Proposed Federal Pay Increase Nothing to Scream About

How does $375 more a year sound? That's what the average federal worker will
get in 2013 should a proposed 0.5% federal pay increase make its way through
Congress. According to the Office of Management & Budget, the White House plans
to put the proposal in its 2013 budget, and approval would end a three-year pay
freeze enacted by President Barack Obama. While no one's coughing at more
money in a down economy, let's not make a mountain out of this molehill. Among
things that should be immediately pointed out about this 0.5% increase:
Private-sector pay has increased 2% in the past 12 months. Inflation is up 3.4%
in the past 12 months. That money isn't the take-home amount, but the pre-tax
amount. The average federal worker makes $75,000. Concerning inflation, federal
workers won't be alone in their disappointment with the government trailing
the inflationary curve. In October 2011, Social Security announced its first
payout hike in three years , with the Cost of Living Adjustment coming to 3.6%.
Of course, at the time, inflation was chugging along at a 3.8% rate, meaning at
best that bigger check was merely a wash in keeping up with the times. Of
course, if your average federal work is making $75,000, that $375 will be taxed
at 25%, meaning you're now looking at only about $280. For bill-paying
purposes, that's about $23.40 a month. For weekly spending purposes, you're
talking about $5.40. In other words, you'd still be digging in your couch for
enough change to afford a Chipotle (NYSE: CMG ) burrito. And those underwhelming
numbers apply if you're an "average" federal worker. If you're among the
rank-and-file for our purposes, let's say you bring in "only" $50K a year
those figures end up being about $187 per year after taxes, turning that
Chipotle burrito into a trenta-sized coffee at Starbucks (NASDAQ: SBUX ). Tasty,
but not as filling. National Treasury Employees Union president Colleen Kelley
whose organization represents 150,000 American workers said in a statement that
"the good news is that the pay freeze is ending, but I am disappointed at the
size of the proposed 2013 increase." Chances are, most of those workers have
the same mixed feelings. As of this writing, Kyle Woodley did not hold a
position in any of the aforementioned stocks.