Who recommends the annual federal pay raise and what factors influence their decision?
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Executive summary
The president recommends the annual federal pay raise via an “alternative pay plan” and finalizes it with an executive order in December; for 2025 President Biden recommended an average 2% raise that became final by executive order [1] [2]. The President’s Pay Agent, advisory bodies and agency wage committees also shape locality and wage‑grade adjustments; factors include comparisons with private‑sector pay, cost of living/locality pay, statutory formulas tied to wage indexes, agency recommendations and political bargaining with Congress [3] [4] [5].
1. Who formally makes the recommendation — and who signs the check?
The administration starts the process: the president submits an “alternative pay plan” (typically in August) recommending a figure and then usually issues an executive order in December to set next year’s pay rates; Biden’s alternative plan led to a 2% average raise for 2025 and an executive order formalized that figure [1] [5] [2]. Congress can override or legislate a different amount, but has often been silent and allowed the president’s recommendation to take effect by default [1] [6].
2. The President’s Pay Agent and advisory panels — who actually recommends locality adjustments?
Locality and comparability payments are shaped by the President’s Pay Agent and other panels that review pay disparities between federal and non‑federal workers. The President’s Pay Agent determines locality‑based comparability payments and categories for locality pay [7]. For blue‑collar federal workers under the Federal Wage System, the Department of Defense Wage Committee conducts wage surveys and approves updates to wage schedules that feed into final pay actions [8] [9].
3. What data and factors move the needle on the recommendation?
Officials cite pay‑gap analyses between federal and private sector jobs, cost‑of‑living and regional pay differences (locality), statutory formulas tied to employment cost indexes or other measures of private wage growth, and agency workforce needs (recruiting/retention) as drivers in recommendations [4] [3] [6]. The Federal Employees Pay Comparability Act (FEPCA) and associated rules provide statutory guidance for locality adjustments when disparities exceed thresholds [7].
4. How politics and budgets enter the picture
The process is political: lawmakers and unions lobby for higher raises (e.g., FAIR Act proposals seeking 7.4%), while presidents balance fiscal constraints; Congress can legislate a different raise but often remains silent, effectively allowing the president’s figure to stand [10] [6] [1]. Appropriations timing and stopgap funding can also affect when and how raises are implemented, and decisions by agency leaders (for example, Pentagon advisory‑committee actions) can delay or change execution for subsets of workers [8] [11].
5. Why some workers get different treatments or delayed increases
Most General Schedule employees receive an across‑the‑board base raise plus locality‑based comparability payments, but certain groups—wage‑grade (blue‑collar) employees, military personnel, and some special‑rate categories (cyber, STEM, healthcare)—are handled differently through separate surveys, special rate authorities, or defense wage committees; that can produce different timing and amounts or delays in pay adjustments [7] [8] [3]. Recent examples show DoD wage‑grade raises being stalled because the DoD wage committee couldn’t meet, leaving tens of thousands awaiting updates [8].
6. Where debates and alternative viewpoints sit
There is clear disagreement among stakeholders. Unions and some lawmakers pressed for larger raises (FAIR Act at 7.4%), arguing federal pay lags private sector growth; administrations have pushed smaller, budget‑constrained figures (Biden’s 2% for 2025). Analysts note the president’s alternative plan often becomes the default absent congressional action; others argue the statutory comparability process should yield larger locality adjustments to close long‑term pay gaps [6] [1] [3].
7. Practical implications for federal employees and agencies
Employees should expect a presidential recommendation in late summer, a formal executive order in December, and implementation early in the new year—though some localities or wage systems can be slower or require separate committee actions [5] [7] [8]. Agencies must follow Office of Personnel Management guidance and process personnel actions so payroll systems can apply raises on schedule; failures or committee delays can create retroactive payments or separate checks [7] [11].
Limitations and sourcing note: This summary draws only on the supplied reporting and agency guidance documents; available sources do not mention internal deliberations at OMB or all technical statutory calculations beyond what the cited pieces describe (not found in current reporting). All factual statements above are cited to the sources provided [1] [2] [7] [4] [3] [8] [6] [5] [10] [11].