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Hello everyone, Ian Smith here with
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And I'm here to talk to you today about
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the 2027 federal pay raise. And I know
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that might sound a little bit weird cuz
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I'm recording this in early August, and
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it seems like kind of an odd time to be
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talking about next year's pay raise
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that's still what? Almost half a year
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But August is a very important month for
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the pay raise process and I'm going to
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explain why in today's video.
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So every year around this time federal
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employees start asking the same
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question, what's my pay raise going to
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And every year the answer doesn't
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actually come down to the budget, it
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comes from a letter that the president
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has to send by the end of August and
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that's why August is key. This year that
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letter matters more than usual because
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right now the budget says that the
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proposed raise is zero and I'll explain
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why a little bit more here in just a
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moment. So here's where things stand
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currently. The White House's 2027 budget
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proposal includes a 7% pay raise
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proposal for military personnel, but it
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does not mention a raise for civilian
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federal employees at all. And so
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consequently that's a silence like that
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usually gets read as a pay freeze. And
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if it holds, this would be the widest
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gap between military and civilian raises
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that we've seen in in years.
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The current average federal employee
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salary also, just as a reference point,
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according to data from the Office of
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Personnel Management is $112,141.
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If you put it in a table, then the trend
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is hard to miss on the gap between um
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raises and federal employee pay raises.
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Back in 2024, military and civilian
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raises weren't precisely alignment, but
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every year since then the gap has
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widened and 2027 could be the biggest
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gap yet. That's exactly the kind of
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comparison that pay parity advocates
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lean on and expect to hear it made
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louder and more often this year than in
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years past. And pay parity, just so you
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know, is an argument in favor of if the
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military is getting X amount of pay
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raise then federal employees should get
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But a 7-point gap is a much easier
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argument to make than a 3.1. So, why
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does August matter so much? I mentioned
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that this is an important month in the
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overall pay raise process. Back in 1990,
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Congress passed FECA, FEPCA, that stands
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for the Federal Employees Pay
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Comparability Act, which set up an
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automatic formula for pay raises.
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However, no president has ever actually
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let that formula play out. It would
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result in a raise that is way too large.
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Instead, the law lets the president
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override it with what's called an
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alternative or alternate pay plan.
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And that letter is legally required to
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go to Congress before September 1st
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That's the deadline driving everything
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that you're about to see.
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And this isn't a new situation. In fact,
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we just went through it last year. Last
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year's budget was silent on a pay raise
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for civilian federal employees as well,
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so a pay freeze was the expectation.
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However, on August 28th, the president's
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letter came out and it contained an
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unexpected surprise. It authorized a 1%
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but with locality pay frozen.
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And a second surprise that that letter
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contained is it proposed a higher pay
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raise for some federal employees.
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Law enforcement personnel got a separate
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3.8% increase to match the military.
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The freeze that everyone expected did
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not happen, in other words.
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And that's actually the pattern going
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back to President Trump's first term.
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If you take a look at this list, you'll
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see that nearly every year starts with a
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proposal for fiscal restraint, sometimes
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even an outright freeze, and ends with a
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modest raise once the letter actually
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is the clearest example.
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A pay freeze was proposed, 1.9%
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was what was delivered though after
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Congress got involved.
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And 2026 followed the same script almost
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And 2019 brings up an important point to
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keep in mind with the pay raise process
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as well. Congress can override with
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legislation any raise that the president
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This does not happen often, mind you,
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but it can and sometimes has as 2019
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And because of this, whatever pay raise
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that Trump ends up proposing in 2027
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will not be the final number until the
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process fully plays out for the
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remainder of the year because of of that
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possibility of congressional
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The number gets finalized within an
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executive order that's issued and that's
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typically in mid to late December.
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So what is a realistic pay raise that
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you could expect for 2027? There are
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three scenarios on the table. A full
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freeze is possible, but it would
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basically require Congress to sit back
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and let the budget stand as written.
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This is what usually happens as I said
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before, but with the large discrepancy
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between the proposed military and
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civilian pay raises for next year, that
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could motivate Congress to act.
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A small raise somewhere around 1 to 2%
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is the most likely outcome based on the
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And a bigger raise in the 3 to 4% range
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but it would need a real push from
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Congress to get there.
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And there are a few things that could
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change the math here. There's a bill in
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Congress right now called the FAIR Act,
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F A I R, that proposes a 4.1% raise.
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It's more of a negotiating position than
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a likely outcome because it has never
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become law in all of the years that it's
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But, it shows that there's pressure from
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Congress can also legislate its own
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number instead of accepting the
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And with a midterm election coming up,
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inflation, the pay parity argument that
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I mentioned, and ongoing retention
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concerns, there's more than one reason
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that this could end up happening.
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Here's the bottom line though, a quiet
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budget has never been the end of the
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story for federal pay. Not last year and
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not in Trump's first term. The real
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number comes from the alternative pay
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plan letter due by the end of August.
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History leans toward a small raise
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rather than a true freeze, but I want to
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be clear I'm not making a direct
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prediction here. It's a pattern that I'm
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highlighting. We won't know for sure
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until that letter is issued, and once it
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has been, the possi- possibility does
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still remain that Congress could change
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it before the end of the year.
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Now, as soon as that alternate pay plan
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letter comes out, we'll have the full
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breakdown for you. What it means for
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your paycheck and how it compares to um
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to what history has predicted. And if
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there are any other breaking updates in
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the pay raise process, we will
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definitely be sharing them as soon as
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Also, I've included some links in the
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description below to articles with more
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details about all this, so please be
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be sure to check those out. Thank you
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for watching today, and I'll see you in
