In response to the across-the-board 2026 pay raise of one percent, the National Active and Retired Federal Employees Association (NARFE) is recommending a 2027 federal pay raise of 3.8% stating that federal pay rates already lag private-sector pay rates by about 25%.
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“I urge Congress to pass at least a 3.8% market-rate federal pay increase, in line with recent private sector pay increases and the increase to military pay rates and for federal law enforcement.” NARFE National President William Shackelford said last week. “With the federal government having 300,000 fewer federal workers by the start of next year, those remaining will be asked to fulfill their missions with less support. They should be compensated appropriately.”
“Federal workers face increased costs of daily living from higher health insurance premiums to basic goods,” said Shackelford. “They face increased workloads following large-scale reductions in force and missed worktime due to a record-long, 43-day government shutdown. Yet they are offered a below-market, 1% pay increase. Is it better than nothing? Yes. Is it enough? Clearly, no.
NARFE has called for at least a 3.8% average pay increase in 2026 based on the annual change in private sector pay as measured by the Bureau of Labor Statistics’ Employment Cost Index prior to the development of the president’s budget request.
NARFE also cites that the Federal Salary Council analyzes federal pay in comparison to wages in the private sector and recommends changes to federal pay rates. In the most recent report, it found a substantial disparity between federal and private-sector pay rates, estimating that private-sector rates outpace federal rates for similar jobs by 24.72%.
“As it stands, federal pay rates already lag private-sector pay rates by about 25% for similar jobs,” Shackelford said. “As a result of the administration’s policies, more high-performing, undervalued employees will likely leave public service, and it will be more difficult or more expensive to hire and train replacements. Without adequate staffing, federal government operations and services on behalf of the American people will suffer.”