President’s Pay Agent signs off on 2 new locality pay areas

Federal employees in two new locations can expect a slight pay bump in 2018.

The President’s Pay Agent tentatively approved a recommendation to add Burlington, Vermont, and Virginia Beach/Norfolk, Virginia, as separate locality pay areas, according to its Dec. 5 report to the President. With the pay agent’s approval, the motion now moves to “appropriate rulemaking” with input from the Bureau of Labor Statistics, meaning federal employees in those locations wouldn’t see any changes until 2018.

The Federal Salary Council originally voted back in November 2015 to move Burlington and Virginia Beach/Norfolk out of “rest of the U.S.” pay category and establish them as separate entities.

The President’s Pay Agent also continued a multi-year trend and rejected the Council’s recommendation to eliminate the GS Employment Criteria as the basis for its decisions on locality pay areas.

“We disagree that it is appropriate to eliminate the GS employment criterion for evaluating areas adjacent to locality pay areas or to change the locality pay program’s treatment for micropolitan or single-county locations,” the pay agent wrote in its report.

The GS Employment Criteria refers to the number of GS employees who work in a specific location. The Salary Council has long favored another approach, the Adjusting Commuting Criteria, which would include the number of GS employees who commute to a specific area for work.

The Council has said that including the commuting data as a factor would help it make decisions that would impact multiple locations and large groups of federal employees, rather than tackling pay disparities one at a time for a specific area.

Changing the criteria would also impact some federal employees who work in locations near multiple locality pay areas. Since their specific municipality does not qualify for a locality pay raise, many federal employees have argued to the Salary Council that they lose out on qualified talent who opt to commute to another area where the pay is higher.

In addition, the President’s Pay Agent once again suggested a need to reexamine the federal pay system as a whole, as well as the model and methodology it uses to compare public and private sector pay.

The Bureau of Labor Statistics’ estimate differs drastically from estimates that academic institutions and think-tanks have given. The Government Accountability Office pointed to the wide range of methodologies for estimating federal pay in a 2012 report.

The Heritage Foundation, a conservative think tank, for example, found that federal employees receive an average of 22 percent more in pay and benefits compared to their private sector counterparts.

According to the Bureau of Labor Statistics and OPM, federal employees on average earned about 34.07 percent less than their counterparts in the private sector. The average pay gap is down slightly from the previous year’s gap of 34.92 percent.

Yet under the Federal Employees Pay Comparability Act of 1990 (FEPCA), federal pay rates should be relatively comparable with private sector rates. FEPCA also authorized a schedule of the amount necessary each year to reduce the pay disparity in each locality area to 5 percent. Congress, however, has not followed that schedule for locality pay adjustments.

The President’s Pay Agent includes Labor Secretary Tom Perez, Office of Management and Budget Director Shaun Donovan and Office of Personnel Management acting Director Beth Cobert.

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