Will federal employees get a raise in 2021? If so, how much will it be?
No one knows. Any figure discussed as a possibility is only a “best guess” at the end result of a complex process.
The road to making a decision on a new pay rate for federal employees in the coming year is always unpredictable with numerous bumps and potholes. Some years are exceptions. 2021 will not be one of the exceptions.
Right now, the “best guess” is an average raise of 1% starting in January. There are already many factors at work that may lead to a different result.
2020 is an election year. Politicians always express their concern for “the people” when running for office. A rough translation means those running for election will say or do what they think they must to return to Congress for another term. For those Congressmen with a large federal population in their district, it means issuing press releases about why federal employees need a “modest” raise that is higher than what is likely to be approved.
For those running in a district with a small or insignificant number of federal employees voting, it means holding down federal spending and reducing the massive federal deficit—including voting for a small raise or no raise at all in the coming year for federal employees.
Where Does the 2020 Raise Stand Now?
In some years, Congress will pass annual federal pay rate adjustments. It usually does this through the Financial Services and General Government appropriations bill. There is no requirement that the issue be addressed by Congress, and in some years Congress does not pass legislation on the subject.
When appropriations bills do not address a pay raise, federal pay adjustments are governed by the Federal Employees’ Pay Comparability Act of 1990 (FEPCA) but that legislation is not necessarily the final say either.
The president can, and often does, propose an alternative pay raise that ignores the FEPCA formula. If the president determines that “because of national emergency or serious economic conditions affecting the general welfare,” a pay adjustment would be inappropriate based on FEPCA, he can propose a different figure.
This frequently happens. It happens regardless of the president’s political party.
President Trump’s Alternative Pay Plan
Normally, an alternative pay plan is proposed late in the year. But, this year, on February 10, 2020, the president transmitted his alternative pay plan for calendar year 2021 to Congress. President Trump’s plan was to increase federal pay rates by one percent in 2021 without any adjustment to existing locality pay rates.
In February 2020, most Americans were not experiencing a pandemic, massive stimulus packages had not been passed by Congress, and the economy was strong, healthy and vibrant with very low unemployment rates.
The political and social landscape has changed. There are numerous headlines about Americans being under siege, and the likely Democrat running for president wants to “transform America”.
In other words, while President Trump proposed a one percent pay raise in February, he is not bound by that proposal.
What is Congress Doing?
A draft of the fiscal year 2021 budget from the House Committee on Appropriations does not address a federal employee pay raise. The effect of this would be to accept the plan for a one percent raise as proposed by President Trump.
In the long run, the initial draft may be forgotten and likely to be substantially changed before anything is passed by Congress. It is also possible there will be another “alternative pay plan” from President Trump before the year is out.
When an executive order is finally issued, usually in December, the amount of any pay raise for 2021 will be implemented and will become effective in January.
However, even that is not always the case. In 2019, the pay raise amount was approved in February and made retroactive to January.
There is a long way to go with intervening steps along the way for any pay raise for federal employees in 2021. The good news for the federal workforce is that there is likely to be a raise in some amount for 2021.
For retirees who may be wondering, this process will not impact any cost of living adjustment (COLA) for 2021. Determining the amount of a COLA for the coming year is a separate process and the amount of any COLA increase for 2021 will be based on a predetermined formula.