2023 Federal Pay Raise

Government spending bill doesn’t mention federal pay raise – a strong indication that Congress supports the White House recommendation of 4.6%.

The federal employee pay raise for 2023 has been expected to be 4.6% since the White House released its recommended budget in March. Although pockets of Congress have made pushes to get the pay increase slightly higher at 5.1%, both the proposed bill and letter to the President proved ineffective. Over the summer, both the House and Senate left any mention of a federal pay raise out of their budgetary measures, which effectively endorsed the 4.6% figure offered up by Biden.

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It had been presumed that this 4.6% number was an average after taking locality pay under consideration, but this supposition was not confirmed until the Alternative Pay Plan Letter was penned by the President at the end of August. This means the “across-the-board” pay raise in 2023 will most likely be 4.1% with the average locality boost adding 0.5% on top of that. For some perspective, the raise that went into effect on January 1, 2022, was 2.2% “across-the-board” with a 2.7% average. The locality known as “Rest of US” saw a 2.42% actual increase while feds working the locality that includes Seattle, Washington saw an actual raise of 3.21%.

Historic Pay Raise

The largest federal pay raise, going back to 1969, was 10.9% in 1972 – the only time the federal civilian employee raise was in double digits. 1980 saw the second largest pay boost for feds at 9.1%. The year 2002 was the last time the number was as high as the upcoming 2023 percentage when it was also 4.6%. It was 4.8% in both 2000 and 1981, and it never reached that level in the 19 years in between.

Could the pay raise still be higher?Well, technically. Under the FEPCA (Federal Employees Pay Comparability Act), OPM could use the calculation contained in the law from 1990 as opposed to the White House’s “alternative” but in the 32 years since this has been possible, such has never transpired. In this scenario, the calculation would likely produce a pay raise larger than the expected 4.6%.

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**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.

2023 Federal Pay Raise

2023 Federal Pay Raise Update