Democratic and Republican administrations and labor unions and have sought for decades to address the gap between what federal workers are paid and what similarly positioned counterparts earn in the private sector. Still, little progress is being made.

The latest figures from the Federal Salary Council show that federal workers made nearly 22.5% less last year, a slight narrowing from 23% in 2020.

“The Council is well aware of the difficulties that federal agencies face competing for workers who frequently find higher salaries in the private sector, which is why this pay gap is a valuable piece of information for our elected officials to consider when setting salaries for the federal workforce,” said National Treasury Employees Union President Tony Reardon, who is also a member of the Council, in a statement.

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 have retained talent.

As many federal employees also served on the front lines of the pandemic, members of Congress have advocated for a higher-than-planned raise for next year.

Who determines how much federal employees get paid?

By law, federal employees’ salaries are set at a level “equitable and comparable” with similar levels of work in the private sector, unless the president proposes alternative federal pay rates.

These salaries are generally determined each year by the President’s Pay Agent, which includes the directors of the White House Office of Management and Budget and Office of Personnel Management, as well as the secretary of labor.

Why do federal pay rates fail to keep pace with private sector?

According to a General Accounting Office report from 1984, frequent use of alternative pay rates by the various administrations had “dropped pay significantly” behind that of the private sector.

“Since 1978, the President has consistently set pay using alternative pay rates, which produced an increase less than that proposed by the Pay Agent,” the report said.

The Federal Employees Pay Comparability Act, passed in 1990, law requires an adjustment across the board and for locality pay each year. However, the president has authority to circumvent the rate set by the Pay Agent.

President Joe Biden exercised this authority to propose his own rate, and in August 2021, proposed an overall 2.7% pay raise for federal workers for 2022 that took effect in January.

Otherwise, the act essentially creates automatic annual adjustments based on changes to private-sector salaries, though the NTEU says FEPCA hasn’t been fully implemented.

In his remarks at the time, Biden said that he can lawfully propose his own plan if he views the increases that would otherwise take effect as inappropriate given a “national emergency or serious economic conditions affecting the general welfare.”

What will government pay increases look like in 2023?

The White House’s budget, which was revealed in March, proposed a 4.6% average increase for federal workers and military service members in 2023.

That would be the largest annual increase for both troops and civilian workers in 20 years, Military Times previously reported.

Given the shutdowns, hiring freezes, the economic squeeze imposed by the COVID-19 pandemic and the highest inflation in decades, some members of Congress have proposed an even higher rate for next year.

Rep. Gerry Connolly of Virginia, the chairman of the House Subcommittee on Government Operations, and Democratic Sen. Brian Schatz of Hawaii introduced a bill that would provide federal employees with a 5.1% increase for 2023. It’s backed by several federal labor unions and other Democrats in the House and Senate.

“Federal employees are our government’s single greatest asset, and they deserve better,” said Connolly. “The FAIR Act is critical step toward recognizing their contributions and providing fair and just compensation.”

When will the federal pay raise go into effect?

It is expected to update in January 2023.

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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