Will federal employees receive a raise in 2013?
The most accurate answer is no one knows but there are reasons for optimism. There is a good chance that federal employees will get a raise starting in January. It may not be a large one, and it will certainly be less than what many employees think they should get. But, with deficits exceeding more than a trillion dollars each year and debt levels setting new records, high unemployment among the American workforce and at least some in Congress looking for ways to cut government spending, any raise would be welcome by many readers.
Current Status of a 2013 Pay Raise
The most recent event in this yearly political drama is the Senate rejected an amendment to a highway funding bill that would have extended the current pay freeze through January 2014. The purpose of the pay freeze was to pay for federal spending such as energy projects, tax deductions for college expenses and the loss in federal revenue as a result of state and local property tax deductions.
Some readers will recall that the administration proposed a pay freeze for federal employees late in 2010. (President Obama Proposes Freeze on Federal Civilian Employee Pay for 2 Years)
A two-year freeze was put into place for 2011 and 2012 although the freeze did not extend to within-grade increases and did not apply to all federal employees. Also, some federal employees received a promotion with an accompanying increase in pay. Some readers have also commented that in some agencies, some employees have been re-classified into a different job series which resulted in a pay raise through the back door as a way of getting around a pay freeze.
In addition to the recent vote in the Senate against extending the pay freeze, the White House has proposed a pay raise of 0.5 percent for next year’s budget.
So, with the Senate and the White House in favor of a pay raise of at least 0.5 percent, there appears to be a good chance of at least a small raise being passed for 2013.
The real question is what will happen in the House of Representatives. A rider could be attached to future legislation imposing another pay freeze. This has already happened but the attempts have been defeated in the Senate.
While federal employee unions often devote much of their time and energy in trying to elect Democrats during each election, and, along the way, generally portraying all federal employees in the politically neutral “civil service” as supporters of one political party, the federal pay raise (or lack thereof) is always heavily influenced by political considerations. That is especially true during a presidential election year.
While many Republicans probably believe the federal workforce receives pay and benefits that are often too high when compared to the private sector, that issue is secondary to winning as many votes as possible in Congressional and presidential elections. A small federal pay raise is not expensive enough to take the chance of generating the negative publicity that would emanate from inside the beltway by blocking a federal employee pay raise. A pending election focuses the attention of politicians on their political survival and trumps any other issue. In the overall scheme of things, the federal employee pay raise is a relatively minor issue for many elected officials. That will help in the negotiations for a pay raise next year.
Locality Pay Vs. Across the Board Pay Raise
The federal pay structure is complex and the procedure for determining the raise each year is convoluted. In most years, there is an average pay figure released. The actual amount of pay received by an individual federal employee depends on the geographic location of the employee. (See, for example, Executive Order Issued on 2009 Pay Increase: Where Are the Biggest Winners Located?)
If the final pay raise is 0.5%, as proposed by the White House, Congress could decide to award an across the board pay increase so that everyone would receive the same percentage increase. Or, with the ability of computers to compute into very small amounts, the locality pay rates could still be applied which would mean some federal employees, such as those in the “rest of the U.S.” would receive virtually no increase. Or, of course, Congress could decide to pass a higher pay raise than the 0.5% proposed.
The Bottom Line
The bottom line is that there is a good chance for at least a small pay increase in 2013 for active duty federal employees.
Remember that in 2010, the Obama Administration proposed a pay increase of 1.4% for 2011. The final raise: $0. (See Negotiations Starting on 2011 Pay Raise: How About 1.4%? and President Obama Proposes Freeze on Federal Civilian Employee Pay for 2 Years)
While federal employees have not had a pay raise in two years, the federal workforce has had a good run of pay raises for a number of years. For those who have been working for Uncle Sam for a few years, this chart below compares federal pay raises to the private sector from 2000 – 2008. The figures in this chart are from the tables by the Bureau of Economic Analysis. While the consistent increases may make some feel better about the current pay freeze, there is little doubt this record of consistent increases will be one of the factors that will be brought up in discussions on your 2012 pay.
For those who have not received a promotion or a within-grade increase, two years is a long time to go without a pay raise, even with relatively modest inflation. That situation is likely to change in January 2013.
We will, of course, keep our readers advised as events progress throughout the year.