President Joe Biden announced that federal civilian employees will get an average of a 2% pay raise in 2025.
According to the Biden administration, there will be an across-the-board pay increase of 1.7% for all federal employees. In addition to national pay increases, locality-based pay increases will average 0.3%.
Although it's unknown how much inflation will come down between now and the end of the year, it's possible the pay increase won't be enough to keep up with the cost of living. As of July 2024, year-over-year inflation in the U.S. was 2.9%, according to the updated consumer price index.
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Inflation has come down steadily in recent years. The July consumer price index was the first time in three years annual inflation dropped below 3%.
The pay raise is also a bit below what workers in the private sector have gotten.
According to the Bureau of Labor Statistics, the average weekly wage for workers has gone up 3.3% year-over-year, as of July.
President Biden says the updated pay rates balance making federal work attractive while being fiscally responsible.
"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," Biden said. "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."
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The pay hikes are scheduled to take effect January 1, 2025.
2025 pay hikes far smaller than prior years
With inflation easing, the pay hikes won't be nearly as much as in years past. Federal employees got a 4.6% pay raise at the end of 2022 and a 5.2% raise at the end of 2023.
The raise at the end of 2022 was not nearly enough to account for inflation, but the most recent pay increase helped workers catch up.
Year-over-year inflation increased 6.4% in 2022, but declined to 3.3% in 2023.
