Budget Extension Virtually Locks in 5.2 Percent January Raise; 2024 Brings New Localities

The temporary budget extension carrying funding for federal agencies—some to January 19 and others to February 2—virtually guarantees that federal employees will receive an average 5.2 percent raise in January.

That would be the largest since an increase of 9.1 percent in 1980 and would be 0.6 percentage points above the average 4.6 percent raise paid in January of this year, which had been the largest since an average increase of 4.6 in 2002.

The 5.2 percent average figure has been the most likely for 2024 through the course of this year, after President Biden proposed it in his early-year budget submission and Congress started writing spending bills with no mention of a raise. Under the pay law, if Congress does not enact a figure by the end of a calendar year, the President can set the recommended figure by default.

Biden in late August said that barring action by Congress to the contrary, he would order the 5.2 percent raise by default, with 4.7 percent paid across the board and the funds equal to the other 0.5 percentage points to be designated for locality pay. However, that was not the last word since there still was a chance of Congress enacting the spending bill where raises can be set—the financial services/general government appropriations bill—before the end of the year.

Enactment of the stopgap measure that pushes the need to enact agency funding into the new year makes it all but certain that that bill—or any of the other appropriations bills—will not be finalized by year’s end. Both the House and Senate will continue to work on them but in any case, both versions of the general government bill still are silent regarding a raise, effectively endorsing Biden’s recommendation by default.

Raises are finalized in a late-December executive order and are effective with the first full pay period of the new year, which for most federal employees will begin January 14. Employees see the impact of the raise with the pay distribution covering that pay period, which they typically receive about a week to 10 days later—meaning early February, in this case.

That order sets the exact figures by locality, based on findings of pay gaps in more than four dozen areas with their own rates, as reported by the Federal Salary Council. That group recently reported that the gaps remain the largest in some areas where the locality pay component already is the highest, including the San Francisco, New York, Seattle, Washington, D.C. and Los Angeles areas.

Also, four new localities are to be created effective in 2024, in the Fresno, Calif.; Reno, Nev.; Rochester, N.Y.; and Spokane, Wash., areas, and the boundaries of most current localities are to be expanded. In both cases, that will provide an additional pay boost to affected employees—about 16,200 in the new localities and about 17,100 in areas to be added to existing localities.

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