President Signs Off on Pay Raise for Feds

President Bush has signed the appropriations bill for several agencies that contains the 2006 pay raise for federal employees.

It has been a long, winding road, as usual, for the annual pay raise for federal employees. But at least the end is in sight and federal employees now know that they will be getting a raise next year.

President Bush has signed the bill approving the appropriations for the Departments of Transportation, Treasury, and Housing and Urban Development. The bill provides about $138 billion to run these agencies during the next year.

As we reported previously, this is the bill that contains a provision for the 3.1 percent pay raise for federal employees. This means that the 3.1 percent average pay raise for federal employees has been passed by Congress and signed off by the President. It also means that, if you are a federal employee, you will be getting a raise in January.

How much of a raise will you get? We don’t know. You won’t know the actual amount of your 2006 raise until later.

Many federal employees receive locality pay. Employees working in those higher cost of living areas receive additional money. The amount of the raise to be devoted to locality pay and the amount for the basic pay raise has not been determined–or at least not publicly announced. President Bush will issue an executive order in the next few weeks that outlines how much of the money goes into the basic pay raise and how much for locality pay.

Approval of the pay raise means that civilian federal employees and military personnel will be receiving the same pay raise. And, in an unusual twist, it also means that active federal employees will be receiving less of an increase in 2006 than the 4.1% to be received by many federal retirees.

The most likely reason for the discrepancy is that setting the pay for active federal employees is a process that ends up taking a year (sometimes more) and the debate usually begins early in the year. The cost-of-living increase for retirees is determined by a formula that is calculated in the fall. In effect, the inflation that started showing up later in the year was reflected in the retiree increase; it was not fully considered in the increase given to active federal employees.

You can check out the amount of current and historical pay received by federal employees by grade and by region using our pay calculators. In response to those readers who have been asking when we will update our pay calculators to reflect the 2006 pay increase, we cannot update the calculators until all of the information is in hand. The 2006 calculators will be posted some time after that information is released.

Congratulations to our readers on receiving a new pay increase.

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. Follow Ralph on Twitter: @RalphSmith47