ere be changes to the federal locality pay areas in 2017? When new areas are added, it automatically leads to an additional pay raise for those employees who are impacted.
Astute readers will recall that 13 new areas were added to the locality pay system last year. This change impacted about 102,000 federal employees.
Locality Pay in 2017
What will happen in 2017?
We do not know the answer yet but two new locality pay areas could be added.
The Federal Salary Council is hard at work in attempting to expand the number of pay areas and the amount of locality pay in the existing areas. The Salary Council consists of three experts in labor relations and pay policy and six employee unions that represent a large number of General Schedule employees. The Council submits annual recommendations on the locality pay program to the President’s Pay Agent. The Council’s recommendations cover the establishment or modification of pay localities, the coverage of salary surveys used to set locality pay, the process for making pay comparisons, and the level of comparability payments that should be made.
For 2017, the Salary Council recommends adding two new areas to the existing list of locality pay areas. The Salary Council has concluded: “[W]e find that two additional areas, Burlington, VT, and Virginia Beach, VA, now have pay gaps averaging more than 10 percentage points above the pay gap for the ‘Rest of U.S.’ area over the 3-year period studied. We recommend that the Pay Agent establish Burlington, VT, and Virginia Beach, VA, as separate locality pay areas in 2017.”
The actual decision is up to the President’s Pay Agent. The Pay Agent, which is made up of the Secretary of Labor, the Director of the Office of Management and Budget and the Director of the Office of Personnel Management, does not automatically accept the recommendations of the Salary Council. It is not unusual for recommendations to be delayed for a year or more and it is not required that the Pay Agent ever accept the recommendations of the Salary Council. But, when the Salary Council makes a recommendation, it will usually be addressed and seriously considered by the Pay Agent.
Federal Pay Prospects for Next Year
Conclusions about whether federal employees are paid too little, too much or some combination of both usually depends on the organization making the conclusions. The Salary Council, which consists largely of federal employee unions, is not hesitant to recommend large pay increases. According to their latest recommendations, there is currently a pay disparity for federal employees of 34.92 percent despite the existing locality pay rates that average 19.82 percent.
In 2016, an additional amount of .03 percent on top of the general pay raise was added as a locality pay increase. Some federal employees in a few locality areas received a higher amount; other locality areas received less than that.
Based on comments from our readers, some federal employees who were enthusiastic about having their own locality pay area for 2016 were not as excited after seeing the 2016 locality pay rates for their areas. The “Rest of the U.S.” locality had a pay differential of 14.35% in 2016. By comparison, the new locality pay area in Albany, NY received a locality differential of 14.49%, the Albuquerque and Santa Fe differential was 14.35%, and the Colorado Springs differential was 14.52%. In short, there was not much difference, at least in the first year.
Federal workers in areas such as the Washington, DC metropolitan area received a raise of 1.46% and those in the San Jose, San Francisco and Oakland area had a 1.45% pay bump in 2016.
In effect, federal employees who may be waiting for a raise of about 35 percent will be waiting a long time. There is likely to be an additional raise for employees in locality pay areas in 2017 above the average amount for other General Schedule employees, but the actual pay raise will probably approximate the differential received in the locality pay areas in 2016.
While we do not know the amount of the pay raise that will be implemented next year, or the amount of the health insurance premium increase, it is likely that the percentage increase in health insurance for 2017 will exceed the amount of the pay raise for many readers. As the actual amounts come into focus, we will provide the information as soon as it is available.