How Much Will Your Pay Increase in 2017? President Submits Pay Plan

By on August 31, 2016 in Pay & Benefits with 92 Comments

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

The process of determining the 2017 federal employee pay raise for the next year has reached a milestone.

President Obama issued a letter on the alternative pay raise to the Speaker of the House and the President of the Senate today. It calls for a 1% across the board pay raise with an additional amount for locality pay.

How Big Will Your Pay Raise Be in 2017?

There will be a total pay increase of 1.6% for many federal employees. The President’s letter states, “The alternative plan for locality payments will be limited so that the total combined cost of the 1.0 percent across-the-board base pay increase and the varying locality pay increases will be 1.6 percent of basic payroll, consistent with the assumption in my 2017 Budget.”

This is similar to what happened last year with an across-the-board pay raise of 1% and an additional amount for locality pay that amounted to an average raise of about 1.3%.

The letter also concludes that these decisions will not materially affect the government’s ability to attract and retain a well-qualified Federal workforce.

The full text of his letter is included below.

This is the fourth year in a row that the president has submitted an alternative pay plan for the federal workforce. The average federal employee salary in 2015 was $81,578 according to the Office of Personnel Management. There was a pay freeze during three years of the Obama administration.

If the president had not advised Congress of his alternative pay plan by August 31st, the increase mandated by the 1990 Federal Employees Pay Comparability Act (FEPCA) would have kicked in. That would have been around 2.1 percent. Congress could still enact legislation with a different amount than that outlined by the president. That is unlikely.

This will probably disappoint many readers who were expecting an across-the-board pay raise of 1.6%. But, as the letter states “the varying locality pay increases will be 1.6 percent of basic payroll…” meaning many federal employees may get the 1.6% or a little more depending on the locality.

What About Locality Pay?

The latest development also discusses the locality pay for 2016 but without revealing any specific amount:

“…I will make a decision by November 30, 2016, regarding an alternative plan for locality payments”

We will not know what the pay rates will be in locality pay areas until more information becomes available.

The adjustments described above shall take effect on the first applicable pay period beginning on or after January 1, 2017.

What About Military Personnel?

President Obama has also issued a letter to the Speaker of the House and the President of the Senate regarding the military pay raise for 2017. The letter states there will be a:

“…2017 monthly basic pay increase (of) 1.6 percent. This decision is consistent with my fiscal year 2017 Budget and it will not materially affect the Federal Government’s ability to attract and retain well-qualified members for the uniformed services.”

The pay increase will take effect on January 1, 2017.

Letter from the President — Pay for Federal Civilian Employees for 2017

TEXT OF A LETTER FROM THE PRESIDENT TO THE SPEAKER OF THE HOUSE OF REPRESENTATIVES AND THE PRESIDENT OF THE SENATE

August 31, 2016

Dear Mr. Speaker: (Dear Mr. President:)

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 2017.

Title 5, United States Code, authorizes me to implement alternative pay plans for pay increases for civilian Federal employees covered by the General Schedule and certain other pay systems if, because of “national emergency or serious economic conditions affecting the general welfare,” I view the adjustments that would otherwise take effect as inappropriate.

Accordingly, I have determined that it is appropriate to exercise my statutory alternative plan authority under 5 U.S.C. 5303(b) and 5304a to set alternative January 2017 across-the-board and locality pay adjustments. Specifically, I have determined that for 2017, across-the-board pay increases will be 1.0 percent. Also, I will make a decision by November 30, 2016, regarding an alternative plan for locality payments under 5 U.S.C. 5304a. The alternative plan for locality payments will be limited so that the total combined cost of the 1.0 percent across-the-board base pay increase and the varying locality pay increases will be 1.6 percent of basic payroll, consistent with the assumption in my 2017 Budget. These decisions will not materially affect our ability to attract and retain a well-qualified Federal workforce.

The adjustments described above shall take effect on the first applicable pay period beginning on or after January 1, 2017.

Sincerely,

BARACK OBAMA

© 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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