This Is What the Proposed 5.2% Fed Pay Raise Might Look Like With Inflation

President Biden, in his FY 2024 budget, has proposed a 5.2% pay raise for feds. 

Sounds pretty good. An extra nickel over every dollar feds earned just last year. And—oh yeah—as every news piece has noted, that not only seems a decent bump, but if enacted, it would actually be the biggest since 1980. 

But wait a sec. Isn’t inflation—the most commonly cited Consumer Price Index from the Bureau of Labor Statistics—still running at 6%? And that’s after more than a year of mostly bumping along at anywhere between 7% to 9%. (Sure, it’s been falling for months now, but awfully slowly.) 

If that’s the case, wouldn’t the 5.2% increase proposal translate not to an extra nickel per dollar in pocket but—after inflation—two or three pennies less?

Well, in terms of buying power, indeed that’s what it would mean. And that’s if the boost took effect right away. Fact is, if feds actually wind up getting a 5.2% pay hike, by the time it takes effect in the first paycheck of the new year after a hike is approved—feds might lose rather than gain in the neighborhood of a nickel per dollar of buying power, compared with 2022. 

Then, there’s the fact that annual pay adjustments have lost steadily—and significantly—for years versus even modest inflation. Further eroding buying power, once you add in—or more aptly put, subtract out—the 3.6% more from gross salary post-2014 hires have had to pay toward retirement—this picture is looking more Edward Munch than Matisse. 

With the Biden administration proposing the largest pay boost in decades, but one still weak against inflation, federal employee advocates not surprisingly have replied with mixed reactions. 

The National Association of Active and Retired Federal Employees, a sturdy advocate for fed pay and benefits, for its part emphasized the upside of the White House proposal. 

“Keeping up with private-sector pay growth is essential to maintaining the federal government’s ability to recruit and retain a highly qualified and effective workforce,” NARFE said. “While pay rates for public servants will still trail private-sector rates, a proposed average raise of 5.2% would ensure they will not fall further behind.” 

The American Federation of Government Employees in recent weeks came back with a solid, OK… but. 

“AFGE applauds President Biden’s reported inclusion of a proposed 5.2% pay adjustment for federal employees in his proposed 2024 budget,” Everett Kelley, the union’s president, said. “Not only would this be the largest increase since 1980, it would also be a significant step in the right direction for efforts to recruit and retain the next generation of federal workers.”  

“While we applaud the president's proposal, it is not enough,” he continued. “More must be done to make serious progress in closing the double-digit pay gap between federal employees and their private-sector counterparts. Congress should pass the FAIR Act’s 8.7% adjustment.” 

AFGE is joined by a phalanx of other federal employee unions and organizations pushing for that significantly higher increase. Just about the whole working federal community, as many feds know, meanwhile continues to rally also for legislation that would institutionalize more responsive pay adjustments over time. That bill is the Federal Adjustment of Income Rates (FAIR) Act. 

“The monthly food and housing bills have grown and health insurance premiums have spiked, which makes it harder for the frontline workers we represent to pay their bills and still save for retirement or college tuition,” Tony Reardon, president of the National Treasury Employees Union, stated earlier this year. “NTEU is pleased to get behind the legislation that provides a fair wage for our nation’s civil servants.” 

“The President’s budget proposal makes it clear that he is prioritizing the federal workforce and implementing policies that empower unions and their membership,” Randy Erwin, president of the National Federation of Federal Employees said, in words that warmed some to the White House proposal. Then he proceeded to express the need for the administration—and Congress—to go higher. 

“Although the proposed 5.2% pay increase for federal employees is less than what we have been calling for, we appreciate that this increase would be the largest raise since the Carter Administration,” Erwin continued. “With that said, NFFE will be leaning hard on Congress to pass the FAIR Act which would provide federal employees an 8.7% pay adjustment in 2024. Anything less than this number will amount to a pay cut and will further widen the pay gap between federal workers and their counterparts in the private sector, which currently stands at 24%.” 

That last figure, often dropped by Erwin and his federal union colleagues, comes from the official findings of the Federal Salary Council—with the gap clocking in at about 24% for 2022. It has remained in that double-digit realm, a chasm of over 20%, for many years. 

So, that said, we can expect feds and their advocates to keep pushing to get north of the White House pay proposal—for all its historical grandeur—with an immediate aim instead of a gain of 8.7%. If inflation doesn’t cool further in the coming months, this higher pay increase target, already a hard aim for many, will inspire even more—and more passionate—support. Feds gotta make a living.