet our nation’s challenges today and tomorrow,” Biden said in a statement. “This alternative pay plan decision will continue to allow the federal government to employ a well‑qualified federal workforce on behalf of the American people, keeping pace with prior wage growth in the labor market.”

By announcing an alternate pay plan, the President effectively circumvents a raise that would automatically be set by law. Without the president interfering, the law says federal employees’ salaries are set at a level “equitable and comparable” with similar work in the private sector.

The number also tracks with what House and Senate lawmakers have supported for service members, Military Times reported.

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But since Biden did intervene — and Congress has not put forth an alternate figure — it’s seems the 5.2% pay raise will stick, lest the budget process produce unforeseen changes. Should Congress offer a different pay adjustment amount, that’d be reflected in the Financial Services and General Government spending bill, which has yet to see initial passage by the House or Senate.

Biden first introduced the 5.2% raise in March in his budget proposal.

Assuming things go as the White House plans, the average pay raise for next year will be higher than this year’s of 4.6%, though unions and some Democrats have said it’s not enough to keep up with record-high inflation over the last years that have starved household budgets. Federal pay has failed to keep up with the private sector, trailing it in 2023 by more than 20%, according to the Federal Salary Council.

“Compared to the extreme platforms of some presidential candidates to eliminate entire federal agencies and layoff hundreds of thousands of federal workers, it is gratifying to see the White House treat the workforce with respect,” said Doreen Greenwald, president of the National Treasury Employees Union, in an emailed statement.

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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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What remains for the 5.2% figure to take effect is an executive order usually signed in December that solidifies that rate and triggers the Office of Personnel Management to update its pay tables.

Then, employees will see the increases reflected in the first pay period of January.

Additionally, thousands of federal employees could come under a higher locality pay in the new year, Federal Times previously reported.

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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