Social Security Recipients to Get Tiny Increase in Benefits

October 18, 2016

WASHINGTON (AP) — Millions of Social Security recipients and federal retirees will get a 0.3 percent increase in monthly benefits next year, the fifth year in a row that older Americans will have to settle for historically low raises.

There was no increase this year. Next year's benefit hike will be small because inflation is low, driven in part by lower fuel prices.

The federal government announced the cost-of-living adjustment, or COLA, Tuesday morning. By law, the COLA is based on a government measure of consumer prices.

The COLA affects more than 70 million people — about 1 in 5 Americans.

The average monthly Social Security payment is $1,238. That translates into a monthly increase of less than $4 a month.

More bad news for seniors: Medicare Part B premiums, which are usually deducted from Social Security payments, are expected to increase next year to the point in which they will probably wipe out the entire COLA.

By law, the dollar increase in Medicare's Part B premium cannot exceed a beneficiary's cost-of-living raise. That's known as the "hold harmless" provision, and it protects the majority of Medicare recipients.
But another federal law says that the Part B premium must raise enough money to cover one-fourth of expected spending on doctors' services. That means that a minority of beneficiaries, including new enrollees and higher-income people, have to shoulder the full increase. Their premiums would jump.

Millicent Graves, a retired veterinary technician, says Medicare and supplemental insurance premiums eat up nearly a third of her $929 monthly Social Security payment. And don't tell the 72-year-old from Williamsburg, Virginia, that consumer prices aren't going up. She says her insurance premiums went up by $46.50 this year, and her cable TV, Internet and phone bill went up, too.

"I just lose and lose and lose and lose," Graves said.

More than 60 million retirees, disabled workers, spouses and children get Social Security benefits. The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.

Since 2008, the COLA has been above 2 percent only once, in 2011. It's been zero three times.

"This loss of anticipated retirement income compounds every year, causing people to spend through retirement savings far more quickly than planned," said Mary Johnson of the Senior Citizens League. "Over the course of a 25- or 30-year retirement, it reduces anticipated Social Security income by tens of thousands of dollars."

By law, the cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

The COLA is calculated using the average CPI-W for July, August and September. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.

The numbers for July and August suggest COLA of just 0.3 percent. The numbers for September are to be released Tuesday.

Some advocates complain that the government's measure of inflation doesn't reflect the costs many older Americans face.

For example, gasoline prices have fallen by nearly 18 percent over the past year, according to the August inflation report, while the cost of medical care has gone up by more than 5 percent.

For seniors who don't drive much, they don't get the full benefit of low gas prices, said Max Gulker, a senior research fellow at the American Institute for Economic Research. Many seniors, however, spend more of their income on health care.

Graves said she appreciates lower gas prices, but doesn't drive much.

"I just have to rely more each month on cashing in investments," Graves said. "I'm lucky I can do that."

Obama Sets 2017 Pay Raise for Civilian, Military Employees

What agency has the most employees? Which feds get paid the most? Federal News Radio looks at the latest data from the Office of Personnel Management.

August 31, 2016

FEDERAL NEWS RADIO - President Barack Obama is exercising his authority to give federal civilian employees and uniformed service members a pay raise effective Jan. 1, 2017.

Civilian employees will receive an across-the-board raise of 1 percent, with an additional 0.6 percent adjusted in locality pay.

“I have determined that for 2017, across-the-board pay increases will be 1.0 percent,” Obama wrote in an Aug. 31 letter to congressional leaders. “Also, I will make a decision by November 30, 2016, regarding an alternative plan for locality payments under 5 U.S.C. 5304a. The alternative plan for locality payments will be limited so that the total combined cost of the 1.0 percent across-the-board base pay increase and the varying locality pay increases will be 1.6 percent of basic payroll, consistent with the assumption in my 2017 budget. These decisions will not materially affect our ability to attract and retain a well-qualified federal workforce.”

Uniformed service members will also receive a monthly basic pay increase of 1.6 percent.

“This decision is consistent with my fiscal year 2017 budget. It will not materially affect the federal government’s ability to attract and retain well-qualified members for the uniformed services,” Obama wrote in a separate letter to congressional leaders.

The raise is just slightly above the 1.3 percent Obama approved last fiscal year.


The Office of Personnel Management earlier this month asked agency chief human capital officers to review and submit requests for raises in special areas with positions that are difficult to fill.

1.6 percent is well below the raise some federal employee unions and organizations, as well as some members of Congress, called for earlier this year after the President released his initial budget request.
“NTEU believes this is far too low given the last few years’ erosion in federal pay — from the recent three-year pay freeze to the last three years of meager raises,” National Treasury Employees Union President Tony Reardon said in a statement. “We continue to highlight the impact on federal workers of low pay increases and the impact on federal agencies’ ability to recruit and retain the skilled workforce our nation needs.”

The American Federation of Government Employees also said the pay increase did nothing to make up for past decisions.

“President Obama acted because Congress has not,” AFGE National President J. David Cox said in a statement. “AFGE reiterates our call for Congress to pass a 5.3 percent pay raise in 2017 that will make up for years of neglect and begin to close the widening gap between employees in the federal and private sectors.”

AFGE enthusiastically had called for a 5.3 percent pay raise earlier this year and described 2017 as a time to “play catch-up” after six consecutive years of pay freezes or small bumps in pay.

Several members of Congress — mostly Democrats — supported legislation proposing a similar 5.3 percent raise. The Federal Adjustment of Income Rates (FAIR) Act had support from Rep. Gerry Connolly (D-Va.) and more than 30 other sponsors. A Senate companion bill had support from six co-sponsors, including Sens. Ben Cardin (D-Md.) and Barbara Mikulski (D-Md.).

Congress hasn’t yet passed a budget for fiscal 2017, and lawmakers have little time once they return from summer recess to approve a new budget by Sept. 30. They have 17 days in session to pass all spending bills or a continuing resolution to avoid a government shutdown.

Federal Employees on Tap for 2016 Pay Raise After Congress Takes No Action

December 16, 2016

THE WASHINGTON POST - For federal employees, silence in the budget will prove to be golden.
By taking no position regarding a federal employee raise for 2016, the budget agreement announced Tuesday evening will allow an average 1.3 percent raise for federal employees to take effect by default. That represents the third straight year that Congress has followed such a strategy of action by inaction on the raise.

The increase, to be effective with the first full pay period of the new year — starting Jan. 10 for most workers — will be divided into two parts: A 1 percent increase will be paid across the board, and the money for the additional 0.3 percentage will be allotted in varying amounts according to locality.
In the Washington-Baltimore locality, a sprawling zone that includes the District of Columbia, much of Northern Virginia and Maryland, and parts of eastern West Virginia and south-central Pennsylvania, that will mean a raise of about 1.5 percent.

That is one of 21 metro area zones set to expand by pulling in some outlying counties; in addition 13 new such zones are being created. The result will be additional pay boosts for nearly 110,000 federal workers who are being moved out of the lowest-paid locality, the catchall “rest of the U.S.” zone for places outside what will now be 44 city areas.

An executive order to finalize the increases is still ahead.

Federal labor leaders wanted a larger pay raise, but they were pleased it was not smaller, as it has been in recent years. They also were glad to see no hit on employee benefits.

“At this point, we’re feeling like we did okay in it,”  American Federation of Government Employees President J. David Cox Sr. told reporters Wednesday. “At this point, I’m not seeing any real harm. There’s nothing coming back attacking our pensions this time or anything of that nature.”

 National Treasury Employees Union President Tony Reardon said “this pay raise amount is far too low,” but he acknowledged that it was better than nothing, adding:  “This funding agreement could have blocked a pay raise entirely.”

Although the raise specifically applies only to General Schedule employees — white-collar employees below the executive level — raises for blue-collar employees under the so-called wage-grade system once again will match those paid to GS employees in an area.

The raise will not be paid to political appointees, however, nor to members of Congress. Further, career employees at the senior executive and senior professional levels do not receive raises in tandem with the GS. They are paid within ranges based on performance and other factors, although the raise will bump up the pay caps applying to them.

Federal employees received 1 percent across the board raises by default in January of both 2014 and 2015, following three years of frozen salary rates; some employees received raises during that time due to promotions, advancing up the steps of a pay grade or for other reasons.

Another provision of the bill would extend and increase the services being provided to victims of the computer system breaches of federal personnel files and background investigation files. Currently, services such as credit monitoring are available at no cost through 2016 in the former case and through 2018 in the latter; the measure would keep both in effect for 10 years. In addition, it would raise the liability protection for costs related to identity theft from $1 million to $5 million.

Related:

More than 100,000 federal employees to get special pay boost