Adding New Federal Locality Pay Areas for 2014

By on November 19, 2013 in Current Events, Pay & Benefits with 41 Comments

Several readers have asked recently about the status of locality pay areas for 2014. We do not have a great deal of information yet. Here is what we do know that will be of interest to those in these metropolitan areas.

The Federal Salary Council reviewed data for Combined Statistical Areas  (CSAs) and Metropolitan Statistical Areas (MSAs) with 2,500 or more GS employees that are currently  in the “Rest of U.S.” locality pay area. Based on this review, the Council recommended a phased approach for removing areas from the Rest of U.S. locality pay  area and establishing them as individual locality pay areas.

For additional locality pay areas to be established in January 2014, the Council selected 12 areas with the largest pay disparities between GS and non-Federal pay averaging more than 10 points above that for the “Rest of U.S.” locality pay area over a 4-year period. These 12 areas are:

  • Albany-Schenectady-Amsterdam, NY Combined Statistical Area
  • Albuquerque, NM Metropolitan Statistical Area
  • Austin-Round Rock-Marble Falls, TX Combined Statistical Area
  • Charlotte-Gastonia-Salisbury, NC-SC Combined Statistical Area
  • Colorado Springs, CO Metropolitan Statistical Area
  • Davenport-Moline-Rock Island, IA-IL Metropolitan Statistical Area
  • Harrisburg-Carlisle-Lebanon, PA Combined Statistical Area
  • Laredo, TX Metropolitan Statistical Area
  • Las Vegas-Paradise-Pahrump, NV Combined Statistical Area
  • Palm Bay-Melbourne-Titusville, FL Metropolitan Statistical Area
  • St. Louis-St. Charles-Farmington, MO-IL Combined Statistical Area
  • Tucson, AZ Metropolitan Area

The President’s Pay Agent has tentatively approved the Federal Salary Council’s recommendation and plans to establish by regulation the 12 new locality pay areas in January 2014.

The pay rates for these 12 new locality pay areas will be excluded from the “Rest of the U.S.” computations. The Federal Salary Council noted in its report that some locations would be entirely surrounded or nearly surrounded by separate locality pay areas if its recommendations are implemented. These areas include Los  Alamos County, NM, if Albuquerque is made a separate pay area with Santa Fe included;  Berkshire County, MA, if Albany is made a separate pay area; and Lancaster County, PA, if  Harrisburg, PA, is made a separate pay area. In the Council’s view, locations completely surrounded by separate pay areas should be added to the adjacent pay area with which it has the highest level of commuting and areas nearly surrounded should be evaluated on a case by case basis.

Locality pay is a complex subject. More information is available from the Office of Personnel Management (OPM). We do not yet know what the pay rates will be for 2014. When new pay rates are established, we will provide readers with the latest information.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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  1. NeedToKnow says:

    Any news on ensuring, without a doubt since they have the whole year to get this right, that the new pay tables will be added

  2. Robflo82 says:

    What about non gs federal employees

  3. tommy says:

    Went to opm today looks like no new locality has been included for 2014.

  4. Austin says:

    No mention of the new locality areas in the Exec Order that came out today.

  5. Steve says:

    I too would like to know the status of what’s going on. 2014 is right around the corner and this has massive implications for those in the proposed areas. Why no media coverage really makes me wonder.

  6. April says:

    Im confused, so is this going to happen or not? It was recommended, but was it approved by who it needs to be improved by in order for it to go into effect in Jan 2014?

  7. Just thoughts says:

    If there is such a disparity between government employees and private sector…how is that the government’s fault? Because the government tries to pay an actual living wage? What does that say about businesses that cut hours to make more part time employees who are not required to be covered? Or cutting employees in order to be below th threshhold for required coverage? This whole government employee/private sector employee crap is just that….crap. Let’s take a look at the high and low of government employees and the high and low of private sector employees. Oh and please keep in mind when i say private sector I mean top (CEO/President) to bottom. Same for the government side. What is the percentage of difference between the two? That is where your problem lies. It is not because government employees are paid so much better but rather because private sector big business top level managers/owners prefer to rake in the profits rather than actually pay its employees. And since the majority of congress (House and Senate) have their hands out to big business for campaign contributions, stock options, maybe a cushy job when they decide not to run again, big business gets to make the rules and congress signs off on it. Sorry folks but that is the reality whether you like or not, whether you agree or not. We have the best government money can buy.

    • little taxpayer says:

      Wow. So much to dispute I don’t know where to start. How about just two basic concepts. (1) Businesses do not exist to provide people with jobs, much less a living wage. Businesses exist to make a profit. They only make a profit if the means of production (employees) generate more revenue than they cost. (2) Every dollar a business earns is a dollar voluntarily paid by someone to procure goods or services. Every dollar the government earns is a dollar taken from someone under threat of force.
      Therefore, big businesses make big profits when they produce something that lots of people voluntarily purchase and employees generate more revenue than they cost. When government regulations increase the cost of employees, businesses need to make adjustments to reduce the costs because they typically cannot unilaterally raise revenue.

      • Ross200 says:

        Why is it that some countries mandate a living minimum wage, and businesses in these countries thrive? The most successful countries on earth are those that combine a vibrant capitalism with a sense of economic social justice.

      • Another taxpayer says:

        You are correct in an overly simplistic way. Unfortunately, not every dollar a business
        earns is a dollar voluntarily paid by someone to procure goods or services because there are monopolies and non-competitive markets for essential goods and services (e.g., utilities, liability insurance) and regulatory requirements that compel people to pay for goods and services they might choose not to by on their own (Obama care comes to mind). Another instance where business profit without offering a good or service are lawsuits in the patent and copyright arena; filing lawsuits can be very profitable. There are many instances of businesses receiving government support e.g., (ag. payments, tax
        incentives). Also, every dollar the government earns is a dollar is not taken from someone under threat of force (e.g., mineral leases on Federal lands, sales of postage stamps). Further, many people understand that the government benefits necessary functions in society, so while they may not gladly submit to taxation, they willingly do so. Big businesses make big profits when they produce something that lots of people voluntarily purchase and employees generate more revenue than they cost. But they also profit when
        regulations create a business advantage for them (e.g., auto manufacturers may
        not like a regulation mandating air bags, but I suspect the makers of air bags think it’s a great idea). Businesses in a completive market always need to make adjustments to reduce the costs because they typically cannot unilaterally raise revenue because they must compete on price. But not all markets function as free markets and some business can, in fact unilaterally raise prices or do so complicity with other businesses (but then you did say “typically”). Minimum wages in competitive markets such as fast food increase costs on a thin margin. However, they increase all of the competitors costs evenly, to the extent that they are relying on a minimum wage workforce. Businesses do not exist to provide people with jobs, much less a living wage. Regardless, it is in societies interest that people have a job which pays a living wage, and business is in turn dependant on the stability and prosperity of the social environment in which it exists. This is why someone can come from Somalia to the United States and start a resturant or quick shop sucessfully, even though they where not able to do that in Somolia, where as a failed state there is little competition, few regulations,and minimal government interference.

  8. soon_to_retire says:

    Wait a minute. The locality pay is based on “areas with the largest pay disparities between GS and non-Federal pay”. But I thought we feds were already grossly overpaid in comparison to our non-Federal counterparts.

  9. Ross200 says:

    It will interesting to see what the President proposes for a Federal Pay Raise in his next budget. If he goes with the just announced Employment Cost Index of 1.8%, perhaps there will be movement on a Geographic pay increase. Of course, the House GOP Majority would have to agree on any proposed pay increase.

  10. Weather Guy says:

    Yup, just like the 1.5% 2014 ” annual” “cola” has nothing to do with Cost of Living (CPI), it is a labor pay disparity cost. Wages and the cost of living should go hand in hand, but during special events, locations, and times the two can diverge, but eventually they must come back together. Its sad to say but the “typical” private american wages are not keeping up with the CPI, and the wages of highly trained, specialist, in-demand labor often exceeds the CPI. Kinda like the rich get richer and the poor get poorer. See Chained CPI vs CPI-E, as an example.

  11. JJ says:

    So, I’m in the Davenport area…is my pay going to go up or down? What about the RUS, is their pay going to go down? How do you reconcile the RUS 40.13% “Pay Gap” (or the 33.46 “Target Pay Gap”), with the 14.16% RUS Locality payment?

  12. ctbigdawg says:

    And people are worried about Federal Employees receiving locality adjustments when they should be worried about all the tax increases coming down the line to pay for the Affordable Care Act. We are already seeing an increase in the number of businesses cutting benefits for employees by labeling them as independent contractors or reducing their hours to below the minimum required to have benefits.

    • Richard Jefferson says:

      Ok, maybe I’ve been half asleep under half a rock, but I hear a few people mention tax increases associated with the ACA. Will somebody please clue me in to what increases, where, and when because I can not find anything that relates to my income being affected by the ACA.

      I’m all ears!.

      • HRGuy71 says:

        For 2013:

        Medicare surtax on wages and investment income: The law raised the Medicare tax on wages and subjects investment income to a Medicare tax for the first time. But the changes only affect high-income households.

        They will owe another 0.9% on their earned income over $200,000 ($250,000 if married). That’s on top of the 1.45% Medicare tax that they currently pay on all of their wages.

        For those making more than $200,000 ($250,000 if married) and who have investment income, they also may be subject to a 3.8% tax on at least a portion of their capital gains and dividends.

        Higher medical deduction threshold: As a result of the Affordable Care Act, tax filers now may only deduct medical expenses that exceed 10% of their adjusted gross income. Previously, the threshold was 7.5% of AGI.

        The new 10% threshold will not apply to people 65 and older until 2016.

        Higher penalty on nonqualified Health Savings Account distributions: Any distributions taken from one’s Health Savings Account and spent on something other than qualified medical expenses are now subject to a 20% tax, up from 10% previously. That’s on top of any ordinary income tax due as a result of adding that distribution back to one’s gross income.

        For those taking nonqualified distributions from Archer Medical Savings Accounts, the tax increased to 20% from 15%.

        The $1 trillion in total tax increase in Obamacare will involve everything from health insurers, drug companies, and tanning salons to Health Saving Accounts and – eventually – high-cost employer-based health insurance.

        The third wave of ObamaCare taxes began on January 1, 2013. There are supposed to be a number of changes from the health overhaul law hit in 2014. These new and higher taxes are being levied to partially pay for ObamaCare’s large new subsidies for private health insurance and expansion of Medicaid.

        • Ross200 says:

          I would love to make the kind of money where I have to pay these taxes under the ACA. So HRGuy how would you help low income and moderate income folks get health insurance ? What we hear from the GOP is simply criticism ? Where is their plan ? The irony is the ACA is patterned after Republican Mitt Romney Massachusetts Initiative and Heritage Foundation Studies/Plans. The GOP controls the House of Representatives, let them pass a plan. The House of Representatives GOP Leadership does get points for their sense of humor. The other day the GOP Leadership had a meeting to discuss their 2014 Legislative Agenda. They handed out a sheet of paper that said “2014 Legislative Agenda” and the rest of the sheet of paper was blank, they thought this was very funny.

  13. Stuart says:

    Locality pay pertains to labor costs. Doesn’t really matter what the cost of living is. What I find interesting is the proposal to add new locality areas in the first place. With all the talk about how Federal employees are paid more than their counterparts in the private sector how is it even feasible to consider new locality areas? The areas proposed have “the largest pay disparities between GS and non-Federal pay averaging more than 10 points above that for the “Rest of U.S.” locality pay area over a 4-year period.” Quit a gap between Federal and private sector. This from the Federal Salary Council and tentatively approved by the President’s Pay Agent. I assume Congress will reject this study since they only accept studies from ignorant persons that can’t decipher the differences between job responsibilities for similar titles that show Federal employees are overpaid in comparison to private sector. If in fact Federal employees are overpaid by comparison why are theer even any locality areas? They came into existence how many years ago and have been accepted ever since?

  14. ObservingTheProcess says:

    Yet out here in Western North Dakota and Eastern Montana, we cannot get locality pay. With the oil boom going on rent and prices have sky rocketed. Rent for a 1 bedroom apartment is $1500, 2 Bd is $2000 with homes renting for $3000-$4000 per month. We are in the RUS pay. Yet OPM says there is not a problem here. obviously not enough votes.

    • WBuffettjr says:

      Your cost of housing has nothing to do with locality pay though. A lot of people think it is based on cost of living, but it isn’t…locality pay is based on the cost of labor…ie what it costs to hire someone in your particular area in the private sector compared to government for the same type of job.

      • ObservingTheProcess says:

        Well an agency is advertising for at a beginning temp position at $11.35. The Agency is not getting any results. Potential employees can go to Walmart and start at $17.00/hr. The cost of labor has been analyzed and the City Governments, County Governments, as well as State Governments have put in special pay increases in order to keep employees. The only Government not recognizing the problem and not giving a raise in locality is Federal. As a result Federal Agencies are loosing employees to both the private sector as well as other political sub-divisions with no backfills at an alarming rate.

        • justin63128@hotmail.com says:

          I’d like to see a Walmart starting anyone at $17.00 an hour. Walmart is one of those who thrives on cutting hours and taking advantage of part time employees paying them barely minimum wage with no benefits as a cost saving measure on their part.

          • SINternet says:

            The person was talking about Walmart Distribution Center which employees start at higher than Minimum wage JUSTIN

          • theinnerring says:

            where was that noted?

          • SINternet says:

            It wasn’t noted. I guess its not true or maybe I just know. Pull your head out. Google it.

            Depending on experience.

            http://tucson.jobing.com/job_d

          • formerIRS says:

            It should have been specifically noted that it was the distribution center and not a typicalo Wal Mart store. Also, I accessed the link in the posting a few below this and it states that the $17.00 per hour is after 3 years, not a starting pay. The starting pay is $14 something per hour, not $17.

    • Richard Jefferson says:

      Sounds like New Orleans. After Katrina housing costs went through the roof. They have come down a little, one br still around $1000, houses still fetching 2-3 grand a month. And we are in the RUS too.

      • Jeff says:

        Richard you are right. We are geographically similar to Houston/Galveston. However our locality pay is roughly 10 points lower. RSMeans city cost index is very close between Houston and New Orleans. We continue to get lumped into RUS. Why can’t we get consideration?

    • Ross200 says:

      Cry me a river !

  15. Ross200 says:

    This seems to be superfluous since Geographic Pay seems to be off the radar screen in Washington, DC.

  16. Analyst666 says:

    …and we have all these different localities for what reason?

    • Steve Neal says:

      Because it would be cruel and unfair to pay everyone the same wages, no matter where they have to live to work at their gov’t job. Locality pay attempts to bring their wages closer to the mean-wage of the area they work in, so they will be able to afford housing, food, utilities, clothing that each geographic area may find more expensive than in other areas of the country. Example: I worked in Alaska for several years, then went to school for six months (on and off) in Oklahoma. Everything was cheaper in OKC than in Anchorage, but average wages are half of what similar jobs would pay up in the Arctic Circle…

      • JG4 says:

        yet the only areas that the USPS gives locality pay are Alaska and Hawaii… and they have no problem hiring folks

        • krs1251 says:

          That’s because the USPS has inflated pay for all their employees and they pay almost 80% of the employee’s health insurance premiums.

          • JG4 says:

            right… and it’s 72% of premiums and that’s being brought into line with the rest of the fed.. btw how is their pay bloated? clerks and carriers are in line with the pay the UPS and FedEx gets…

    • duh says:

      because “fairness” is in the eye of the beholder…. specifically the ones in Congress who need to buy votes.

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