(Andrew Harrer/Bloomberg)

The modest across-the-board pay jump would be the first increase for federal workers since before a two-year freeze began in late 2010. Raises for within-grade step increases and promotions have continued during the freeze.

The proposal, which requires congressional approval, differs from Republican plans supported by lawmakers and presidential candidates that would freeze basic pay rates for one more year. Some of those plans also call for denying within-grade raises. In recent weeks, GOP lawmakers have called for extending the pay freeze as a way to pay for a payroll tax extension.

But, “a permanent pay freeze is not an acceptable policy,” one of the senior administration officials said Friday. “While modest, a 0.5 percent increase reflects the belt-tightening we must do in these difficult times.”

The officials were unauthorized to speak publicly on the matter, but said that the White House notified agency budget offices about the decision Friday morning so that agencies could complete their 2013 budget requests.

The White House is expected to formally unveil its fiscal 2013 budget proposal in early February. No decision has been made yet on a potential pay raise for uniformed military personnel, the officials said, though lawmakers and federal worker unions traditionally push to ensure pay parity between civilian and military personnel. Pay parity was the standard practice for many years before 2009.

The proposal would save about $28 billion over the next decade and $2 billion in fiscal 2013 under the caps authorized by the budget control measures passed last summer, the officials said.

But the pay bump is well below the 3.6 percent cost of living adjustment that went into effect this week for Social Security recipients and most federal retirees to keep pace with inflation. It is also far below private sector earnings, which climbed roughly 2 percent in 2011, according to the Bureau of Labor Statistics.

Federal worker union leaders voiced tepid support Friday.

William R. Dougan, president of the National Federation of Federal Employees, called the move “a breath of fresh air for all those who serve their country every day.”

But John Gage, president of the American Federation of Government Employees, the nation’s largest federal union, said the move “doesn’t make me yell and cheer.”

“Clearly I don’t think it comes close to paying federal employees what they’re worth, but at the same time, it also breaks this terrible pay freeze that has been put on us,” Gage said. “And hopefully it will carry through, and we will avoid any pay freezes that might come from the payroll tax deduction negotiations.”

Gage said “a real threat” remains that Republicans will successfully enact a pay freeze as part of the payroll tax negotiations. AFGE and other unions believe Republicans should focus on raising taxes on the wealthiest Americans instead of federal employees, the vast majority of whom are middle-class wage earners.

Lawmakers who track federal personnel issues were not immediately available for comment.

The federal government employs roughly 2 million civilian federal employees, with about 85 percent living and working outside the Washington area. The federal sector added about 2,000 new jobs in December, according to employment statistics released Friday.

Staff writer Eric Yoder contributed to this report.

Follow Ed O’Keefe on Twitter: @edatpost

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