President Biden announces pay raises for federal workers in 2025.

President Joe Biden announced that federal civilian workers will receive an average 2% raise in 2025.

According to the Biden administration, there will be an across-the-board pay increase of 1.7% for all federal workers. In addition to the national pay increases, local pay increases will average 0.3%.

While there’s no telling how much inflation will fall between now and the end of the year, it’s possible that the pay rise won’t be enough to keep up with the cost of living. Year-over-year inflation in the U.S. was 2.9% in July 2024, according to the updated Consumer Price Index.

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Inflation has fallen steadily in recent years. July’s consumer price index was the first time in three years that annual inflation fell below 3%.

The raise is also slightly lower than what private sector workers received.

According to the Bureau of Labor Statistics, the average weekly wage of workers increased 3.3% year over year in July.

President Biden said the new pay rates make federal employment attractive while also fiscally responsible.

“We must attract, recruit and retain a skilled workforce at fair wages to keep our government running, deliver services and address our nation’s challenges today and tomorrow,” Biden said. “This decision on an alternative pay plan will continue to allow the federal government to hire a skilled workforce on behalf of the American people, recognizing labor market wage growth and fiscal constraints.”

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The pay increases are to take effect on January 1, 2025.

Salary increases in 2025 significantly lower than in previous years

As inflation falls, pay raises won’t be as high as in years past. Federal workers got a 4.6% raise at the end of 2022 and a 5.2% raise at the end of 2023.

The increase at the end of 2022 was not enough to account for inflation, but the latest pay rise helped workers catch up.

Year-on-year inflation rose by 6.4% in 2022, but fell to 3.3% in 2023.