Annual adjustments to federal employee salaries are designed to help maintain purchasing power as prices for goods and services increase. These adjustments consider various economic indicators, often including the Consumer Price Index (CPI), which tracks the average change in prices paid by urban consumers for a representative basket of consumer goods and services.
Salary adjustments tied to economic indicators are essential for attracting and retaining qualified individuals in public service. Consistent, predictable updates to compensation help ensure that federal salaries remain competitive with the private sector and recognize the valuable contributions of public servants. Historically, these adjustments have played a critical role in maintaining a stable and effective federal workforce. These adjustments can also stimulate the economy by boosting consumer spending among federal employees.