What is the status of the 2022 pay raise for federal employees? This is an easy question with a complex answer. With the issuance of the Alternative Pay Letter for the 2022 pay raise, we are closer to knowing the final figures.
2.7% Average Pay Raise for 2022 Proposed
Here is the headline of greatest interest. President Biden prefers a 2.2% across-the-board raise with locality pay increases to provide a 2.7% overall average for 2022. The letter is available below in its entirety.
An annual pay raise for federal employees involves different parts of the federal government, politics, and a great deal of time. In most years, the percentage increase and the actual dollar amount for each pay grade and step in every pay locality is announced late in December by Executive Order.
The process plays out in different ways so different events may impact what happens. Last year, for example, the COVID pandemic played a role. President Trump issued his alternative pay plan in February. The law requires an alternative pay plan to be submitted by September 1st but does not have any other time restrictions. Issuing the plan in February advised the workforce and Congress of his intent with regard to the raise and the federal budget. Obviously, an unforeseen event can create new issues and considerations.
What Is an Alternative Pay Plan?
About 40 years ago, Congress passed the Federal Employees Pay Comparability Act (FEPCA). This law intended to change the way pay is set each year for the General Schedule and to maintain pay comparability by locality. It also called for establishing several special pay plans.
In short, FEPCA created a two-part annual pay adjustment for General Schedule federal employees. Each year, there is to be an across-the-board pay adjustment and a locality pay adjustment that varies by various locality pay areas.
The annual pay adjustment was to be an automatic adjustment based on a formula. Time has rendered this automatic adjustment irrelevant. No president has followed this formula since the law was enacted. As the formula would result in a large pay raise for the federal workforce again this year, that will not happen.
Instead, FEPCA gives the president this alternative.
If, because of national emergency or serious economic conditions affecting the general welfare, the President should consider the pay adjustment which would otherwise be required…to be inappropriate, the President shall—
“(A) prepare and transmit to Congress before September 1 of the preceding calendar year a plan for such alternative pay adjustments as he considers appropriate, together with the reasons therefor; and
“(B) adjust the rates of pay of each statutory pay system, in accordance with such plan, effective on the same day as the increase under subsection (a) would otherwise take effect.https://www.govinfo.gov/content/pkg/STATUTE-104/pdf/STATUTE-104-Pg1389.pdf#page=39
In some years, the president will issue an alternative pay plan that only includes an across-the-board pay raise. In other years, the alternative plan includes a separate percentage for locality pay. Each locality pay area learns of the specific plan for that pay area when the Office of Personnel Management (OPM) posts the information.
2022 Pay Raise in Alternative Pay Plan
This year is no exception. President Biden has issued his alternative pay plan for the federal workforce. Earlier this year, President Biden proposed a 2022 pay raise of 2.7%. That proposal has held as the most likely amount so far in 2022 as Congress has not proposed any other amount.
In this year’s alternative pay plan, there is a proposed across-the-board pay raise and a separate percentage for locality pay. Here is what he has proposed as the alternative to FEPCA:
Specifically, I have determined that for 2022, the across-the-board base pay increase will be 2.2 percent and locality pay increases will average 0.5 percent, resulting in an overall average increase of 2.7 percent for civilian Federal employees, consistent with the assumption in my 2022 Budget. This alternative pay plan decision will not materially affect our ability to attract and retain a well‑qualified Federal workforce.
The adjustment described above shall take effect on the first day of the first applicable pay period beginning on or after January 1, 2022.
As noted above, the actual increases in each locality pay area will be made available later in the year.
Congress has plenty of time to act to alter the proposed raise outlined in this letter to the Speaker of the House and President of the Senate. We will keep readers advised if or when this should occur.
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