Pay Raise Uncertain for 2021 as talks about a Pay Freeze pop up in Congress
Just one month ago, I wrote an article indicating the likelihood of a 1% pay raise in 2021. My, how things can change quickly.
On November 10th, Senate Republicans put forth their 2021 appropriations bill which includes the recommendation for an across the board pay freeze for federal employees in 2021. Earlier this year, President Trump proposed a 1% federal pay raise for 2021. There was no locality pay adjustment in President Trump’s proposal.
These appropriations bills serve as a starting point for the Senate’s negotiations with the House, so nothing is confirmed as of today. The House had remained silent on President Trump’s 1% proposal leading many to believe that it would easily take effect in 2021. Now, that is not as certain as one would have thought.
The next steps will be to see if lawmakers are willing to adopt the Senate’s proposal, or if they will remain silent which could lead to the adoption of the 1% raise originally proposed by President Trump. If they remain silent, as the House did earlier this year, the president will decide to either approve the 1 percent raise, or he could recommend a pay freeze.
As one would expect, employee advocate groups are upset with the suggested pay freeze. Of note, the health insurance premiums for federal employees for 2021 are increasing on average about 4.9%. With no federal pay increase, or even if the 1% raise passes, there is a significant gap to be made up by employees in 2021.
Generally, the official pay rates are not officially announced until near the end of December through an executive order from the White House.
**Written by Jennifer Meyer, Financial Planner. 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 Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.**
Pay Freeze for 2021