The White House's Office of Management and Budget officials briefed federal labor leaders late Friday on the proposed pay hike.
Federal pay has been frozen for more than two years. A 0.5% pay hike is scheduled to go to civilian federal workers in late March. That pay hike was delayed when President Obama extended the existing pay freeze a few months to give lawmakers time to come up with a budget deal.
Union leaders were elated to hear the news.
"After all that federal workers have sacrificed the past three years, they have earned a raise. I repeat, they have earned a raise," said William R. Dougan, president of the National Federation of Federal Employees.
Congress would still have to approve the pay hike. In the meantime, House Republicans have plans to consider legislation that would extend the current freeze on federal pay through the end of this year.
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