Biden formally announces 2% average pay raise for feds in 2025

President Biden formalized his plan to provide civilian federal workers with an average pay increase of 2% next year, in a letter to congressional leaders Friday.

Last March, Biden first announced the pay raise plan as part of his fiscal 2025 budget proposal, marking a significant decrease from previous pay raises of 5.2% in 2024 and 4.7% in 2023. Friday's announcement confirms that, if implemented, federal employees will see an across-the-board boost of 1.7% to basic pay and an average 0.3% increase to locality pay, a slight departure from the traditional 0.5% of the overall raise figure being set aside for locality adjustments..

"We must attract, recruit, and retain a skilled workforce with fair compensation in order to keep our government running, deliver services and meet our nation's challenges today and tomorrow," Biden wrote. "This alternative pay plan decision will continue to allow the federal government to employ a well‑qualified federal workforce on behalf of the American people, acknowledging wage growth in the labor market and fiscal constraints."

Each year, the president must issue an alternative pay plan by the end of August determining that an “economic emergency” precludes much larger automatic increases in locality pay from automatically taking effect, in accordance with the Federal Employees Pay Comparability Act. The move has been largely perfunctory since the law was enacted in 1990.

Biden’s 2% average pay raise plan falls well short both of the expectations of federal employee groups, after the last two years’ worth of increases broke decades-long records as the federal government sought to keep up with inflation. And it falls short of the long Democratic priority of maintaining pay parity between civilian federal employees and military service members—service members are slated to receive a 3.5% pay increase next year, in addition to a series of targeted pay increases directed at the service branches’ lower ranks.

But consternation from federal employee unions and some Democrats—who have instead endorsed the 7.4% average pay raise as proposed by the Federal Adjustment of Income Rates Act—thus far has not led to concrete action to override the president’s plan. Appropriations bills in both the House and Senate are silent on federal employee compensation, effectively endorsing the president’s 2% raise plan.

In order for the president’s pay plan to be implemented in January, Biden must issue an executive order by the end of the year finalizing the raise, after which the Office of Personnel Management will publish pay tables for each locality pay area. The raise then would go in effect for the first full pay period of 2025.