2022 Federal Pay Raise

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searight
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Joined: Wed Jan 16, 2013 8:56 am

2022 Federal Pay Raise

Post by searight »

Anyone have any better news on our raise for next year? It looks like a 2.2% pay raise +an average of .5% locality pay change if you are eligible. With inflation at 6.2% it is only a 3.5 - 4% pay cut this year.

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bloobs
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Re: 2022 Federal Pay Raise

Post by bloobs »

searight wrote: Fri Nov 19, 2021 3:55 pm Anyone have any better news on our raise for next year? It looks like a 2.2% pay raise +an average of .5% locality pay change if you are eligible. With inflation at 6.2% it is only a 3.5 - 4% pay cut this year.
Well, everything is relative. Without the increase, it would be -6.2% cut, right?

I am celebrating this effectively negative pay raise with a steak dinner (albeit with a discounted flank steak--not a 22oz porterhouse) :lol: :cry:

pilotric99
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Joined: Fri Sep 21, 2012 9:02 pm

Re: 2022 Federal Pay Raise

Post by pilotric99 »

First off, I will preface this post by saying I suck at math. Maybe I shouldnt even be in this conversation, but I dont think we are affected by inflation as described above...stay with me here...

Say I make $100,000 a year and I get this mystical 2.2% raise. Without adjusting for taxes withheld, I make an additional $2200 in 2022.

Lets assume inflation is 6.2% in 2022. I would only be paying 6.2% more on items I consume...food, gas, utilities (maybe), restaurants, vacations, vehicle purchases, etc...

...if my consumables budget is LESS than $35,483 ($35483 x .062 = $2200) , than my annual raise should net some amount of money AFTER inflationary effects.

Its not unreasonable to believe that 65% of our income ($65,000) would go towards existing FIXED costs that are NOT affected by inflation (at least in 2022) to include:

Payroll deductions/allotments
mortgage/rent,
property taxes,
insurance (house and car), car/boat/whatever payments,
TSP/IRA contributions,
life insurance,
Health insurance (my family plan going up just $11 in 2022)
Credit card interest rates...

...leaving 35% of our salaries (or $35,000) for consumables affected by inflation...which at 6.2% will cost about... $2200 more in 2022.

...Im sure there are more fixed costs, but the point is, at least in 2022, I dont think the annual raise percentage and inflation percentage are adjusted 1 for 1...

...although we all might just break even in 2022, which is just as depressing imo.

Pls feel free to correct any incorrect assumptions.

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bloobs
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Re: 2022 Federal Pay Raise

Post by bloobs »

Ric
Your reasoning is sound. The bulk of rising costs, be it food, premiums, gas, property taxes, etc. would be attenuated by the fact that only a fraction of our paychecks goes towards those affected expenses. Also, stock market returns and bank account interest rates also tend to perform better in most inflationary conditions and should further offset these costs.

Again, applying objective thinking, basic math, and MS Excel has made me feel better. I will be thawing the porterhouse this weekend ;)

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Aitrus
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Re: 2022 Federal Pay Raise

Post by Aitrus »

I can see your logic, Ric, but I think there's a component that might be missing. You're dividing up your $100,000 into two separate buckets: money used to pay for the daily needs of everyday living, and money left over. Investments, paying off debt, etc - that all comes from the second bucket.

The 6.7% inflation means that a dollar - any dollar - is worth 6.7% less in terms of buying power today. Yes, the $35k used to purchase daily needs is increasing in value by a roughly equal rate as the cost of inflation is driving up prices. However, it applies only to that bucket of money. The same can't be said of the other $65k.

The other $65k will be used to purchase future daily needs at a time when $100k isn't being earned each year through labor. The cost of future daily needs has gone up by 6.7%, while the presently-held $65k that will be used to purchase them went up by only 2.2% in terms of how much is earned with labor. Your math shows that, yes, technically this year the pay raise is a wash in terms of purchasing daily needs, but for today only. Future needs are still costing 4.5% more than the pay raise is providing for.

The only way to overcome that gap is to invest the $65k, whether positively (by investing) or negatively (by paying off current debt so it doesn't affect future total amount held that can be used to purchase daily needs, but at the cost of potential growth opportunity).

It's a race: will the $100k earned today still purchase $100k worth of goods in the future through the implementation of pay raises to offset inflation? This year, the answer is that $65k of that amount has fallen behind by 4.5%, and will not be recovered unless invested.
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pilotric99
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Joined: Fri Sep 21, 2012 9:02 pm

Re: 2022 Federal Pay Raise

Post by pilotric99 »

Aitrus,

I dont disagree a bit that over time, inflation erodes spending power and minimizes any value from our annual raises.

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IRQVET
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Re: 2022 Federal Pay Raise

Post by IRQVET »

Are the new tables out yet?
Operation Iraqi Freedom Veteran
Disclaimer: The contents of this thread are known to the state of California to cause cancer. (As they always seem to know more than the rest of us)

ProduceMan
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Joined: Thu Jan 18, 2018 12:01 pm

Re: 2022 Federal Pay Raise

Post by ProduceMan »

I believe the new pay tables are posted on OPM the last pay period (second week) of 2021.
Moneys’ Money Making Money (4M)

23V23C
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Joined: Sun Sep 24, 2017 2:13 pm

Re: 2022 Federal Pay Raise

Post by 23V23C »

I'm hearing rumblings from the Hill of a small bump up on the 2022 raise following an initial extension to the CR. But nothing is final until we have an enactment signed into law.

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bloobs
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Re: 2022 Federal Pay Raise

Post by bloobs »

23V23C wrote: Sun Nov 21, 2021 2:45 pm I'm hearing rumblings from the Hill of a small bump up on the 2022 raise following an initial extension to the CR. But nothing is final until we have an enactment signed into law.
Rep. Gerry Connolly (D-Virginia) is the biggest advocate for maximizing the fed increase to 3.2% plus locality pay. Send him your best wishes.

bsmith123
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Joined: Thu Dec 10, 2020 4:06 am

Re: 2022 Federal Pay Raise

Post by bsmith123 »

I was thinking if inflation goes up 6.2 average but the price of certain essentials skews the spending then
couldn't the rate touted as 6.2 be thought of more like an average.

I did some DIY projects over the summer and got raked over the coals on lumber. Less common things are happening too, like having to buy an expensive model vs a budget model for all kinds of things from ATVs to washer & dryers due to low stock.

Essentials would hit lower income brackets harder and I still remember when my investing goal was having money leftover after paying bills :).

"Hey Kids, --before tweeting or posting about "Boomers", remember who invented the internet." :)

tspme
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Joined: Thu Oct 07, 2010 3:51 pm

Re: 2022 Federal Pay Raise

Post by tspme »

I think that the logic is sound, seprating out fixed costs vs other costs. The complicating factor is that inflation hits some categories harder than others. Food, energy, and gasoline are way up. Even if you have a lot of your costs at a fixed rate you might get slammed extra hard in the other categories.

acidfly
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Re: 2022 Federal Pay Raise

Post by acidfly »

LMAO, Inflation is way above 6.7%

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