President Issues Order Finalizing 2017 Federal Employee Pay Raise

An executive order finalizing the 2017 GS pay raise for federal employees has been published.

We have reached the end of the long road to determining the final 2017 federal employee pay raise. As usual, the final document was issued shortly before the end of the year as an executive order.

The new pay rates include an average pay raise of 2.1 percent and will be effective on the first day of the first applicable pay period beginning on or after January 1, 2017.

Final 2017 Federal Employee Pay Raise

President Obama has issued an Executive Order (below) ordering the 2017 pay raise that will average 2.1 percent. This is consistent with the “revised” pay plan issued on December 8. This is an increase over the 1.6 percent raise in 2016. It is also larger than the 1 percent increase civilian federal workers received in 2015 and 2014.

Before that, a partial three-year pay freeze had been in effect. (See President Issues Memo Explaining Pay Freeze)

For 2017, there is an across the board 1% pay raise. An additional amount is added for locality pay rates. The  total raise for federal employees under the General Schedule will average 2.1%.

The exact amount of the raise will depend on the locality where a federal employee is working.

Locality Pay for 2017

There were no new locality pay areas added for 2017. The Federal Salary Council recommended adding Burlington, VT and Virginia Beach, VA. This recommendation was not adopted for 2017 by the Pay Agent. These new locality pay areas will most likely become part of the locality pay system in 2018. (See Federal Employee Locality Pay Update: Holding Off Burlington and Virginia Beach)

Salary Council recommendations to add in a large number of areas adjoining existing locality pay areas were also not adopted by the pay agent. (See Pay Agent Shoots Down Large Expansion of Locality Pay)

The Salary Council also recommended new locality pay areas for San Antonio, TX and Birmingham, AL. These will not be added in 2017 either. The earliest they will be added is January 2018.

The 2017 locality pay rates are listed for each locality in 2017 Locality Pay Rates for Federal Employees: San Francisco and DC Areas On Top.

Military Pay and 2017 COLA for Federal Retirees

The executive order also implemented a 2.1 percent pay raise for military personnel.

Several readers have asked if retired federal employees will also receive this pay raise. If they are not receiving the raise, they question why they should not receive the same pay raise since their cost of living is increasing.

The pay raise does not apply to federal retirees. There is a separate formula for determining the cost of living adjustment (COLA) for federal retirees and Social Security recipients. The increase in January will be 0.3 percent. This calculation was determined in October.  (See 0.3% COLA Increase for Federal Retirees and Social Security Recipients in 2017)

Executive Schedule and SES Pay Rates for 2017

The executive order also sets the range of rates of basic pay for the Executive Schedule which will be as follows.

Level Rate
Level I $207,800
Level II $187,000
Level III $172,100
Level IV $161,900
Level V $151,700

The basic rates for 2017 for the Senior Executive Service (SES) will be as follows:

Structure of the SES Pay System Minimum Maximum
Agencies with a Certified SES Performance Appraisal System $124,406 $187,000
Agencies without a Certified SES Performance Appraisal System $124,406 $172,100

The Executive Order was issued after Congress opted to support President Obama’s recommendation for a average 2.1 percent total pay raise for federal employees and military personnel. The legislative branch could have opted for a different amount but did not do so.

Note also that the maximum special rate is the rate payable for level IV of the Executive Schedule (EX-IV). (The EX-IV rate will be increased to $161,900 effective the first day of the first pay period after January 1, 2017.) Because of the EX-IV cap, some GS-14 and GS-15 special pay rates for 2016 are capped.

2017 Executive Order on Federal Employee Pay

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