2022 Pay Raise: What Happens Next?

A significant step in the 2022 pay raise for federal employees is coming up by the end of August. Will it be 2.7% as widely predicted?

As we work our way through the year, the picture becomes clearer on the 2022 pay raise amount for federal employees in the coming year. The president usually issues an “alternative pay plan” for the coming year by the end of August. We do not anticipate this year will be any different.

Last year was different. On February 10, 2020, the president transmitted his alternative pay plan for 2021 to Congress. President Trump planned to increase federal pay rates by one percent in 2021 without any adjustment to existing locality pay rates without any extra amount for locality pay. That is what ended up actually being implemented in January 2021 despite several alternative scenarios that could have played out.

President Proposed 2022 Pay Raise of 2.7% in Budget Request

President Biden has not issued an alternative pay plan. This means he will most likely be issuing his alternative pay plan on our before August 31st.

At the moment, a pay raise of 2.7% is the most likely outcome. A 2.7% raise was proposed in the 2022 budget proposal from the administration. That amount is not certain though. Some Democrats in Congress, as is usually the case, want a higher raise. But, while legislation was introduced for a higher raise, it has not gone anywhere. So far, the House of Representatives has been silent on any raise for federal employees next year.

What About Locality Pay? Higher Pay for DC?

Even if the average raise turns out to be 2.7%, it is possible many federal employees will see a raise greater than 2.7%. Employees in a locality pay area often receive a higher amount, particularly in areas such as the San Francisco or Washington, DC locality pay areas.

In 2020, for example, the base pay increase was 2.6%. But the Washington, DC metropolitan area came out on top with a locality raise of 3.52%. The San Francisco-San Jose, CA and Seattle, WA areas came in second with a raise of 3.40%.

President Biden could propose a raise of 2.7% with an additional amount for locality pay areas. Or, as was done last year, there could be an increase in base pay without an additional amount for locality pay.

What Is the Alternative Pay Plan?

There are years in which Congress will pass legislation that contains an annual federal pay increase. There are also years in which Congress does not pass legislation addressing a pay raise.

When federal 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 usually 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 has always happened, if Congress has not acted, regardless of the president’s political party.

Average Federal Salary and FEPCA

If the approach described above was not taken, the FEPCA formula for determining federal pay would kick in. Do not get your hopes up. That is not going to happen.

According to the Federal Salary Council, “when existing locality pay rates averaging 23.60 percent as of March 2020 are taken into account, the overall remaining pay disparity is estimated at 23.11 percent.” No doubt, anyone would like a raise of 23%.

As noted in this recent article, the average federal employee salary was $91,570 at the end of March 2022. The average federal employee salary in Washington, DC at that time was $129,267. That does not take into account the value of federal employee benefits. There is no possibility of an additional raise of more than 23%.

When Will The Final Raise Be Announced?

The final amount of any raise will be known when the president issues an Executive Order, usually late in December. At that time, the amount of locality pay for each pay area will be announced as well as the overall average of the federal pay raise.

Last year, the Executive Order on pay was issued on December 30th. While many readers would prefer earlier information, it will most likely be very late in 2021 before the 2022 pay data is released.

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