Biden gives federal employees major raise, still doesn’t keep up with inflation

President Joe Biden signed an executive order giving federal employees a significant pay bump heading into the new year, but that increase still does not keep up with inflation.

The executive order gives “General Schedule” employees a 4.6% pay increase, 4.1% as a raise and 0.5% as a cost-of-living adjustment. General Schedule employees include a wide range of civilian federal workers.

“The other schedules contained herein are effective on the first day of the first applicable pay period beginning on or after January 1, 2023,” the order said.

The raise is higher than the 2.7% increase from the same time last year.

Biden indicated the raise was coming in August. He sent a letter to House Speaker Nancy Pelosi, D-Calif., and Kamala Harris in her role as vice president of the Senate about the change.

“Title 5, United States Code, authorizes me to implement alternative plans for pay adjustments for civilian Federal employees covered by the General Schedule and certain other pay systems if, because of “national emergency or serious economic conditions affecting the general welfare,’ I view the increases that would otherwise take effect as inappropriate,” the letter said. “Accordingly, I have determined that it is appropriate to exercise my authority to set alternative pay adjustments for 2023.”

That increase, though, fails to keep up with the rising prices since Biden took office. The 4.6% increase is far less than the rise in consumer prices, and nearly a third of the increase in some items like groceries in the last year.

The U.S. Bureau of Labor Statistics released its latest Consumer Price Index report earlier this month, which showed prices rose 7.1% in the previous 12 months.

Another federal inflation marker released this month, the Personal Consumption Expenditure Index, showed a 5.5% increase in the previous twelve months, nearly one point higher than the pay raise.

CPI data shows grocery prices rose 12% in the last year.

"Four of the six major grocery store food group indexes increased over the month,” BLS said. “The index for fruits and vegetables increased 1.4% in November, after falling 0.9% in October. The index for cereals and bakery products rose 1.1% over the month while the index for dairy and related products increased 1.0% in November. The index for nonalcoholic beverages rose 0.7% in November, after rising 0.5% last month."