President Biden wants to give federal employees a 2% pay raise next year. That is the proposed amount of the 2025 federal pay raise outlined in the 2025 White House budget proposal unveiled this week.
The 2025 budget proposal states:
The Budget reflects an average pay increase of 2.0 percent for civilian employees. This increase builds on the average pay increases of 5.2 percent for 2024, 4.6 percent for 2023, and 2.7 percent for 2022. It illustrates the Administration’s continued strong commitment to the civil service, reflecting the need to attract the talent necessary to serve Americans and recognizing the fiscal constraints Federal agencies face.
The proposal is considerably less than the previous two years as noted in the quote from the budget proposal. Since he has been in office, President Biden has given federal employees some of the most generous raises they have received in decades.
The proposed 2% figure is an average raise, meaning that if that is the final figure to be enacted, some federal employees would get more than this and some would get less. The federal pay raise typically includes one amount for an across-the-board pay raise and another amount allocated for locality pay.
Because locality pay rates vary by region, the final amount of the pay raise is different when locality pay is applied. In 2024 for instance, the pay raise was a base pay increase of 4.7% and an average increase to locality pay of 0.5% resulting in an overall average raise of 5.2%.
Does This Mean the 2025 Federal Pay Raise Is Finalized?
No. The White House’s proposal is one of the first important steps in the process.
In recent years, the amount of the federal pay raise proposed by the White House has ended up being the final figure, but it is determined by a lengthy political process that involves both Congress and the president.
Congress will sometimes pass annual federal pay rate adjustments in an appropriations bill. When this occurs, it is usually done in the Financial Services and General Government appropriations bill.
However, there is no legal requirement for Congress to address a pay raise for federal employees in bills that it passes. Congress often remains silent on the issue and defers to the president’s proposal.
The president can, and often does, recommend a pay raise figure per the alternative pay plan. This is typically done late in the year, usually in August. It is often the same amount as what is recommended in the White House budget proposal released earlier in the year.
Of course, if Congress does not like the amount of the raise in the alternative pay plan, it can still pass new legislation determining the final amount. This is most likely to happen during an election year. With an election coming up, the thought process is likely to be that giving a raise could increase the chances of candidates running for office getting more votes from their constituents by giving them more money.
Congress has already introduced legislation to set next year’s pay raise for federal employees at 7.4%. This was done in the FAIR Act, legislation introduced annually by Senator Brian Schatz (D-HI) and Congressman Gerry Connolly (D-VA). To date, these bills have never been passed into law.
After this political process has played out fully, the president issues an executive order in December setting the amount of the annual federal pay raise by locality for the next year. The Office of Personnel Management (OPM) calculates the final annual salary figures for every locality, grade, and step for the next year and publishes the pay tables shortly after the executive order is issued.
