Proposed 2% federal pay raise gets support in 2025 defense authorization bill

The Senate committee’s version of the 2025 NDAA, advanced last week, supported a 2% federal pay raise for civilian feds and a 4.5% raise for military members.

With both Senate and House lawmakers advancing legislation that aligns with President Joe Biden’s 2% federal pay raise request, civilian federal employees appear to be a step closer to a smaller pay bump for 2025.

The Senate Armed Services Committee’s version of the fiscal 2025 National Defense Authorization Act last week showed support for a 2% raise for DoD civilian workers and a 4.5% raise for military members. In a vote of 22-3 on June 13, committee lawmakers advanced the 2025 NDAA to the full Senate for consideration. The House passed its version of the NDAA last week.

Although the NDAA’s provisions only apply to Defense Department employees, both civilian DoD workers and the rest of the civilian federal workforce on the General Schedule would see the same percentage added to their paychecks, if the raise is enacted.

In House appropriations legislation, committee lawmakers remained silent on the topic of the federal pay raise, indicating a likely alignment with the president’s raise proposal. The GOP-led committee advanced legislation for a fiscal 2025 spending package last week along party lines. The Senate Appropriations Committee has not yet released its versions of fiscal 2025 spending legislation.

President Joe Biden’s request of a 2% pay raise for most civilian federal employees on the General Schedule, if enacted, would be the smallest annual raise for feds since Biden took office. The 2% proposal comes in contrast to the 5.2% federal pay raise for 2024, which was the largest raise for feds since the Carter administration.

Biden’s initial raise proposal in March, contained in the fiscal 2025 budget request, did not indicate a breakdown between base pay and locality pay. But in most years, presidents typically set aside 0.5% for locality pay and leave the remainder for the across-the-board raise.

For the federal pay raise, nothing is set in stone until Biden signs an executive order to enact it, which usually happens in December. Ahead of that finalization, federal unions and other employee organizations have spoken out in favor of a larger pay raise for feds in 2025, calling for a 7.4% boost rather than the 2% proposal.

Legislation titled the FAIR Act, if enacted, would offer that large of a raise to feds next year. Unions including the National Treasury Employees Union have endorsed the bill, which lawmakers first introduced in January.

“NTEU continues the fight to pass the FAIR Act,” NTEU wrote in a blog post Tuesday. “Such an investment in the federal workforce would help close the significant pay gap between federal employee and private sector pay and help the federal government compete with the private sector for talented employees.”

But many agencies are already trying to figure out how to incorporate the larger 5.2% raise into their budgets for 2024. Some agencies’ budgets this fiscal year remained relatively stagnant, while other costs, such as federal employees’ paychecks, have continued to rise.

The next step in the process toward finalizing the federal pay raise will likely come later this summer. To avoid defaulting to the Federal Employees Pay Comparability Act (FEPCA), Biden will have to issue an alternative pay plan by the end of August.

Federal employees currently earn about 27.54% less in wages than those in the private sector with similar occupations, according to the Federal Salary Council. Although FEPCA allows for a large enough annual federal pay raise to bring the federal-private sector wage gap down to 5%, no president since 1994 has incorporated the fully authorized amount.

Decades of deviation from FEPCA have caused distortion of federal pay in multiple ways. It would now cost an estimated $22 billion to bring General Schedule salaries in line with the private sector.

Any potential changes in Congress that might break away from the current pay plans could still take place this fall ahead of an executive order in December.

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