Congress Leaving Biden Alternative Pay Plan in Place for 2023 Federal Pay Raise
The Omnibus spending bill that is working its way through Congress could have impacted the federal employee pay raise for 2023. So far, it has not done so.
There are years in which Congress inserts a different pay raise than what has been proposed by the president. Congress can even overturn what has been outlined by the president in the Alternative Pay Raise letter that is sent to Congress late in August of most years.
This year President Biden proposed a pay raise of 4.1% with an additional amount of 0.5% for locality pay. That does not mean all federal employees get an additional 0.5% for locality pay. Some will get more than that and others will get less. Typically, employees in the Washington, DC locality pay area, San Francisco locality area, or several others come out ahead for the year on where federal employees get the largest yearly pay raise.
That could change as the budget has not passed both Houses of Congress. At this stage, it is very unlikely there will be any changes to that proposed by the alternative pay plan President Biden issued.
The result is that Congress is silently accepting the amount for the 2023 pay raise recommended by the president.
Biggest Federal Pay Raise in 20 Years
No doubt, many federal employees will see headlines touting the 2023 pay raise as the largest pay raise in 20 years. That is the case. During the Bush administration, federal employees received an identical pay raise percentage of 4.6% back in 2002. On the other hand, and better news for those federal employees in 2002, the rate of inflation was 1.6%. (See Federal Employee Pay Raises and Inflation)
Prior to that, the largest pay raise was 4.8% during the Carter administration. Inflation in 1981 was 10.3%. The 2023 raise for federal employees under President Biden is almost comparable to the pay raise under President Carter when there was also a rate of high inflation. As in 1981, while the pay raise provided a bigger paycheck, the actual purchasing power of every dollar was lower because of rising inflation.
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 the FEPCA formula since the law was enacted. As the formula would result in a large pay raise for the federal workforce in one year—and the country now has a $32 trillion national debt—that will not happen.
What About GS Locality Pay for 2023?
President Biden will issue an Executive Order that will constitute the final decision on the 2023 pay raise. As an attachment, there will be information on locality pay for each of the 53 locality pay areas and the “Rest of the U.S.”
Earlier this week, the President’s Pay Agent set the stage for the impending Executive Order when it issued its decision on recommendations from the Federal Salary Council regarding locality pay. Most of those decisions will not be implemented until 2024 for reasons outlined in the article that is referenced with the link.
As soon as information is available on the 2023 GS pay tables, FedSmith will provide the information to readers with an analysis of how the 2023 pay raise unfolds.
