Your home, office and locality pay, part 2

First we asked you if you’d take a pay cut to work for your agency from the comfort of your own home.

Last Monday’s column took the question a step further: Would you accept a locality pay change to work remotely — from anywhere?

The column presented some — but certainly not all — of the considerations that could play into a hypothetical scenario like the one initially described.

So let’s explore more of them.

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First, let’s talk about what locality pay really is. It’s easy to think of your locality pay as a cost-of-living adjustment. But locality pay was born out of a concept that economists observed in the early 1990’s — that there was a growing pay gap between non-federal and civil service salaries.

Despite common misconceptions, living costs or specific price levels like the Consumer Price Index aren’t factors when setting locality pay rates.

Instead those rates are based on a highly complex comparison from the Bureau of Labor Statistics, which uses the National Compensation Survey to measure non-federal compensation in a particular labor market and compare it to federal pay for GS employees who perform similar work in the same region.

BLS will compare the average salary for an engineer at a private company or local government in Boston, for example, with the average take-home pay for a federal engineer working for the Environmental Protection Agency in the same city.

The discrepancy, or pay gap, between the two helps determine a locality pay adjustment for a specific area during a given year. Commuting patterns are also a factor.

Now there’s certainly a case to be made that locality pay isn’t working as originally intended. There are flaws with this methodology, economists, think-tanks and federal pay experts have said. But that’s another column for another time.

But put another way, these locality rates are essentially the price the government pays to compete with the private sector for professionals in your region.

Which brings me back to the original question: If your recruiting pool is no longer limited to a 50-mile radius surrounding your office building, don’t the traditional rules and concepts surrounding locality pay go out the window?

At least one agency has figured this out.

Under a pilot program authorized by Congress, the U.S. Patent and Trademark Office already allows employees to work remotely from anywhere in the United States.

The Telework Enhancement Act Pilot Program (TEAPP) waives the usual requirements to report regularly back to PTO’s home campus in Washington, D.C. Employees enrolled in the program must change their duty station to an alternate work location in the city where they’re currently living. Their locality pay changes too.

According to its most recent report on the program, PTO had 2,784 TEAPP participants
across 47 states and Puerto Rico in fiscal 2018. PTO estimates it saved $125.9 million that year through TEAPP.

It also allows PTO to recruit “top notch scientists, engineers, and lawyers across the country,” as the agency has said.

Clearly, there are some benefits to PTO and other agencies who might want to move in this direction.

But what about the benefits for employees?

As we discussed last week, moving to a new locality area — particularly from an area like the Washington metro region to a place like Kansas City — may amount to thousands of dollars less in salary and your retirement annuity. Some of you — especially those at the top of the General Schedule who have been subject to pay compression for years — are undoubtedly familiar with the changes locality pay can bring to your retirement.

But as some readers reminded me last week, it doesn’t have to work that way. You could, if your agency allowed it, work in a more expensive city than the location of your agency.

Again, a GS-12, step 5 in Washington makes $97,848 in 2020. But if that same employee worked out of the San Francisco area, his or her salary would be $106,067, a difference of $8,219.

In Newark, New Jersey, that employee would make $100,473, a $2,625 differential.

And now, a final question to consider: Does working from home save you money?

The answer to this question likely varies depending on your job, the kind of duties you have and your lifestyle. Perhaps your job requires a higher speed internet connection than you’d normally purchase for your own home use. Perhaps, like one reader suggested, you have supplies to pay for out of pocket.

“If anything, we should get paid more; after all, we are paying for our printing, supplies and services that would normally be supplied at the office,” this reader said. 

What about that commute?

If you bike to work, sure, your commuting costs were very little to begin with. But if you drive, park, pay tolls, take public transportation or some combination of all the above, you’re saving hundreds of dollars by telecommuting.

I haven’t even mentioned that for some, telework isn’t ideal. As we’ve learned from our reader surveys over the past few months, it’s often more difficult to “turn off work” when your office desk is your kitchen table. Some of you also miss a change of pace or socializing in-person with your co-workers.

What price, if any, do you place on that?

Nearly Useless Factoid

By David Thornton

A new study in The New England Journal of Medicine shows that a country’s chocolate consumption correlates strongly with the number of Nobel Prizes its citizens win. According to the author’s calculations, Switzerland consumes the most chocolate and ranks second behind Sweden in laureates per capita. (The author accuses the Sweden-based Nobel committee of favoritism.)

Source: Slate