The Cost of the 2013 Pay Raise

By on January 1, 2013 in Current Events, Pay & Benefits with 52 Comments

An executive order issued last week made the end to the pay freeze official. Starting after March 27, 2013, federal employees can expect a 0.5% pay raise after no raises for the last two years. You can use our GS pay calculator to see how it may impact your salary after the pay raise goes into effect later in 2013.

Although a 0.5% pay raise for federal employees and members of Congress doesn’t sound like much, it is estimated that it will add $763,125,000 in total salary costs to the federal budget.

According to the CBO’s latest monthly budget review, the federal budget deficit was $292 billion for the first two months of FY 2013, a 24% increase over the same time period last year. The Government Accountability Office also recently said in a report that the federal government is on an unsustainable long term fiscal path.

So given the federal government’s rapidly growing deficits from excessive spending, giving pay raises to federal workers and Congress is likely to raise the ire of those who believe that spending is already out of control.

Indeed, the House voted Tuesday to block the pay raise for federal workers, and the “fiscal cliff” legislation that passed Congress late Tuesday night contained a clause to withhold the pay increase for members of Congress.

However, every debate always has two sides. Federal workers have pointed out that they have been not seen a pay raise in the last two years and a 0.5% raise doesn’t do much to break that trend, so consequently they say it’s well past time for the raise.

Earlier in the “fiscal cliff” negotiations, there was some talk of expanded cuts targeting federal workers as part of a compromise, such as Senator Bob Corker’s (R-TN) proposal.

Federal unions and federal employee advocates were quick to speak out on such proposals, saying that the federal workforce had already made enough sacrifices in contribution to deficit reduction. As part of their case, the groups said in letters to members of Congress that the federal workforce had collectively contributed roughly $103 billion to deficit reduction through various cuts. That staggering figure makes the $763,125,000 in added costs for the pay raise sound like pittance, however, it is based on a 10-year budget window as opposed to a two year time frame (the length of the pay freeze).

Regardless of which side one chooses in the federal pay debate, the reality is that federal payroll is a small part of the federal budget. Social Security, Medicare, and Medicaid are what really strain it, especially with an aging population with growing health care needs.

A recent GAO report addressing the future sustainability of promised government spending said, “In both GAO simulations spending for the major health and retirement programs will increase in coming decades, putting greater pressure on the rest of the federal budget.”

And the CBO said in its December 7 monthly budget report that expenditures for each of the three main entitlement programs were higher than the same period last year accounting for a significant increase in spending: Social Security benefits increased the most; expenditures for it are up $8 billion or 7%; Medicare rose $6 billion or 8%, and Medicaid rose $4 billion or 9%.

The CBO also estimated that the fiscal cliff agreement that just passed Congress will add $4 trillion to the federal deficit over a decade.

Lawmakers will eventually have to look hard at these three programs if they want to make serious headway on cutting the federal deficit.

© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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  1. Carlsberg9980 says:

    Insulting. That’s it. Just insulting.  A .5 pay raise is pennies in employees pockets. All around the country the cost of living is increasing  way more than .5%, it would be nice for the government to realize that its employees need a pay increase to compensate for the real cost of living increases.

    • Grapesofwrath1975 says:

      Carlsberg9980, I completely agree.  Not only is it insulting, it’s deceiving.  Although we received an increase, I’m getting taxed to hell, I saw a decrease in my salary by 42.00 a pay period; my spouse did as well.  I’m a GS-9 and my spouse is a GS-9.  We can’t afford a decent home in a decent neighborhood with good public schools.  Something has to give, we’ll never be able to afford a home at this rate; currently we reside on an Army post (thank goodness for privatized housing).  We don’t live extravagantly, we put away what we can when we can.  We don’t vacation here or there except to visit family within driving distance 2-3 times a year.  How are people doing it?  They have to be up to their eyeballs in debt, or living off of ramen (love the stuff occasionally, but I can’t live off it).  I was never good at mathh but how does an increase results in a decrease? What a joke this pay increase was…they might as well have said “Gather ’round all you little people…your reward for putting up with a couple of years of no increases has earned you a .5% raise, and oh by the way, you owe us money”  84.00 bucks a month to be exact.  

  2. Andy2x says:

    I’d rather keep the 2% tax holiday.

  3. C Widmayer says:

    Why are you making such a big deal over a meaningless executive order?  Congress determines what federal employees get paid.  Once the  CR expires, an new CR or appropriations bill is required for government to spend a red cent.  So this executive order is nothing but a political ploy.  If Obama really wants to raise federal pay this fiscal year, he needs to request it from the Congress.

  4. Fed up fed says:

    Just rif me and lets get this over with What a joke this is

  5. Ann Stringer says:

    They should be letting members go and working on furlough for the next six to eight months.
    Not getting more pay for what?
    it is not fair to the Americans who are just getting by and for that matter, anyone that voted and cares about this country!

  6. nothing for nurses ever says:

    nurses never get anything-all increases goes to GS, WG, and doctors and dentists
    gee whiz
    not fair every single time, over and over and over again
    that is the worst part of being a nurse for government

    • Guest says:

      Then you should quit and move to a job where you are paid fairly as you always have this option. Instead, you sit around and complain anonymously on comment threads on the Internet about how badly you have it when you could be using that time and energy in a productive way to create a better life for yourself. Please don’t be shocked if nobody takes you seriously or has any sympathy for you whatsoever.

      • say what? says:

        say what? nurses get low pay everywhere-what planet do you live on?
        hope you never need one to find out how hard the physical labor and drain is on nurses-but then again, you may learn something since you are ignorant to the facts as it appears

    • Rainy098 says:

       Do you work for the VA?  I’ve heard terrible stories about the VA. 

  7. CJZ1007 says:

    If Social Security is admittedly one of the ‘strains’ on the Federal budget, I’m at a loss for why they continue the ‘temporary’ reduction in the social security withholding tax.  I get that it was a ‘temporary’ stimulus measure, but “Hello” can the President or Congress do basic math?

  8. CJZ says:

    If social security is part of what admittedly strains the federal budget, what logic is there in continuing the temporary reduction in the social security payroll tax.  I get that it was a temporary economic stimulus measure, but hello?  Can the President and Congress do basic math?

  9. Roy0384 says:

    Ok…guys get ready to be peeved here.  Social Security, Medicare, and Medicaid are the largest deficit gutters, not much to argue about there, huh?  
    1.Freeze benefits for three years (hey, the federal workforce enjoyed it)., and use a chained COLA thereafter until payouts reach 78% of the benefit levels using the current cola as a standard.
    2. Dump the prescription drug benefit from Medicare, it as never funded, right?  So, ya kill off a few geezers.
    3. Medicare freeze benefit dollars, and allocate benefits to the most desperate cases.  Again, ya kill of a few…

    While we are at it.  Dump the BUSH tax cuts restoring 1/3 of the tax increases each year starting next year until rates normalize.
    While you’re at it, restore .55% to treasury rates each year until they normalize at 2% over the current inflation rate.
    Tax the SNOT out of gasoline, to get people to drive more efficient vehicles, and fewer miles.  The planet will smile!  

    Consider a 100% freeze on terror/defense spending beginning immediately.  Chain future military pay / benefit changes to that of the fed civilian workforce.

    If that doesn’t help the economy, and budget, just go tits-up as we didn’t really don’t deserve to exist as a free social democracy.
    You’re welcome
    Retired Fed Employee 

  10. Vsackvillewest says:

    Put Congress on a PIP!

  11. Jean Paul2223 says:

    As usual, the pay calculator is innacurate.  It will not be a 5% increase for all localities.  This calculator is a misleading simple multiplier of all salaries in the current schedule by the same 5% which will not be the case in reality.

    • FedSmith says:

      FedSmith does not determine locality pay for each area. We anticipate OPM will have the locality rate structure for each locality area available prior to the time the new pay raise becomes effective. However, we cannot manufacture the figures; we have to rely on the agency that performs this task to set the new rates.

  12. Fed_worker says:

    Not sure why peolpe are argueing over 763,000,000 when the budget deficet is 1,700,000,000,000. Removing the raise would only save 0.04% of the deficet. Congress needs to seriously discuss the big three: social security, medicare, and medicaid, in addition to Defense spending and the tax code. Thats when the real budget deficet reduction will begin.

  13. Gloria J Hodge says:

    Skip raises for the next 5 years.  It doesn’t look like it’s going to get any better.  We’ve done without a raise for the past 2 years why not hold on to that thought for the next 5.  I don’t mind — it’s better than listening to the opinions/complaints of others as to how the deficiet will increase because govt workers will receive a raise.  Just DON’t give us a raise and call it a day.  I’m sure everyone will manage.

    • Bluebird says:

      Ms. Hodge, are you Marie Antoinette in disguise? It sounds like your attitude is “let them eat cake!”  Congratulations that you can “survive” without any cost of living adjustments. Not all of us are here for the sheer joy of the job. Some of us have rising food and fuel bills, want to send our kids to college and would like to continue to live in our neighborhood. Increased health care premiums, rising property taxes, state income taxes, fuel surcharges, the cost of increased fuel in general all ripple through the economy making no raise for multiple years truly a hardship for anyone trying to raise a family or who is not on the higher end of the GS scale. If you want to donate your standard of living to Uncle Sam, go ahead, but don’t speak for me or assume that we’ll all survive. Your arrogance is saddening.

  14. Usmcgym_aldea1 says:

    My health Insurance went up 12% and gas is 4 to 5 dollars a gallon here in California. GS-01 through GS-07 do not make that much money and we are not over paid!  We Federal Employees have families too to feed, rent to pay and work many hours unpaid.  If any member of Congress thinks they are over paid, have them write a check to the IRS and donate to reduce the deficit.  The cold war is over, many bases in Europe can be closed and troops moved back home, there are other costs congress is not looking at to save money. We Federal Workers have taken it in the shorts for 2 yeas, it’s time to give something back bankrupt is all from higher healthcare costs and rent and gas prices and food prices.

  15. Tbriggs04 says:

    The only thing that can help the financial problems this country has is cuts to medicare.  I know that’s not popular at all, but it’s a reality that is going to be dealt with. 

  16. Bean Counter says:

    Keep it indeed!  It won’t even begin to offset the 2% payroll tax that is now back on us, as well as the FEHB premium increases most, if not all, of us will enjoy in 2013.  However, we are ALL very lucky to have a good job, so I am not complaining.  Things could be MUCH worse! 

  17. Varkfixer says:

    Why bother with a .5% raise it will cost more to implement than it is worth, it pretty much P#*^#< me off , what a joke.

  18. Disgusted says:

    What’s funny about this whole “spending cut” issue is this…..as a procurement officer where I work now in the federal govt, they MAKE me spend the entire budget given to us each year.  Instead of giving it back, because essentially you will not receive as much budget the following year.  WHAT SENSE DOES THAT MAKE?  So instead of me giving back 400K, we NEEDED new conference room tables and chairs? HA! 400K was spent on POINTLESS ITEMS to furnish the office.  So the real issue lies with inappropriate spending.  Do we NEED nice fancy furniture and desks to meet STATUS of someone?  Also in federal govt we are required to shop at UNICOR first for furniture, which is made my prison inmates.  Which also costs about 3 times as much.  So instead of every agency in the government GIVING BACK the excess left in their budget each year, we are PUSHED to spend and spend and spend come the end of our fiscal year every SEPTEMBER!  That alone folks, would save billions of dollars!

  19. Super_Babysitter says:

    I would suspect that all this will do is add fuel to the fire that; paints civil servants as overpaid lazy do-nothings. 

  20. Darlene Wilbur says:

    Maybe I am alone, but a 0.5% raise is not even “symbolic” enough for us to help with the squeeze we have felt in the last few years.  I say keep that and put it towards Social Security or Medicare, and balance the darn budget!!

    • Sincerely_09 says:

      You’re not alone. People forget that the fed is borrowing over 50% on
      ever dollar spent so tack on interest to over half of every “drop in the
      bucket that is too small to matter”. We would be in much better shape
      if these types of items were directly applied to the debt balance to at
      least slow the rate of increase & reduce the amount of money wasted
      on interest.

  21. tiredofscapegoatingfeds says:

    No one in their right mind would ever support the chained CPI scam. It is basically fraudulent. Would cost feds a fortune in retirement. All feds against this comtinuing political assault

  22. grannybunny says:

    Who cares how much this minor pay raise adds to the budget?  It is also adding a corresponding amount to the economy.  Contrary to the claims of the extreme few, not all spending is “bad.”

    • little taxpayer says:

      At best, it’s a zero sum game – you have to take the money out of the economy, siphon off some overhead with no value added (accountants, IRS, treasury), then put it back into the economy.  At worst it’s just that much more money the country is borrowing and adding to the debt.

    • HRGuy71 says:

      Wow, we are adding to the economic prosperity of the country. That is great news.

      With the $1.3 trillion or so we are going into debt each year, we are really rolling along. The economy is on top of the world with the money we are printing and giving out to everyone.

      No doubt, your grandchildren will be pleased to learn their standard of living is in the tank, they can’t get a job because of high unemployment but that food stamps and welfare will probably be available. Also, public housing and free health care. That also exists in third world countries but no one wants to live there.

      Our debt per person is now much higher per person than it is in Greece…and going up rapidly in 2013.

      No doubt, we are expanding our wealth (courtesy of the Federal Reserve that is printing more money) even though incomes are dropping, unemployment is historically high (despite dropping a few million off of the rolls to make the stats look better) and taxes are going up. But it is good to hear that our economy is in such good shape. After Pres. Obama’s four more years, we should be even richer after we have redistributed more of the wealth and gotten rid of the rich that create the jobs.

      • grannybunny says:

        No one is claiming that the economy is in great shape.  The threat of the Fiscal Cliff, after all, was that higher taxes on everyone, combined with draconian spending cuts, would throw us into another Recession.  While the deficit — long-term — must be dealt with, continuing to grow the economy must take precedence.  If we successfully complete our recovery from the Recession, it will also help the deficit, which is an issue for another day.  

        • HRGuy71 says:

          And, unfortunately, we are unlikely to enjoy our former prosperity in the next few years. 

          It is unlikely we can spend our way to prosperity–especially when we are taxing the most productive members of society who may now pay more than 60% of the income in taxes, depending on the state in which they are living. We are finding that higher taxes lead to the most successful people no longer hiring new employees in this country, companies keeping their income overseas instead of investing in the U.S., and, I presume, some of the most wealthy now renouncing their citizenship as a result of our tax laws and rapidly growing intrusion of our government into our lives (leaving the U.S. despite the extra “departure tax” we now impose on Americans who dare to leave). Wealth redistribution, instead of wealth creation, will probably help out those who are relatively poor but the middle class will feel the most impact as taxes, cost of living and inflation all go up as a result of our fiscal policies.

          Some economists are now predicting a “new normal” of growing of less than 2% and high unemployment. See, for example, France, England, Spain etc. as their policies are similar to what we are now doing in the U.S. It is unlikely our results will be any different here than in those countries.

          But, as most people realize, this is not all bad. Socialism can create a lifestyle of less wealth, less work and less stress as we can survive without working as hard and just not producing as much wealth or having to be responsible for our own success or lack thereof. As has happened in a number of other countries, a number of voters prefer that type of government to a system that grants more freedom with commensurate rewards for hard work. I have read that in an “economic freedom” index, the U.S. is falling rapidly in the ratings despite having been among the top countries for a number of decades. But, if that is what our electorate wishes to have, that is the type of government and economic system we will have.

      • Bobbin_Along says:

        HR Guy.  I don’t know what third world countries you have been too where there is food stamps, welfare, public housing and free healthcare.   I have been to several “third world” countries and there is no government subsidization for these types of social programs.  That is one main reason they are known as third world countries.  It is sponsored charitable and religious organizations who support these types of efforts in the third world for the most part.  

        I do agree however, there must be a dynamic shift in the thinking of our elected officials, both Democrat and Republican.  When looked at as a whole the federal budget is dominated by social entitlement spending (over 2 trillion dollars) and defense (over 900 billion dollars) where only about 2.5 to 2.6 trillion dollars is collected in taxes.   The rest is borrowed and we will have to pay that debt (estimated to be 17 trillion in total by the end of the year) to all those investors who bought U.S. government backed bonds, notes, and loan instruments.   

        If this level of borrowing continues there is the likely possibility the U.S. will not be able to pay the debt and that will be a dire day for all citizens, and I mean citizens of the world, as no one will loan our government money without charging exorbitant interest.  The government will be be forced to dramatically trim back spending as a result and the “Great Recession” and even the “Great Depression” will look like a day in the park in comparison.  

        Imagine what would happen to the economy if the government were to remove overnight 1.3 trillion dollars from a economy where the GDP is 16.4 trillion dollars.  It won’t even be like Greece as the Greek economic problems only caused problems in Europe for the most part.  The U.S economy is so interwoven in the world economy, its failure, due to debt, would take a generations time to overcome and the U.S. would never be the same.  

    • ReaperComing says:

      Not exactly granny your Social security taxes went back up 2.0% So you are in the hole 1.5 %

      • Reality says:

        I am covered under CSRS.  So, I pay CSRS rather than SS.  Just for your info, CSRS costs 7% of an employee’s entire salary (no cap for those above $110K.)  The GOP wants to increase CSRS to 12%.  (If raising SS is a “tax increase”, so is this!)  CSRS employees did not get the 2% “holiday” that you enjoyed and it was paid for by freezing our pay for two years.

        So, suck it up cupcake!  If you want SS benefits when you retire, you are going to have to pay into the program.  Federal employees can’t afford to fund another price break that you think you are entitled to.

        • Hopeisnot A. Plan says:

          Why would you expect a 2% “holiday” on something you don’t pay???

        • DeathWatch says:

          I am funding my retirement fund at over 20% in addition to FERS and Security and will probably receive about 50% of pre retirement income (never see what CSRS retirees receive) in addition to the possibility of running out of funds before death.  For FERS employees to assist in funding any CSRS retirement is absurd.      

      • grannybunny says:

        The Social Security taxes just went back to where they were prior to the temporary tax relief used to stimulate the economy.  Most people don’t mind contributing to Social Security; nor do I.

        • Japygid says:

          Amen.   And I might add that all the furor over “raising” taxes had to do with RETURNING tax rates to the level they were at before the “temporary” Bush cuts.  Am I the only one that remembers they were TEMPORARY?

          • grannybunny says:

            Well, they were intended to be temporary.  Now, for most of us — with income less than $400K – they’re permanent.

        • WORLDBFREE says:

          I don’t mind if it actually goes to SS and is only used for that purpose.

    • guestwo says:

      Another ignorant statement from GB.  Hey where did this money come from?  Oh yeah, Bernanke has the printing presses running 24 hours a day.  Called funny money! 

    • Tinman says:

      Deficit spending on the backs of our children/grandchildren is bad business under any set of circumstances. The projected $20 Trillion (20 thousand billion dollars) doesnt include future wars/conflicts/natural disasters. What then? Where does it end?

  23. FedTaxPayer says:

    If the powers that be continue to focus on Fed pay and other entitlement programs, they can continue to make massive profits from tax payer dollars on oil, BIG pharma, and government contracts that are the real reasons for the current fiscal problem.  Talk about supported fraud, waste and abuse!  Those in congress have investments in oil, pharma, and other products from those contracts in which WE pay an absurd amount of money for that are abandoned (Iraq reconstruction) or never meet requirements so the contractors can require more money to “rethink” things.  Coming up on 12 years officially at war so we can try to get more oil, uh…”go after terrorists”.  How much have WE paid for that in addition to injuries and deaths to our service men and women?  To keep things going, WE, the go-along-with-it and pay-for-it, tax payers have been told efforts need to be diverted to Afghanistan and Korea.  And, just so we don’t try to fight back, we’re being kept poor, sick, and about to lose our second amendment rights!

  24. HLL7575 says:

    A 0.5% pay raise at this point, even for the rest of nine months in 2013 (as it currently stands) would be mainly symbolic, given that the 2% payroll tax holiday is now gone.  Let’s all pay attention now to the debit ceiling/sequestration/2013 budget fights (we still need a 2013 budget, right?) in the coming months.  My gut feeling is that there is a decent chance for some kind of a “grand bargain” struck with the following elements:

    1.  Change CORA to use chained-CPI (even Nancy Peloci had indicated she’s fine with that change).
    2. Require feds to contribute more to their retirements (likely for new hires).
    3. Change annuity calculation from Hi-3 to Hi-5.

    In a way, the above three together might be a lesser pill to take than more severe cuts to feds’ benefits.  We are all in this, and I am willing to accept the above to assure long-term stability of feds’ benefits.

    • Fed_Peasant says:

      I agree!!  It was a crumb that fell from the table.  It is likely that there will be no more pay raises for the next three years at least.  The republicans support that.  If so, three years from now, it will be said that fed pay was frozen for the past 3 years & not the past 5 years, which was essentially the case!!  This drama will continue for a long time to come!!

    • Gubmit Man says:

      Well a sharp stick in one eye is better than a sharp stick in both eyes but I am against chained CPI.  The irony is that it might not matter for me if the high 3 goes to high 5 because their won’t be any raises anyhow. Two more long years.  I am ready to go the first day I am eligable to retire.

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