2.7% Federal Raise Headed for the Trash Heap?

The possibility of a 2.7% average raise for federal employees took a decidedly negative turn this week with the announcement that Congress will, in effect, keep the continuing resolution in effect for the remainder of the fiscal year.

FedSmith recently published a pay table that showed how much federal employees would receive next year if the 2.2% pay raise becomes reality. In the interim, the proposed average pay raise of 2.2% for white collar federal employees is looking more certain. Many readers were still hoping for an average raise of 2.7%. That possibility is not dead but it is looking less likely.

Congress has only passed two appropriations bills for fiscal year 2007 (Departments of Defense and Homeland Security). A new Congress will convene in January.

Democrats Robert Byrd and David Obey say they plan to offer a single spending bill covering 13 Cabinet departments. “It is important that we clear the decks quickly so that we can get to work on the American people’s priorities, the president’s anticipated war funding request and a new budget,” according to their statement.

In effect, the continuing resolution that is now in effect until February 15th would remain in effect throughout the rest of the fiscal year. The plan would kill thousands of earmarks (or “pork” if you prefer) that Congressmen have been adding to bills to benefit their home states.

The Democrats’ plan has the added benefit of staying within the reduced spending limits sought by the White House but it will affect budget priorities where the administration had wanted to increase spending.

What does this all mean for your 2007 pay raise? Keep in mind the military is getting a 2.2% raise next year. (See Your 2.7% Pay Raise: Is it “Slip, Slidin’ Away“?) Anything can happen (including a higher raise) but the federal pay scale is likely to pale in comparison to the publicity received by other political issues on the table in January with a new Congress. No doubt the argument in the minds of some who will be voting on the issue will be along the lines of: “Soldiers in Iraq and Afghanistan are getting a 2.2% raise. Why should the federal workforce not putting their lives on the line get more than our military?”

In January 2006, we published an article with predictions for your 2007 pay raise. Among the predictions: You would not know the amount of the actual raise until December. As it turns out, that part of the prediction was wrong. The reality is you will not know until sometime in early 2007.

The bottom line: Keep investing in your Thrift Savings Plan to provide for a solid retirement from your federal career. That money is yours and the more you save, the more you will have to spend. Federal retirees will be getting a COLA adjustment of about 3.3% depending on several different factors. You cannot control the amount of any pay raise but you can control the amount of your TSP investment and how you allocate your TSP investments.

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