Federal Employee Pay Raise Process Moving Ahead

The 2018 federal employee pay raise is following the usual tortuous path. Probable result: an average pay raise of 1.9% in January.

Federal Employee Pay Raise and the FECA

Federal pay rates automatically go up each year by a certain percentage under a formula established by the Federal Employees Pay Comparability Act (FECA) unless Congress or the president take action to implement an alternative plan.

As most readers know, the FECA pay raise percentages are virtually irrelevant. Congress or the president will again take action to implement an alternative plan.

As of now, the presumed federal employee raise that would take place in 2018 is 1.9%. The deadline for the White House to propose a different rate increase is August 31. This letter will typically be issued just a few days before August 31st.

Role of President and Congress on Pay Raise

In some years, appropriations bills in Congress have precluded the president from granting federal workers a pay increase and effectively freezing federal employee salaries. In recent years, Congress has left the decision on a pay raise up to the president. While Congress could still take action if it decides to do so, there is no indication so far in 2017 that Congress will pass legislation on this particular issue.

Latest Action by OPM

Last week, the Office of Personnel Management (OPM) issued its “Annual Review of Special Rates.” The OPM memo “provides for a general review of special rates to support possible pay actions to take effect in January 2018. ” The memo does not require agencies to respond to the request. If there is no response, there will be a “default January 2018 pay adjustment for special rates, which is equal to the percentage adjustment (if any) in GS base rates in January 2018.”

The OPM memo also notes “the general increase in GS base rates in January 2018 would be 1.9 percent.  However, the President is authorized to provide for alternative adjustments in GS base rates” and “the President may provide for alternative adjustments in locality rates authorized under 5 U.S.C. 5304.”

What This Means for a 2018 Pay Raise

In effect, OPM is just noting that, for the time being, it appears the overall federal pay raise in 2018 will be 1.9%. If this occurs, we do not know how this will apply to different locality pay rates in effect throughout the country. Will everyone get the same pay raise? Will there be a base raise amount (1%, as an example) with the overall average for the federal coming out to 1.9% when locality pay rates are added?

Chances are, a scenario like this one will become a reality as it did in 2017.

There are indications the Trump administration would prefer a pay for performance plan for the federal workforce rather than a system which rewards both average and outstanding employees with the same pay raise. While locality pay does not correlate to a pay for performance system, it is at least somewhat different than an across the board raise for everyone in all geographic areas. (See, for example, ‘Antiquated Assumptions’ About Federal Pay and Benefits)

When Will We Know Amount of 2018 Pay Raise?

Realistically, the amount of the pay raise will not be finalized until December 2017. As we know from last year, last minute changes can occur in unexpected ways. Last year, the executive order was issued on December 27th.

There is usually an executive order issued in December and OPM will provide information about the new pay rates for different locality pay areas along with the rates for each GS grade and step.

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