Some Feds Fear They Might Not Get That Pay Raise Now That the Debt Deal is Inked

Updated: 3:14 p.m., June 7, 2023.

Months of uncertainty over whether the federal government would—for the first time ever—default on its debt and other financial obligations came to an end last week, as the Senate approved a last-minute Biden-McCarthy debt ceiling deal to lift borrowing authority. 

In short, the deal provides for two years of spending caps with over $130 billion in cuts, satisfying the Republican House, while lifting the debt ceiling until January 2025—ending the immediate crisis.  

Calm may now be restored to Wall Street and the world’s financial markets. But more than a shade of uncomfortable uncertainty remains for federal employees. 

The question in the air is: does the deal make it unlikely that feds will get the 8.7% pay raise favored by federal employee unions and advocates? Or even the 5.2% currently advocated by the Biden administration? Or—much of any raise at all? 

The answer, unfortunately, is: We just don’t, and can’t, know. At least not yet. 

The federal employee unions—or at least those that are speaking up right away in the wake of the deal—are vehement that this is an apples and oranges situation. Whatever cuts or ceilings may be set in motion as of October 2023—when the deal’s terms begin to go into effect—should have nothing to do with the fact that feds must receive some relief against inflation. 

“There is absolutely no reason for Congress not to consider a fair pay raise for federal employees in 2024,” Tony Reardon, president of the National Treasury Employees Union, told Government Executive. “[President] Biden has already recommended an average 5.2% raise next year—which is not impacted by the debt limit deal that recently passed into law.”

“While that spending agreement does curtail some federal spending over the next two years,” Reardon added, “it does not automatically foreclose the debate over a federal pay raise, which is essential to helping recruit and retain the skilled employees that federal agencies need to serve the American people.” 

Another major fed union expressed the same worries—and hopes, and determination to convince Congress and the White House that the debt deal shouldn’t be allowed to imperil the promised raise. 

“We remain hopeful—and that’s our official stance—that Congress and everyone else will see the need here,” Steve Lenkart, executive director at the National Federation of Federal Employees, told Government Executive. “Given the inflation rates in recent years, and given last year’s COLA boost for Social Security—8.7%, we’re hoping federal employees’ needs here also will be honored.” 

“I have to add here that some kind of 1%—or anything lower than what we’re asking for—definitely would amount to a pay cut, under the current circumstances and inflation,” he said. 

Reardon, Lenkart and other union brass leave no doubt they remain hopeful. But what’s the word in their circles, so far? Is there already talk circulating among labor leaders and legislators of a much lower raise? 

“No—there’s no real chitchat like that,” Lenkart said. “But there is a lot of concern among the troops, among our people, because of the shape of the debt ceiling agreement,” he replied. “Everyone is aware that the new debt ceiling deal could somehow encourage some in Congress to try for a limitation of 1% or something very low. This would be a huge problem, and it’s a huge concern for federal employees at the moment.” 

Lenkart pointed out that if the deal were allowed to get in the way of a decent raise, there could be some very real consequences—not just for feds, but for all of us. For example, he noted that federal wildland firefighters have only recently been provided a—temporary—pay increase, one adequate to live on. 

“The increased pay for wildland firefighters—that pay authority—expires at the end of the year,” Lenkart noted. “Without new funding, some could lose as much as 50% of their base pay, and for others that could represent a loss of $20,000.” 

Lenkart noted that many federal agencies are already having a hard enough time attracting and keeping employees. Having pay fall further behind inflation won’t help. “We're trying to stop a mass exodus already,” he said. “We’re reminding leaders that there are ways to move money around within the government—and we're asking them to make sure to do that to go forward with needed pay increases.” 

The National Active and Retired Federal Employees Association, an advocacy group for all federal employees, echoed similar concerns as the unions. It also ventured a tentative prediction, a positive one. 

“The budget deal certainly leaves open the possibility of the full Biden-proposed pay raise—that’s 5.2% including locality pay—being implemented,” John Hatton, vice president for Policy and Programs at NARFE, told Government Executive. “But it also makes the budget numbers tighter for federal agencies.”  

Hatton explained that while, yes—as has been widely reported—substantial COVID funds will be repurposed under the deal (as well as funds from specific cuts—for instance, from a planned expansion at the IRS), unfortunately financial space for a strong raise indeed has been lessened. 

“But just because the numbers are tighter doesn't mean that the raise won't go through,” he said. 

“If I had to make a prediction,” and he was pressed for one, “I would say that Congress will not act in the end here—leaving the president’s 5.2% raise as the outcome. But I would also say the matter is likely to come under debate,” Hatton gave as his bottom line. 

“It's very much up in the air—we don’t know this, where Congress will land. There will be a lot of negotiation that will be ongoing,” Hatton said. “We at NARFE still support the FAIR Act proposal—with its 8.7% raise. We would love to see that enacted into law. But at this point we also could be satisfied with President Biden's proposal.” 

F. Stevens Redburn, a retired senior government official with the U.S. Office of Management and Budget and lecturer at George Washington University on the federal government’s budget process, took the opposite view.

“If I had to guess—and at this point it would only be a guess—I would say that Congress would not simply decide not to act here,” Redburn told Government Executive. “I think they would want to have a say in how their limited allocation is used—and so they will want to weigh in on the pay raise.”

Correction: An earlier version of this story misidentified the president of the National Treasury Employees Union.