2023 Federal Pay Raise Takes Another Small Step Forward

A key spending bill makes another case for a 4.6% 2023 federal pay raise.

The 2023 federal pay raise process took another small step forward last week when the House passed the 2023 National Defense Authorization Act (NDAA) (H.R. 7900).

The bill contained a measure authorizing a 4.6% pay raise for members of the military and Department of Defense civilian employees, a de facto argument in favor of pay parity with federal employees and members of the military. In essence, it is a nod from the House to go along with the White House request for a 4.6% pay raise for federal employees in 2023.

The bill still has to be approved by the Senate and signed into law by the president, however.

As for the 2023 federal pay raise itself, normally the president will issue an alternative pay plan in August as one key step in finalizing the coming year’s pay raise.

The Federal Employees Pay Comparability Act (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, however, no president has followed this formula since the law was enacted.

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.

The final pay raise is usually announced late in the year, typically mid to late December. It is at this time that OPM posts the finalized pay tables and locality percentages.

What About Inflation and the Federal Pay Raise?

With 2022 inflation rising rapidly, many federal employees have said that they think the proposed 4.6% pay raise should be much higher to better keep pace with inflation. However, this may ultimately be wishful thinking, especially as proposals such as the 2023 NDAA appear to further support the White House’s proposal for a 4.6% 2023 federal pay raise.

No doubt, the impact of high inflation and falling stock prices are still a politically volatile combination. As we near mid-term elections in November, elected politicians, including the president, are well aware of how much high inflation can impact election results.

Inflation is technically not a factor in a pay raise for federal employees. The process in determining the pay raise is political, so political considerations may play a role in the 2023 federal pay raise, albeit indirectly. Any lawmakers looking to be reelected to their seats in Congress might use it as a way to curry favor from their constituents.

One provision that was added to the 2023 NDAA was a 2023 inflation bonus for certain federal employees. In this case, DoD civilian employees earning less than $45,000 per year would be eligible for the 2023 inflation bonus. However, the White House is opposed to the amendment, so it is unknown whether it will make it into the final version of the bill.

Other Provisions in the 2023 NDAA

Other provisions in the House version of the 2023 NDAA of interest to federal employees include:

  • A permanent ban on Schedule F, a new class of federal employees that was originally established via an executive order issued by President Trump to make it easier to remove federal employees for performance reasons.
  • TSA employees would be placed under the General Schedule and also get Title 5 protections just like the rest of the federal workforce (whistleblower and due process protections). Moving to the GS pay schedule would likely mean a pay increase for some TSA employees, namely airport screeners.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.