2017 Federal Pay Raise and COLA Update

By on September 8, 2016 in Pay & Benefits with 93 Comments

Image of 2 dollar signs

Several readers have asked questions related to a 2017 federal pay raise. The questions are:

  • Is the 1.6% pay raise for current federal employees a “done deal” now?
  • When will we know about the 2017 locality pay raise in different geographic areas?
  • Will federal retirees also receive a 1.6% cost of living adjustment (COLA)?
  • Will the pay raise for military personnel be the same as it is for civilians?

2017 Pay Raise for Current Federal Employees

Congress could enact a an amount other than an average 1.6% pay raise . That is unlikely, however, as Congress has not taken any action on a raise this year (or for the last two years).

It is an election year. Elected officials do not want to make visible decisions impacting their re-election chances.  Congressmen in districts with many federal employees will be in favor of a larger raise (e.g. 5.3%). Others will not want to support a larger pay raise, especially with unions considered an adjunct of the Democratic party by many Republicans.

Unions are already issuing press releases in favor of a larger raise. AFGE, for example, wrote:

A 1.6 percent pay raise does nothing to make up for years of pay freezes and miniscule increases that have left federal employees worse off today than they were at the start of the decade….AFGE reiterates our call for Congress to pass a 5.3% pay raise in 2017 that will make up for years of neglect and begin to close the widening gap between employees in the federal and private sectors.

Image of AFGE president J. David Cox, Sr.

American Federation of Government Employees National President J. David Cox Sr.

Maryland Senator Ben Cardin (D-MD) also advocates a bigger raise for his constituents. He stated:

We cannot attract and maintain highly qualified personnel by continuing to undervalue the men and women who keep our borders secure, our food and water safe, care for our veterans and the elderly, teach our children, and search for cures to crippling diseases. A third year of a one-percent pay raise is far below what is warranted based on the hard work and expertise, dedication and sacrifices of our federal workers.

Image of Senator Ben Cardin (D-MD)

Senator Ben Cardin (D-MD)

Despite the sound and fury, a pay raise larger than that proposed by President Obama is unlikely. As stated in his letter to Congress, “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….” (See How Much Will Your Pay Increase in 2017?)

When Will We Know About The 2017 Locality Pay Raise In Different Geographic Areas?

Based on previous experience, we can predict when decisions will be made on locality pay.

Last year, locality pay rates were issued on November 30th. This year, readers will probably find out the 2017 locality pay rates on or about…November 30th.

The 2016 report from the President’s Pay Agent was dated October 23rd. Their reports appear on different dates but, as no report has been forthcoming, it is likely to be another month or more before we know if new locality pay areas will be added or others will be modified.

Will Federal Retirees Also Receive A 1.6% COLA In January?

Federal retirees will not receive a 1.6% COLA in 2017. Federal pay and increases in retirement checks are different processes.

In the latest month, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased by 0.22 percent. That index is what is used to determine the amount of any COLA for 2017.  The index is now 0.23 percent higher than the average CPI-W for the third quarter of 2014, which is the comparative figure used to calculate the 2017 COLA increase. (See Bleak Outlook for 2017 COLA for a longer explanation.)

For the average Social Security recipient, any increase will probably be about $5.00 per month. The final relevant inflation figures will not be available until mid-October.

For most federal retirees, their increase in health insurance premium costs will probably be greater than any COLA increase.

Will The Pay Raise For Military Personnel Be The Same As For Civilians?

Joe Heck, (R-NV) and a member of the House Armed Services Committee, reiterated his support for providing troops with a “2.1% pay increase as required by law.” He noted this is the fourth year the president has proposed a smaller military pay raise than that mandated by the 1990 Federal Employees Pay Comparability Act.

As with the civilian pay raise, there are interest groups and individuals pushing for a higher pay raise for military personnel.

Anything can happen. While the fiscal year ends September 30th, a divided Congress has yet to agree on a federal budget. Negotiations will be getting intense because of time constraints and a general dislike for continuing resolutions.

But, for both military and civilian employees, don’t waste your time wondering if a bigger raise for 2017 will be coming your way.

© 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.