How much will the federal employee pay raise be in 2022?
This is an annual question. It is always one of the most popular topics among readers each year. As of this day, the most likely amount is 2.7%. That is a long way from being a certainty as a lot can happen between now and January 2022.
Perhaps a most common comment among those who discuss the issue is some version of “the proposed pay raise is not enough.” This comment comes in a variety of ways from ranging from “We still have not made up for the Obama years when the raise was zero” to “We are already 27% (fill in the latest number) behind the private sector”.
One reader asked the question: “What is the highest pay raise ever given to federal employees?” There are probably different ways to answer that question including “How far back to you want to go for an answer?”
Largest Federal Pay Raise
The best answer, going back a few decades to the end of World War II in 1945, is 15.9%. That was followed by another 14% raise in 1946. Obviously, the ending of the War with Germany and Japan played a big role in raises of that magnitude. The Federal Employees Pay Act of 1946 stated, in part, that federal employee pay: “is hereby increased by 14 per centum or $250 per annum whichever is the greater, except that no such rate shall be increased by more than 25 per centum.”
There was also a pay cap of $10,000 in 1945. One could not live on that amount in 2021 but this was for the top of the pay scale in that era so not many employees made that much. Of course, $10,000 in 1945 would be worth about $149,552.78 in 2021.
While there are often complaints about federal employee pay, the comparison is worth considering. The Executive Level IV rate was increased to $172,500 effective the first day of the first pay period after January 1, 2021. Because of this cap, some GS-14 and GS-15 special pay rates are capped.
Is 2022 the Year for a Big Pay Raise?
Since we do not know what the person was thinking who wanted this information, my guess was it was an expression of hope for a higher raise in 2022. There is a Democrat in the White House who loves to spend money with very few limits; the House is controlled by Democrats and the majority there also loves to approve massive spending bills; the Senate is tied 50-50 but the vice-president can break a tie vote; the administration loves to curry favor with unions and they are always in favor of higher raises; rapidly increasing inflation is bringing back memories of inflation under the Carter administration so perhaps a big increase is in order.
In other words, this may be the year to “go for broke.” Since the federal government is in the mood for incurring trillion-dollar deficits (with apologies to future generations who may be stuck with paying off the debt), perhaps 2022 will be the year of a very large federal employee raise.
Biggest Pay Raise by Decade
Determining what will happen in the political process of determining the annual pay raise for federal employees is a fool’s errand. Too many things can happen; many of which will be unexpected.
A reasonable guess, based on the president’s proposed budget, is 2.7%, but even that is just a guess.
But, as requested, we can take a look back at factual data. What is the largest pay raise by decade over the past several decades?
Thanks to President Nixon
Forget about Watergate and the first televised debates, the Vietnam War and opening up the political wall around China. The most important event for this article is that under President Nixon, federal employees received the highest pay raise of the 70’s.
In 1972, the federal pay raise was 10.9%. That followed two years of 6% raises, also under President Nixon. Also in 1972, for those who may not have been old enough to remember, President Nixon ordered starting development of the space shuttle; 11 Israeli athletes were killed at the Olympics being held in Munich, Germany, and five White House operatives were arrested for burglarizing the offices of the Democratic National Committee.
“American Pie” by Don McLean was one of the biggest pop hits in that year. If you remember that song, you probably are (or are retired) under the CSRS system.
Thanks to President Carter
In 1980, federal employees received a pay raise of 9.1%. That was the first year of the decade and the highest pay raise for the 80’s.
And, of course, who can forget the pop hit “Do That To Me One More Time” by Captain and Tennille from 1980. (Does anyone remember that romantic song?)
The inflation rate in 1980 was 13.50%—obviously higher than the federal employee pay raise—and for those wanting to buy a house, mortgage rates hit 18.5%. John Lennon was shot in 1980 (he was 40) and the U.S. Olympic Hockey Team, composed of mostly college-level players, defeated the four-time gold medal-winning team from the Soviet Union in one of the greatest upsets in sports history.
Thanks to President Bush
The highest federal employee raise in the 1990s was under President Bush—that is President George H.W. Bush. In 1992, the federal pay raise was 4.2%. The inflation rate in that year was 3.47%. The European Union was founded and “I Will Always Love You” by Whitney Houston was the top pop song.
Thanks to President Clinton
In the 2000s, the highest federal employee pay raise was under President Clinton. The federal pay raise in 2000 was 4.8%—that would become the highest raise for that decade.
Also in 2000, the U.S. stock market crashed. The NASDAQ stock market ultimately dropped more than 78.4%. The top hit in 2000 was “Breathe” by Faith Hill.
In 2000, Vladimir Putin was inaugurated as president of Russia; the first survey of the entire human genome was completed; NASA launched STS-92, the 100th Space Shuttle mission, using Space Shuttle Discovery; the U.S. Supreme Court released its decision in ‘Bush v. Gore’; and Monica Lewinsky became an A-List guest in the Manhattan, NY social scene.
Thanks to President Trump
In the decade from 2010 – 2020, the largest pay raise was in 2020 under President Trump. In 2020, during a decade of low pay raises, the pay raise was 3.1%. While 3.1% is not a large increase compared to previous decades, the bar was fairly low. That is because, during the Obama administration, the average federal pay raise was 0.96%.
In 2020, COVID became a word and disease well known to all of us. Prince Harry and Meghan Markle quit the royal family and eventually moved to America. President Trump was impeached by a House of Representatives under the control of Democrats. The stock market crashed (and recovered) and riots and protests spread throughout the country after the death of George Floyd in Minnesota.
One of the top songs in 2020 was “Blinding Lights” by The Weeknd. If you are familiar with this song, the ones by The Captain and Tennille (see above) are probably unknown to you and you are unlikely to be under the CSRS system.