Federal Pay Freeze Extension: What it Means for Your Wallet


As many of you have likely heard by now, earlier this week the White House issued a letter to Congress calling for a three-month extension of the federal pay freeze. Here’s what you need to know about the extension and how it impacts you.

The federal pay freeze, beginning in January 1, 2011, was scheduled to end on January 1, 2013, lasting two full years. The new extension will extend the pay freeze through March of 2013, making the earliest date for an increase April 1, 2013. At that point, according to the President’s memo, federal employees will receive a 0.5% pay increase as he called for in his FY 2013 budget proposal. But this still leaves several questions.

What Does an Extended Freeze Cost Me?

The two-year federal pay freeze will cost federal employees a total of $60 billion over the next decade – yes, that’s billion with a “b.” That shakes out to roughly $30,000 in forgone income for every employee of the federal government, on average. If this was not bad enough, a three month extension would grow that figure, costing you even more in missed income.

Why Delay the Pay Adjustment to April 1st?

In our opinion, three more months of frozen pay are three months too long, and pay should increase as scheduled on January 1, 2013. But it is lawmakers who make these decisions. Since Congress has failed repeatedly to pass a budget, the government has been running on what are called continuing resolutions (CR), which basically maintain funding at current levels. In other words, CR’s maintain the status quo as far as government funding is concerned. The current CR that is funding government is scheduled to expire on September 30th of this year.

Congress and the White House have , funding the government through March of next year. This is where the April 1st date for a federal pay adjustment comes from.

Am I Guaranteed a 0.5% Raise on April 1st?

The short answer is no. The only thing this memo guarantees is that the President intends to increase federal pay by 0.5% on April 1st. Unfortunately, there is no guarantee this will happen despite the President’s letter saying he intends to do it. Congress may decide to allow the President to make the pay adjustment on April 1st as he declares in the letter, or Congress could specify that the pay freeze should continue in another CR or other piece of legislation. Right now, it is impossible to say for sure what will happen.