Reduced Take-Home Pay As More Top Level Employees Hit the Federal Pay Ceiling Of 2020 by Bill Eager

Reduced Take-Home Pay As More Top-Level Employees Hit the Federal Pay Ceiling Of 2020 – By Bill Eager


A growing number of long-time, top career federal employees won’t realize the full pay raise due to the arbitrary pay cap in 2020. There are several regions, such as Los Angeles, San Francisco, and Washington DC, that will be missing their pay raise due to this federal pay ceiling. Additionally, stranded employees, those with executive schedules, will see their take-home pay reduced due to higher health insurance premiums.


Finalized 2020 Pay Raise For Federal Employees


The President issued an executive order this past December, confirming that federal employees will have an average of 3.1 percent this 2020. It was an implementation of the Congress approved raise, which was a part of the bipartisan fiscal 2020 spending agreement.


This year, general schedule employees and law enforcement officers received a 2.6 percent necessary pay raise in the first pay period of January 2020, which is from January 5 to 18. This pay hike is in addition to the locality rate increase averaging at 0.5 percent depending on location.


The Federal Pay Ceiling is Equivalent to Lesser Take Home Pay


For several years, a considerable number of federal employees at the top steps of the GS-15 had their pay capped because of the executive pay freeze. Additionally, the new higher premiums, which everyone expects to arrive soon, appeared to be a significant problem. Not realizing any pay raise due to the freeze and higher premiums means lesser take-home pay.


Adverse Effects of the Pay Cap Hitting Multiple Steps in the GS-15 Ladder


In Washington DC, specifically in the Metropolitan Area, the pay ceiling only affected employees at steps 8 through 10. Moreover, federal employees in Washington are due to get the most significant pay raise adjustment of any locality area, which is 3.52 percent.


However, this same year broke the three-year run, as step 7s are now a part of the 2020 federal pay ceiling. Additionally, for GS-15s or step 10s in Washington, their annual salary should total approximately $185,509, but due to the national pay cap, their salary becomes limited to $170,800.


The Federal pay ceiling has long been a problem for GS-15 workers in New York City. Moreover, the situation has also escalated in the New York-Newark Locality as the pay cap extended to Step 6s. It has also been a problem with other high-wage areas, where salaries are associated with local private sector salaries, such as Philadelphia and Baltimore.


Meanwhile, locality regions, such as Raleigh, North Carolina, and Buffalo, New York, are experiencing the step 10 pay cap for the first time.


Major Turn Over Problem Due to the Pay Cap


The New York Times recently cited an increase in the turnover rate at the National Security Agency. The pay cap seems to have forced qualified federal employees out of the government.


While there is no tangible evidence to prove this claim, there is a high possibility that other government agencies will start experiencing a significant turnover problem. It is most likely that many of the different agency’s best and brightest will begin walking out the door and accept jobs with contractors that have better pay. Tier government employees are highly desirable considering their work experience, insider knowledge, top security clearances, and federal health benefits.


Pay Cap is Sad News For All


The pay cap has enormous downsides, not only for long-time, top career federal employees. On the other hand, some localities are just about to experience the pay cap for the first time. Apart from getting stranded on the GS ladder and limiting take-home pay, these caps could also cost future retirees thousands of dollars a year during their retirement.


While plenty of localities have been experiencing pay caps for several years now, other regions are only about to reach the pay ceiling shortly if Congress doesn’t raise the pay cap anytime soon.


Other Technology Admin Articles

What is a 401(k) Rollover?

What Should You Do When the Thrift Saving Plan Tanks?

Should You Invest Everything Possible Into Your TSP?

2021 Budget Proposals Seek to Change Benefits of Federal Employees

Leave a Reply