What does the pay freeze mean for feds living in new locality pay areas?

Because of the pay freeze, federal employees living in the six new locality pay areas will likely have to wait at least another year before seeing any increase in their paychecks. While the Office of Personnel Management lists those new locality pay areas in its 2019 pay tables, the rates are frozen at 2018 levels. That means those six locality pay areas are set at 15.37 percent, the same as the “Rest of United States” pay rate, for 2019.

The regulations in the final rule that established the new pay areas still go into effect on January 5, 2019.

However, even though federal employees living in Birmingham, Alabama; Burlington, Vermont; Corpus Christi, Texas; Omaha, Nebraska; San Antonio, Texas; and Virginia Beach/Norfolk, Virginia will all technically be living in locality pay areas come Jan. 1, 2019, they will be paid the same as federal employees living outside locality pay areas for the next year.

Some employees, especially those in Burlington and Norfolk, have been waiting years for OPM to make locality pay in their areas official.

But this is still a step forward for those federal employees living in these areas. It sets them up for locality pay increases sometime in the future that will bring them closer in line with the private sector salaries for comparable jobs in their areas. The increases would presumably take effect the next year in which federal employees are not subject to a pay freeze.

The designation will impact roughly 71,700 General Schedule employees. The final rule will have the biggest impact for Virginia Beach/Norfolk, where 30,400 employees will be affected, OPM said earlier in December.

Locality pay increases are based on 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.

For example, the bureau can compare average salary information for an engineer at a private company or state government in Indianapolis with the average salary of a federal engineer working 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.

The discrepancies for Birmingham, Burlington, San Antonio and Norfolk all ranged between 40.32 percent and 60.46 percent, according to the Federal Salary Council.

“Like the 13 locations established as new locality pay areas in January 2016, these four additional locations all had estimated pay disparities that significantly exceeded those estimated for the ‘Rest of U.S.’ locality pay area over an extended period,” the Federal Salary Council’s July recommendation to the President’s Pay Agent said.

Omaha and Corpus Christi also have pay discrepancies that fall within this range, averaging 46.69 percent and 48.67 percent respectively over the past three years. The Federal Salary Council said it included Omaha and Corpus Christi this year specifically because those were both more than 10 percent higher than the pay discrepancy for the “Rest of the U.S.” area, a bar that none of the other candidate areas cleared.

The 1990 Federal Employee Pay Comparability Act technically authorizes the full amount necessary to reduce the pay gap between federal and non-federal salaries in 47 broad “locality pay areas” to within 5 percent. But previous administrations, and the current one, have not followed the schedule of locality pay adjustments as FEPCA authorizes.

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