OPM Issues Guidance to Ensure 67,000 Feds Make at Least $15 per Hour

The Office of Personnel Management on Friday issued long-awaited guidance on how agencies should ensure all federal workers make at least $15 per hour in accordance with President Biden’s executive orders establishing a minimum wage for feds and contractors. Agencies have until Jan. 30 to implement the changes.

All told, around 67,000 federal employees will see a raise next month as a result of the new policy. The Defense Department employs more than 56,000 workers who make less than $15 per hour, followed by 9,700 employees of the Veterans Affairs Department. The remainder are primarily federal firefighters, who recently received temporary pay boosts in the form of bonuses and other cash awards to effectively bring their pay up to $15 per hour; custodians across government; and plant protection technicians at the Agriculture Department.

“As the largest employer in the country, how the federal government treats its workforce has real impact,” said OPM Director Kiran Ahuja. “The Biden-Harris administration believes that the federal workforce should be treated with dignity and respect. Raising pay rates across the federal government to a minimum of $15 per hour reflects our appreciation for the federal workforce and our values as a nation.”

In its guidance, OPM relies on Biden’s executive order establishing a $15 minimum wage for federal contractors to develop special pay rates for both the General Schedule and Federal Wage Service pay scales. The administration noted that without the order to raise the minimum wage for federal employees as well as contractors, feds could decide to jump ship for better paying contractor jobs. 

“Those increased minimums for federal contractors present the potential for recruitment and retention issues for GS positions paid below $15 per hour,” OPM wrote. “To address those potential staffing issues, OPM has established a single nationwide special pay rate schedule of annual rates for grades GS-1 through GS-4 which will apply to all GS employees with an official worksite in the United States (including its territories and possessions) whose pay rate at their grade and step would otherwise be below the special rate shown on this nationwide special rate table at that same grade and step.”

According to the guidance, the new special rate for GS-1, step 1, the lowest pay grade in the General Schedule, will be set at $31,305 this year. GS-2 through GS-4 will be based on a 2% increase over the pay grade below them—GS-2 step 1 is $31,931 per year; GS-3 step 1, $32,570; and GS-4, $33,221.

The Defense Department will be responsible for establishing its own similar special pay rate for Federal Wage Service employees, with OPM’s approval. OPM said it will approve all agency requests for special pay rates to ensure all employees make $15 per hour.

The new pay rates will take effect for the pay period beginning on Jan. 30, meaning affected federal workers should see bigger paychecks by late February. If any agency fails to meet the Jan. 30 deadline, they will be required to make pay raises associated with establishing a $15 minimum wage retroactive to that date. The U.S. Postal Service and the Postal Regulatory Commission are exempt from the guidance, because they are outside of the scope of OPM’s statutory authority.

Federal employee unions lauded the move to implement a new minimum wage for federal workers.

“Today, President Biden is raising the pay of nearly 70,000 American workers in one of his most significant actions to date, delivering on a campaign promise, and fulfilling a long-sought goal of the labor movement,” said American Federation of Government Employees National President Everett Kelley. “Our union applauds this needed action. For the tens of thousands of workers who will start seeing more money in their paychecks each week, this is a transformative policy choice that will improve their everyday lives.”

“This is a tremendous stride towards ensuring all federal employees are paid a living wage that allows for them to provide for their families,” said Randy Erwin, national president of the National Federation of Federal Employees. “No employee working for the federal government should be struggling to make ends meet. As these pay increases take effect in the coming days, there is no doubt that these workers will be given some much needed and well deserved relief.”