It's official: Biden formalizes average 4.6% pay raise plan for feds in 2023

President Biden on Wednesday formalized his plan to provide civilian federal workers with an average 4.6% 2023 pay increase in a letter to congressional leaders.

In March, Biden first announced his pay raise plan as part of his fiscal 2023 budget proposal, recommending the largest pay increase for civilian federal employees in two decades and nearly double the 2.7% average pay increase employees saw in 2022. Wednesday’s announcement confirms that, if implemented, federal employees would see an across-the-board boost in basic pay of 4.1%, and an average 0.5% increase in locality pay.

Every year, presidents issue the so-called “alternative pay plan” by the end of August, which declares there to be a national economic emergency preventing automatic pay increases from kicking in as prescribed by the 1990 Federal Employees Pay Comparability Act. Wednesday was the deadline for Biden to issue that emergency declaration to block the automatic increases.

In the letter, Biden said providing a sizeable pay increase is necessary for federal agencies to remain competitive with the private sector and attract and retain the next generation of civil servants.

“Federal agencies have witnessed growing recruitment and retention challenges with federal positions experiencing eroded compensation,” he wrote. “Multiple years of lower pay raises for federal civilian employees than called for under regular law have resulted in a substantial pay gap for federal employees compared to the private sector. The American people rely on federal agencies being managed and staffed by skilled, talented and engaged employees, including those possessing critical skills sets, which requires keeping federal pay competitive.”

Federal employee groups and some members of Congress have urged appropriators and the White House to implement a larger pay increase of 5.1% on average—split between a 4.1% increase in basic pay and a 1% increase in locality pay. But neither the minibus appropriations package passed by the House nor the appropriations bills introduced in the Senate make mention of civilian federal worker compensation, effectively endorsing the president’s plan.

National Active and Retired Federal Employees Association National President Ken Thomas applauded Biden’s pay plan for keeping pace with private sector wage growth.

“The president’s alternative federal pay plan will provide hardworking public servants the largest pay increase since 2002,” he said in a statement. “At an average of 4.6%, it tracks with recent increases in private-sector pay for the second consecutive year. As Americans face unprecedented price increases for food, fuel, housing and other staples, this pay raise demonstrates an understanding of the value of these hard-working civil servants and the jobs they do, as well as displays the administration’s commitment and recruitment and retention of talented federal employees.”

But some federal employee unions argued that while Biden’s plan is appreciated, they will continue to push for a 5.1% average pay increase.

“President Biden’s plan to provide an average 4.6% raise . . . for federal employees in 2023 would be the largest in 20 years and go a long way toward helping recruit and retain the public servants our government needs,” said Tony Reardon, national president of the National Treasury Employees Union. “However, NTEU earlier this year endorsed legislation for an average 5.1% increase because we believe rising costs of living and private sector wages warrant the larger raise . . . We will continue to urge Congress and the administration to consider changing economic conditions and the 22.47% pay gap between federal employees and their private sector counterparts before making any final decisions on the 2023 federal pay increase.”

“The overall 4.6% pay raise issued by President Biden will represent the largest pay adjustment for federal employees in 20 years,” said American Federation of Government Employees National President Everett Kelley. “However, in order to bring federal salaries close to market rates and compensate for the recent surge in inflation, more must be done.”