Pay Raises Federal Employees can Expect in 2023

Good news for federal employees in the USA! President Joe Biden formally announced a salary increase for federal employees. This noteworthy declaration was made on 3rd December 2023. The President officially increased the salary for all civilian federal employees. 

This news came after the declaration of raising compensation for federal contract employees. General Schedule (GS) employees will get a 4.1 % pay increase overall in 2023, plus a 0.5 % locality change. The federal workforce has received the biggest one-year pay increase since 2002, totaling 4.6 %.

Please note that the increment is applicable from January 2023. In other words, federal employees will receive their revised paychecks from the first pay period in January 2023.

In August 2022, Biden made his intentions for the 4.6% pay increase public. Most civilian workers experienced a significant rise above the 2022 average 2.7% pay increase. The final step in officially announcing the salary increase before the new year was the executive order on December 23. 

average hourly wages in the USA

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Also, note that since the average salary increase for next year is 4.6%, not everyone will receive that exact increase in pay. Some federal employees also expect significantly higher increments than others. Per the President, all the increments will depend on the nation of employment. 

Congress’s recent omnibus appropriations bill did not mention civilian government pay. Experts consider it smart to approve the President’s proposal for the 4.6 % increase. The Federal Adjustment of Income Rates (FAIR) Act, introduced by Rep. Gerry Connolly (D-VA) and Sen. Brian Schatz (D-HI), would have given a 5.1 % pay raise, but Congress decided not to take action. 

Workers’ compensation increased by 2.7 % last year. However, difficulties with inflation (the Consumer Price Index rose by 7% in November) and a rise in healthcare costs (premiums for the Federal Employees Health Benefits Program are expected to rise by an average of 8.7% in 2023) have increased pressure to offer larger pay increases.

The National Active and Retired Federal Employees Association applauded the pay increase. It is a leading organization that represents federal workers. According to a statement from NARFE National President Ken Thomas, “this increase is comparable to the pay raise given to military members. It is at par with recent increases in private-sector pay for the second consecutive year.”

President Biden announced plans for the pay raise in an email sent to supporters in August 2022. According to him, this pay plan will help the Federal Government to compete better in the labor market. It will also help attract and retain a well-qualified Federal workforce.

The 4.6 % number represents an average. Some employees might receive marginally higher or lower raises based on their locations. For employees to verify their 2023 compensation, the Office of Personnel Management (OPM) published salary tables online.

List of the Top Salary Increase as per the Locations

The table below explains the federal salary raises in some of the major locations in the USA. 

Sr. No. Locality Pay Raise
1 Atlanta 4.43%
2 Birmingham 4.63%
3 Chicago 4.49%
4 Colorado 4.71%
5 Denver 4.87%
6 Houston 4.50%
7 Las Vegas 4.55%
8 New York 4.95%
9 Portland 4.64%
10 Seattle 5.15%
11 Washington 4.86%
12 San Diego 5.01%

For instance, General Schedule federal employees working in San Diego will get a total salary hike of 5.01%. At the same time, employees working in Houston will enjoy a pay hike of 4.50%. Similarly, federal employees working in Seattle will get the highest pay increase of 5.15%. On the other hand, employees of Atlanta will get the lowest hike of 4.43% in 2023. 

The government initially identified 53 localities for a pay increase. Moreover, any federal employee working in any other locality will get a flat 4.37% pay raise. Also, please note that this salary hike does not apply to political officials, especially seniors. 

It covers all the political employees listed on the Executive Schedule, non-career employees, non-career Foreign Service Ambassadors, and other political joinees at or above level 4 of the Executive Schedule.

average hourly wages in the USA

Source

Moreover, the pay increase will also not apply to the employees whose salary has been frozen for any reason since 2014. Congress continued the pay raise freeze under the rules and regulations of the Consolidated Appropriations Act of 2023.  

The Office of Personnel Management also issued a memo during its annual review to announce the special rates. This review decides the special rate adjustments during the general schedule pay adjustment.

Moreover, the special rate was fixed at 4.1% per the President’s proposal guidelines. Agencies having trouble filling positions can request special rates anytime during the year.

Moreover, Mr. Biden’s pay agent officially authorized four new salary localities. However, civilian federal workers in Fresno, California; Reno, Nevada; Rochester, New York; Spokane, and Washington cannot expect any changes until January 2024. 

Agencies needing help filling positions can request special rates anytime during the year. The Federal Employee Pay Comparability Act (FEPCA) of 1990 gave rise to locality pay. Every presidential government since 1994 has completely implemented it. Moreover, alternative pay plans are also issued in their place if needed. 

It was designed to make federal wages more competitive with the private sector. This year, the President’s Pay Agent called for “major legislative reforms” to the federal pay system. The authority claimed that using geographic location to determine pay rates results in some professions being either underpaid or overpaid. 

Reflecting on this Salary Hike

Considering This Pay Increase Even with this impressive pay increase, many federal employees may still need to be more concerned. They need to worry about how inflation will impact their retirement and what they can do to plan for that. 

The short response is that while you can do so many things to prepare for inflation, it can be devastating to retirement plans. As a federal employee, you have options that can reduce the impact of inflation even if you intend to retire within the next six months.

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