Federal pay agent finalizes locality pay changes

The Federal Pay Agent finalized its recommendation that President Barack Obama give about 102,000 federal employees locality pay raises.

In a final rule published in the Oct. 27 Federal Register, the Office of Personnel Management issued final regulations on behalf of the Federal Salary Council to add 13 new locations to those that already receive locality pay increases.

The President must approve these recommendations by issuing an executive order. And even if he does add these 13 areas across the country, OPM says the total increase may be smaller than expected for all federal employees in the more than 40 locality pay areas.

“When locality pay percentages are increased, past practice has been to allocate a percent of the total GS payroll for locality raises and to have the overall dollar cost for such pay raises be the same, regardless of the number of locality pay areas,” the final rule stated. “If a percent of the total GS payroll is allocated for locality pay increases, the addition of new areas could result in a smaller amount to allocate for locality pay increases in existing areas. Implementing higher locality pay rates in the 13 new locality pay areas could thus result in relatively lower pay increases for employees in existing locality pay areas than they would otherwise receive.”

The President said in an August letter to Congress that he would make a decision on locality pay by Nov. 30. The letter came when Obama approved a 1 percent pay raise for federal employees for fiscal 2016. The White House had frozen locality pay increases since 2011.

The cities are: Albany, New York; Albuquerque, New Mexico; Austin, Texas; Charlotte, North Carolina; Colorado Springs, Colorado; Davenport, Iowa; Harrisburg, Pennsylvania; Kansas City, Missouri; Laredo, Texas; Las Vegas, Nevada; Palm Bay, Florida; St. Louis, Missouri.; and Tucson, Arizona.

If these 13 are added, there would be 46 areas in the U.S. where federal employees receive locality pay. Kansas City was the only new recommendation. In all the other cases, the council already had approved the cities for locality pay rates.

OPM proposed the changes in May and received more than 700 comments.

National Treasury Employees Union President Tony Reardon said he’s pleased with the final rule.

“NTEU worked to expand locality pay coverage and is pleased that more federal employees are in line to receive these increases in 2016, although the percentage increase is too low,” Reardon said in a statement. “NTEU will continue to make the case for higher locality pay raises for federal employees who live and work in high cost regions. We are committed to preventing hardworking federal employees from falling further behind their private sector counterparts in terms of pay.”

The federal pay agent said adding these 13 locality pay areas would help further reduce disparities between the General Schedule pay rates and nonfederal salaries in similar locations.

“The Federal Salary Council recommended the 13 new locality pay areas after reviewing pay levels in all ‘Rest of U.S.’ metropolitan statistical areas and combined statistical areas with 2,500 or more GS employees,” the final rule stated. “The Federal Salary Council found that the percentage difference between GS and nonfederal pay levels for the same levels of work — i.e., the pay disparity — in these 13 locations was substantially greater than the ‘Rest of U.S.’ pay disparity over an extended period. Because pay disparities calculated for the ‘Rest of U.S.’ locality pay area are based on average pay across many metropolitan areas throughout the United States with varying pay levels, and because pay in those metropolitan areas can change over time, the pay agent believes it is appropriate to monitor pay levels in ‘Rest of U.S.’ metropolitan areas to the extent it is feasible to do so.”

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