The 2025 federal pay raise took another small step forward recently with movement on appropriations bills that are working their way through Congress.
The Senate Armed Services Committee approved the 2025 National Defense Authorization Act which contains a 2% pay raise for Defense Department civilian federal employees. This is an endorsement of President Biden’s proposed 2% 2025 pay raise for federal employees.
The House Appropriations Committee advanced legislation that did not specifically address the president’s 2% pay raise. This amounts to an endorsement of the raise since Congress must override whatever raise the White House proposes in the annual pay raise process.
Unless either spending bill is modified to include an amount different from the proposed 2% 2025 federal pay raise, it will come to fruition later this year. This is what happens most years as there is no legal requirement for Congress to address a pay raise for federal employees in bills that are passed and it defers to the president’s proposal more often than not.
Of course, if Congress does not like the amount of the raise in the alternative pay plan, it can still pass new legislation determining the final amount. This is most likely to happen during an election year. With an election coming up, the thought process is likely to be that giving a raise could increase the chances of candidates running for office getting more votes from their constituents by giving them more money.
The president can, and often does, recommend a pay raise figure per the alternative pay plan. This is typically done late in the year, usually in August. It is often the same amount as recommended in the White House budget proposal released earlier in the year. That is what happened with the 2024 federal pay raise when Biden issued his alternative pay plan letter last August.
The 2% pay raise proposed by the White House for 2025 is a far cry from the 7.4% pay raise proposed under the FAIR Act introduced by Congressman Gerry Connolly (D-VA) in the House and Senator Brian Schatz (D-HI) in the Senate. The annual piece of legislation is little more than wishful thinking by the lawmakers since it has never become law and usually falls well short of the final annual pay raise approved by Congress and the White House.
Federal Employee Pay Raise is Not a COLA
Federal employees will typically read throughout the year about the cost of living adjustment (COLA) that will occur for the next year. FedSmith reported recently, for example, that the 2025 COLA is on pace to be 2.7% according to one estimate.
If you are a current federal employee and not a retired federal employee, the annual COLA does not apply to your salary. If you are retired, the annual COLA will apply to your retirement income in the coming year. There is a formula used to determine the amount of the upcoming COLA and it is applied automatically to the amount of a retired federal employee’s annuity payment.
The process of deciding on a salary increase for the coming year for the federal workforce is complex and confusing. Unlike the annual COLA determination for retired federal employees, the federal pay raise is determined by a political process.
