The Senate Armed Services Committee recently completed the markup of the fiscal year 2025 National Defense Authorization Act (NDAA). The legislation contains a 2025 pay raise for civilian Defense Department employees and military service members. However, the pay raises are different.
As currently written, the legislation would give the military a 4.5% pay raise and civilian federal employees a 2% pay raise. 2% is the same amount that President Biden wants to give federal employees next year.
The House Appropriations Committee also approved its version of the FY 2025 National Defense Authorization Act, which contains a 4.5% 2025 military pay raise. Unlike the Senate version, it was silent on a pay raise for civilian federal employees which is effectively an endorsement of the president’s desired 2% raise.
Because the military may get a raise next year that is over twice as large as what federal employees get, this becomes an argument for pay parity with the military for the 2025 federal pay raise.
What is Pay Parity?
Pay parity is the idea that federal employees should receive the same annual pay raise as military personnel receive.
There is no requirement that pay parity be implemented in a given year. The argument is frequently raised by federal employee unions when a higher raise for military personnel is proposed. It is also raised by legislators, particularly from the Washington, DC metropolitan area, who are seeking a higher raise for many of their constituents that work for the federal government.
Is It Effective?
While pay parity was an accepted practice for a number of years, the argument has not always been very effective.
Since 2003, there have been 9 years when federal employees have received a smaller pay raise than military personnel. There have not been any years when federal civilians received a higher pay raise than the military.
This table shows how the average military and civilian pay raises have come out over the last 21 years:
| Year | Military Pay Raise | Federal Employee Pay Raise |
|---|---|---|
| 2003 | 4.1% | 4.1% |
| 2004 | 4.2% | 4.1% |
| 2005 | 3.5% | 3.5% |
| 2006 | 3.1% | 3.1% |
| 2007 | 2.7% | 2.2% |
| 2008 | 3.5% | 3.5% |
| 2009 | 3.9% | 3.9% |
| 2010 | 3.4% | 2% |
| 2011 | 1.4% | 0% |
| 2012 | 1.6% | 0% |
| 2013 | 1.7% | 0% |
| 2014 | 1% | 1% |
| 2015 | 1% | 1% |
| 2016 | 1.3% | 1.3% |
| 2017 | 2.1% | 2.1% |
| 2018 | 2.4% | 1.9% |
| 2019 | 2.6% | 1.9% |
| 2020 | 3.1% | 3.1% |
| 2021 | 3.0% | 1% |
| 2022 | 2.7% | 2.7% |
| 2023 | 4.6% | 4.6% |
| 2024 | 5.2% | 5.2% |
White House Wants a 2% 2025 Federal Pay Raise
The White House proposed a 2% raise for federal employees in 2025 in its 2025 budget proposal. This is an average figure, meaning that if this is the final figure enacted, some federal employees would get more than this and some less because of locality pay.
The federal pay raise typically includes one amount for an across-the-board pay raise and another 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 in locality pay 0f 0.5% (5.2% total).
A Push for Higher 2025 Federal Pay Raise
Earlier this year, Congressman Gerry Connolly (D-VA) and Senator Brian Schatz (D-HI) introduced their annual legislation to give federal employees a 7.4% pay raise next year. However, federal employees shouldn’t get too excited when they see that figure.
The bill has never become law and the federal pay raise ends up being lower as it meanders through the usual political process each year. Still, the bill is usually the first figure suggested publicly in the annual political process for setting the pay raise for federal employees.
How is the Annual Federal Pay Raise Determined?
The annual pay raise for federal employees is determined by a political process. This means that the amount of the pay raise, if there is one, will vary from year to year depending on the political climate. This is what makes the process so complex.
In some years, Congress will 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.
While this often happens, there is no legal requirement that Congress address or consider a federal employee pay raise, and Congress usually does not pass legislation on the subject.
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.
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 result in getting more votes for a candidate running for Congress.
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 annual salary amount for every locality, grade, and step for the next year and publishes the pay tables shortly after the executive order is issued.
