1.6% Pay Raise for 2017 Advancing in Congress

By on May 25, 2016 in Pay & Benefits with 292 Comments

Image of road sign with words 'pay raise just ahead'

The amount of an annual pay raise, if any, for most of the federal workforce is a meandering, confusing process interrupted by political considerations, elections and budget deficits. But, with few exceptions, the process eventually reaches a conclusion shortly before the start of the new year. A 2017 raise will not be an exception to this process.

The good news for most readers is that the recommendation by the administration for a 1.6% average pay raise for the federal workforce is on track for implementation by January 2017. Here is what has happened (or what has not happened as is often the case with Congressional bills).

The House Appropriations Committee has released its fiscal year 2017 financial services bill. This bill provides annual funding for the Treasury Department, the Judiciary, the Small Business Administration, the Securities and Exchange Commission, and other related agencies. This bill usually contains legislation on federal employee pay. This year, a clause in the legislation reads, in part:

“An employee serving in an Executive Schedule position, or in a position for which the rate of pay is fixed by statute at an Executive Schedule rate, may not receive a pay rate increase in calendar year 2017, not withstanding schedule adjustments….This subsection applies only to employees who are holding a position under a political appointment.”

In effect, the legislation does implement a pay freeze but only for political appointees. In plain English, this means that Congress has, so far at least, not interfered with the President’s recommendation of a 1.6% federal pay raise for next year.

The route for an annual pay raise is therefore following the same path that has occurred in the past several years. In 2016, the approximate amount of the pay raise was established late in August. Since Congress did not take any action on the pay raise, President Obama issued a letter on August 28, 2015 directing a 1% pay raise with an additional amount for locality pay. That amounted to an average of 1.3% for federal employees.

That timing is likely to occur again this year to implement a raise for the federal workforce next year. The president has until August 31st to formally announce his pay raise proposal for federal employees which is why the letter was issued on August 28th last year.

Federal employees have not fared well during the past eight years as far as annual pay raises are concerned. There was a 1.3% pay raise in 2016 when locality pay was figured in and 13 new locality pay areas were also created. A raise of 1.6% would be the largest raise since 2010 when there was a raise of 2%.

As many readers will recall, there was a pay freeze on annual pay raises for several years, although there was an increase in the average pay amount during that time with within-grade increases, promotions, or reclassification actions. The last year a federal pay raise topped 4% was during the Bush administration in 2004.

For a longer term perspective on federal pay raises, check out Federal Pay Raises Through the Years.

In a FedSmith survey, federal employees thought the 2017 pay raise should be 5.3% and, of course, unions are pushing for this higher amount. A raise of that amount is very unlikely to occur.

Of course, some federal employees fare better than others, particularly in agencies that are outside of the regular General Schedule pay system. Check out individual federal employee salaries and sort the salary column to see how many highly compensated federal employees work in the federal government.

For federal employees who are retired, we will not know the amount of any COLA that will be factored into your retirement annuity until this Fall. While it is too early to know what will happen to the COLA for next year, it now appears that there may not be a COLA again in 2017. (See Your COLA Increase in 2016 Will Be: Zero)

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

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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