Executive Order on Adjustments of Certain Rates of Pay
On December 23, 2024, the White House released an Executive Order titled “Adjustments of Certain Rates of Pay.” This order adjusts the rates of pay for certain federal employees, including members of the uniformed services, effective January 1, 2025.
Key Provisions
- Across-the-board increase: All federal employees, except certain senior executives and political appointees, will receive a 4.6% pay increase.
- Locality pay adjustments: Locality pay adjustments will be made to compensate for differences in the cost of living in different areas of the country. The average locality pay adjustment will be 2.2%.
- Military pay: Members of the uniformed services will receive a 4.6% pay increase, which is the same as the across-the-board increase for civilian employees.
- Minimum wage: The minimum wage for federal contractors will increase from $15.00 to $16.00 per hour.
Rationale
The Executive Order cites the following reasons for the pay adjustments:
- To ensure that federal employees are fairly compensated: The pay increases are designed to keep pace with rising inflation and the increasing cost of living.
- To attract and retain a skilled workforce: The government needs to offer competitive salaries to attract and retain qualified employees in the face of a competitive labor market.
- To support economic growth: The pay increases will put more money into the pockets of federal employees, which will stimulate economic growth.
Impact
The pay adjustments will have a significant impact on federal employees and the economy as a whole. The across-the-board increase is expected to cost the federal government approximately $60 billion in fiscal year 2025. The locality pay adjustments will cost an additional $10 billion.
The pay increases are likely to have a positive impact on the economy by increasing consumer spending and boosting economic activity. They will also help to reduce the gap between federal employees and their counterparts in the private sector.
Conclusion
The Executive Order on Adjustments of Certain Rates of Pay is a significant step towards ensuring that federal employees are fairly compensated and that the government can attract and retain a qualified workforce. The pay increases will have a positive impact on the economy as a whole and will help to support economic growth.
Executive Order on Adjustments of Certain Rates of Pay
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