What factors determine the percentage of the federal civilian pay raise for 2026?
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Executive summary
The 2026 federal civilian pay adjustment will be shaped by three main levers: the statutory FEPCA formula (which would have produced a 3.3% across‑the‑board raise plus large locality adjustments based on the Employment Cost Index), the White House’s alternative pay plan that calls for a 1.0% base increase with locality frozen, and final action by Congress/OPM to implement or alter those recommendations (Congress can pass different legislation and OPM implements eligibility details) [1] [2] [3].
1. How the statutory formula would set the baseline: FEPCA and the ECI
Under the Federal Employees Pay Comparability Act process, OPM and the Federal Salary Council base the across‑the‑board adjustment on the Employment Cost Index (ECI) change, minus a half percentage point; the council noted the ECI rose 3.8% in the measurement window, which produces a 3.3% base increase under that formula for 2026 [1]. FEPCA also drives locality comparability payments using Bureau of Labor Statistics and OEWS data to measure pay disparities between federal and non‑federal wages; for 2026 that statutory machinery would have yielded an average locality boost estimated at 18.88% [1] [4].
2. The White House alternative: trimming the package to 1% plus frozen locality pay
The Trump administration submitted an alternative pay message to Congress that would depart sharply from the FEPCA output: it proposes a 1.0% across‑the‑board base increase while freezing locality pay increases at 2025 levels, and it directs OPM to identify law‑enforcement categories that would receive larger raises (with some law enforcement potentially getting 3.8%) [3] [5] [6]. The administration justified the alternative as a fiscal restraint measure, warning the statutory locality rise would cost billions and strain agency budgets [2] [4].
3. Who decides the final percentage: Congress, OPM and agencies
The President’s pay message is a recommendation; Congress can enact a different raise through legislation, and OPM is the implementing agency that finalizes tables and eligibility once a course is set [3] [6]. That means the headline percentage that individual employees see depends on political negotiation (Congress vs. White House), statutory formulas, and OPM’s determinations about which pay systems and job categories are affected [3].
4. Locality pay mechanics and why they swing total increases
Locality pay is computed from comparisons between federal and private pay in local labor markets; when the statutory process is allowed to operate after multi‑year sidelining, it can produce very large locality swings — in 2026 the statutory calculation would have averaged an 18.88% locality increase, which combined with the 3.3% base would have produced total increases exceeding 20% in some metro areas [1] [7]. Freezing locality pay, as the White House proposes, eliminates that regional component and keeps most of the raise limited to the modest base increase [8] [5].
5. Special categories: law enforcement and parity pressures
Both the statutory route and the alternative plan recognize exceptions. The administration’s letter signals larger increases for certain federal law‑enforcement personnel tied to the military pay raise (3.8% cited), while earlier FEPCA work and union advocacy push for parity with other groups—Democrats and unions have proposed larger raises (for example, a 4.3% bill backed by AFGE and congressional Democrats) that would alter outcomes if enacted [6] [9].
6. Timeline and practical implications for employees
The practical payroll outcome is often settled by late summer: agencies use an August decision letter and then OPM releases final tables in December for pay periods beginning in January; employees therefore see concrete changes only after that layered process of recommendation, negotiation and rulemaking [10]. The difference between statutory and alternative paths matters not just this year’s paycheck but future retirement accruals and locality‑based recruitment/retention in high‑cost areas (available sources do not mention long‑term retirement modeling beyond these effects).
7. Competing narratives and political context
Sources present competing priorities: the Federal Salary Council and FEPCA proponents frame a large adjustment as necessary to restore comparability with private markets [1] [7]; the White House frames its smaller plan as fiscal discipline to prevent an “irresponsible” multibillion‑dollar spike in locality pay [2] [3]. Congressional Democrats and unions argue for larger raises (e.g., 4.3%) to protect parity with military pay and to address cost‑of‑living pressures [9] [11].
Limitations and what’s not in the record: available sources describe the competing formulas, the administration’s alternative plan and legislative pushes, but they do not provide a final, enacted 2026 pay table — that depends on ongoing congressional and OPM action [3] [6].