2017 Federal Employee Pay Raise: Where Does it Stand?

By on August 10, 2016 in Pay & Benefits with 126 Comments

Image of dollars and coins

When will federal employees know what to expect for a pay raise for 2017? President Obama proposed a raise of 1.6% early this year in his budget proposal.

Last year, President Obama issued a letter on August 28, 2015 approving alternative January 2016 across-the-board and locality pay adjustments. We can expect to see a similar letter issued this year, possibly as late as the week of August 29th. Last year’s letter read as follows:

“I am transmitting an alternative plan for pay increases for civilian Federal employees covered by the General Schedule and certain other pay systems in January 2016….Specifically, I have determined that for 2016, across-the-board pay increases will be 1.0 percent.”

But, for those who pay close attention to this issue, you may recall that the average pay raise amounted to 1.3% and not 1%. The difference was locality pay. An additional 0.3% was allocated to locality pay for 2016. The actual percentage of the 2016 raise varied between different locality pay areas. The actual amount of the raise was not disclosed until December.

An executive order was issued on December 19, 2015. At that time, federal employees learned what their actual pay raise was going to be for 2016.

It is likely that a similar scenario will occur again this year. We anticipate a letter will be issued late in August approving an alternative January 2017 across-the-board pay raise. It is also likely there will be locality pay adjustments.

And, as happened in 2015, it is likely an executive order will be issued late in the year that outlines the specific pay raise amounts.

Pay Raise Options

As usual, action on a pay raise will not be final until all other options have expired. Congress has the final say on any pay raise if it chooses to do so. While the president has recommended a raise of 1.6%, Congress could come up with what it considers a more appropriate pay raise for federal employees. That is unlikely at this date since no action has been taken in Congress and no apparent effort to take action appears to be underway during this year of national elections.

It is also possible that the president will not issue a letter with an alternative pay plan by the end of August. If that happened, a higher pay increase mandated by the Federal Employees Pay Comparability Act (FEPCA), would come into play.

This is also an unlikely scenario. While FEPCA provides an automatic formula to determine the annual federal employee pay raise, it has been ignored because of how much it would cost to implement it.

The president has authority under FEPCA to submit an “alternative” pay plan with a lower raise than that called for by the FEPCA formula (or none at all) “if because of national emergency or serious economic conditions affecting the general welfare.” In reality, the final pay raise has often been decided by Congress, which may authorize higher or lower increases than what were originally requested by the president in his annual budget submissions.

In the most recent past, Congress has declined to take action and the president has issued an alternative pay plan. That is again the most likely scenario for 2017.

What about the effort to secure a 5.3% pay raise for federal employees? That effort garnered favorable publicity for some unions and some in Congress but it has not gone anywhere again in 2017.

When more information becomes available, we will provide the latest information to our readers.

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


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.