SALARY HIKE: Biden Announces 2% Federal Employee Pay Raise for 2025
According to Scripps News, President Joe Biden has announced that federal civilian employees will receive an average pay raise of 2% in 2025. According to the Biden administration, this increase includes a 1.7% across-the-board raise for all federal employees, with an additional 0.3% in locality-based adjustments.
While the raise aims to maintain fair compensation, there are concerns it may not fully keep up with inflation. As of July 2024, year-over-year inflation in the U.S. stood at 2.9%, based on the updated Consumer Price Index (CPI). Although inflation has been steadily decreasing in recent years, this is the first time in three years that annual inflation has dropped below 3%.
Pay Raise and Inflation Concerns
Despite the pay increase, it’s uncertain whether it will be sufficient to match the rising cost of living, particularly as inflation trends remain unpredictable. Federal employees have seen larger pay raises in the past, with a 4.6% increase at the end of 2022 and a 5.2% raise at the end of 2023. These previous hikes were implemented during higher inflation periods, with the raise at the end of 2022 not fully covering the 6.4% inflation rate that year. However, the 2023 increase helped federal workers catch up as inflation dropped to 3.3%.
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Federal Pay Versus Private Sector
The 2% raise for federal employees is notably lower than the wage growth seen in the private sector. According to the Bureau of Labor Statistics, private sector workers saw an average 3.3% increase in weekly wages as of July 2024. This discrepancy highlights the ongoing challenge of ensuring federal compensation remains competitive while balancing fiscal constraints.
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Biden’s Statement on the Pay Raise
President Biden emphasized the importance of attracting and retaining skilled workers within the federal government, stating: “We must attract, recruit, and retain a skilled workforce with fair compensation in order to keep our Government running, deliver services, and meet our Nation’s challenges today and tomorrow. This alternative pay plan decision will continue to allow the Federal Government to employ a well-qualified Federal workforce on behalf of the American people, acknowledging wage growth in the labor market and fiscal constraints.”
Pay Raises Take Effect in 2025
The updated pay rates are scheduled to go into effect on January 1, 2025, with the Biden administration aiming to balance competitive wages with responsible fiscal management.
