Feds Receiving a Two Percent Average Pay Raise in 2025, Locality Pay Announced

President Biden signed an executive order implementing a two percent average raise for civilian federal employees in 2025. 

The raise includes a 1.7 percent boost across the board, plus an average locality raise of 0.3 percent. 

The raise will appear in the first full pay period in January.

The exact pay hike will vary depending on where federal employees work and their corresponding locality pay. OPM published a table of pay adjustments for the 58 locality pay areas. 

 In 2025, the top locality pay area is San Francisco-San Jose-Oakland, California where employees will receive a 2.35 percent raise. That’s followed by Seattle-Tacoma, Washington at 2.29 percent, and New York-Newark, New York, New Jersey, Connecticut, Pennsylvania at 2.23 percent. 

The smallest locality pay raise is 1.88 percent in the Cleveland, Ohio locality pay area.  Federal employees working in the national capital region will receive a 2.22 percent raise. 

Pay Compression Expands

With the 2025 raises, pay compression now affects 37 of the 58 locality pay areas, up from 25 pay areas in 2020. 

Pay compression occurs when the raises for senior-level employees bump up against the pay cap for their pay grade and the raise is compressed down. It typically occurs in higher cost of living areas. Colorado Springs, Colorado, and St. Louis, Missouri-Illinois are experiencing some level of pay compression for the first time this year. 

The Senior Executives Associations (SEA) is among the federal employee groups arguing that pay compression hurts morale and disincentivizes top talent from pursuing a government position. 

“We look forward to engaging with leaders from the new administration and new Congress to pursue much needed modernization and change, including on the important issue of pay compression. To position the federal government to attract, recruit and retain talented executives, professionals and technical experts, policymakers must prioritize and act immediately to resolve this long-standing, continuous impediment,” said SEA President Marcus Hill in a statement to Federal News Network. 

Other Compensation Moves

Meanwhile, there are some other variables to the raises to note. 

Employees working overseas under a Domestic Employees Teleworking Overseas (DETO) agreement will receive a special locality payment. 

The freeze on pay for certain senior political appointees will continue through March 14, 2025, when Congress will determine if the freeze will be extended further. The freeze does not affect the official rates for the Vice President and the Executive Schedule, which will be increased by 1.7 percent, and paid to executives not covered by the freeze.