Civilian federal employees got a welcome holiday surprise last week: a larger pay increase than initially projected.
In a letter to the Senate and House leaders, President Obama announced a revised plan for locality pay increases, to take effect January 1. The average pay increase will be 2.1 percent, instead of the 1.6 percent increase originally submitted in August.
“Civilian Federal employees made significant sacrifices as a result of the 3-year pay freeze that ended in January 2014,” President Obama wrote. “Since the pay freeze ended, annual adjustments for civilian Federal employees have also been lower than private sector pay increases and statutory formulas for adjustments to the General Schedule for 2014 through 2016. However, keeping our Nation on a sustainable fiscal course requires tough choices.”
Obama said his decision to request a larger increase in locality pay came after Congress approved a 2.1 percent raise for military personnel.
“When the final 2017 National Defense Authorization Act set the military raise at 2.1 percent at the end of November, NTEU contacted key members of Congress to ask them to urge the president to change his original proposal to 2.1 percent,” said National Treasury Employees Union President Tony Reardon, as reported in Stars and Stripes. “It was our view that the federal pay raise wasn’t a done deal and could be adjusted.”
Will Wages Rise in 2017?
The PayScale Index, which measures the change in wages for employed U.S. workers, forecasts year-over-year wage growth of 1 percent for the fourth quarter of 2016. That’s the lowest forecast for the year to date.
Of course, workers who are making their personal budgets for the coming year want to know whether wages will increase in 2017. According to WorldatWork’s annual Salary Budget Survey, the answer is yes — but not much. The survey projects average salary budget increases of 3.1 percent for 2017.
It’s also worth noting that those numbers are from May 2016. A lot can change in a few months. For example, the jury is still out on how the results of the U.S. presidential election will affect wage growth, employment, and the economy.