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By: FEDweek StaffAn early marker has been set for the January 2024—not 2023—federal employee raise, with announcement by the Labor Department of an increase in the employment cost index of 5.2 percent over the 12 months ending in September.
Under federal pay law, the ECI measure of growth in wages—not living costs—for the 12 months through each September is supposed to be used in setting the across the board portion in the White House’s subsequent budget proposal for the next fiscal year. A half percentage point is to be shaved off the indicated amount and separate locality pay is supposed to be paid in addition, varying by locality.
That formula often has not been followed in practice, though, due to the potential cost of the indicated locality raises and disagreements over the calculations underlying those figures. In some years the ECI number has played little to no role in a determination of a raise. In other years the full or reduced ECI number alone has become the total raise, with locality pay sometimes carved out of it.
The pattern so far in the Biden administration has been to recommend a total raise equal to the unreduced ECI number, with part carved out as locality pay. In his 2021 budget proposal for 2022, he used the indicated 2.7 percent figure, with 0.5 percentage points for locality pay, and in his proposal earlier this year for 2023, he used the indicated 4.6 percent figure, again with 0.5 percentage points for locality pay.
However, a 5.2 percent raise would be the largest in many years and might run into opposition from Congress, particularly if Republicans win one or both chambers in next week’s elections.
Congress last year was silent regarding the 2022 raise, allowing Biden’s recommendation to take effect by default, and is on track to do the same this year for 2023. However, that is not final, as Congress has not finalized the fiscal 2023 budget; it will have to revisit that issue after the elections with the current temporary funding authority expiring December 16.
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See also,
Watch for ‘Significant’ FEHB Plan Changes, OPM Says
Enrollee Share of FEHB Premiums to Rise 8.7 Percent on Average for 2023
January Retirement COLA Set: 8.7 Percent for CSRS, 7.7 Percent for FERS
FERS Retirement Planning Bundle: 2022 FERS Guide & TSP Handbook
