Salary Council Recommends More Locality Pay Areas

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By on October 23, 2018 in Pay & Benefits with 0 Comments

Grid showing dollar signs superimposed over a city skyline depicting locality pay

The Federal Salary Council (FSC or the Council) made several recommendations during the summar regarding pay for a number of federal employees.

Salary Council Recommendations

Here are the recommendations likely to have the most impact if they were to be adopted:

  • The Pay Agent should adopt the estimated locality pay rates listed at the end of this article. These pay rates would go into effect in January 2019. The FSC states in its latest recommendations that “when existing locality pay rates (averaging 22.35 percent) are taken into account, the overall remaining pay disparity is estimated at 31.98 percent.”
  • The Pay Agent should start the regulatory process to establish Burlington, VT; Virginia Beach, VA; Birmingham, AL; and San Antonio, TX as new locality pay areas. The Council has previously recommended that the President’s Pay Agent establish these cities as new locality pay areas.
  • The Pay Agent should begin the regulatory process to establish McKinley County, NM, as an area of application to the Albuquerque locality pay area and to establish San Luis Obispo County, CA, as an area of application to the Los Angeles locality pay area.
  • The Pay Agent should establish Corpus Christi, TX; and Omaha, NE as new locality pay areas for 2019. The Salary Council concluded its estimated pay disparities for these areas exceeded those for the “Rest of U.S.” locality pay area by more than 10%, on average, from 2015-2017.

Role of the President’s Pay Agent

The President’s Pay Agent reviews and makes decisions on recommendations made by the Federal Salary Council. The Pay Agent is made up by the Director of the Office of Management and Budget, the Secretary of Labor and the Director of the Office of Personnel Management. The recommendations of the Salary Council are important as it brings to the attention of the Pay Agent possible changes in locality pay.

The final decision on Salary Council recommendations is made by the Pay Agent. Decisions by the Pay Agent are often made late in the year. In 2017, for example, the Pay Agent report was issued on December 20, 2017 for locality pay to be implemented in January of 2018.

The Salary Council is largely populated by federal union representatives. They have an interest in raising federal employee salaries and have had considerable in expanding locality pay areas through this annual process. Many of their recommendations are not adopted or are significantly delayed by the Pay Agent. The conclusions of the Salary Council are often unique and not generally accepted by other organizations that study federal pay.

Possible Changes in 2019

In 2015, the Pay Agent’s report stated:

We tentatively agree that, after appropriate rule-making, separate locality pay areas should be established for Burlington, VT, and Virginia Beach, VA. BLS should deliver data separately for the Burlington-South Burlington, VT, MSA and for the Virginia Beach-Norfolk, VA-NC, CSA, and exclude those areas from the “Rest of U.S.” computations for 2016 data deliveries to OPM staff.

Employees in Burlington and Virginia Beach may have noticed that they are not in a locality pay area as of 2018.

Earlier this year, OPM issued a proposal in the Federal Register to add the following locality pay areas. These pay areas would impact about 62,000 federal employees. These proposed new locality pay areas were:

  • Birmingham-Hoover-Talladega, AL;
  • Burlington-South Burlington, VT;
  • San Antonio-New Braunfels-Pearsall, TX; and
  • Virginia Beach-Norfolk, VA-NC.

Final regulations have not been issued by OPM. There is a chance that these new areas will be added for 2019. According to OPM, the “[locality] pay rates for the four new locality pay areas would be set by the President at a later date after they would be established by regulation.”

Implementing Pay Raise of More than 30%

The Salary Council’s recommendation of implementing locality pay rates of almost 32% amounts to wishful thinking. Perhaps the strategy is to propose a large pay raise and hope for a smaller one. In any event, this recommendation does not have a chance of being implemented by the Pay Agent.

It is possible the Pay Agent will approve starting the regulatory process to establish McKinley County, NM as part of the Albuquerque locality pay area and to establishing San Luis Obispo County, CA, as part of the Los Angeles locality pay area.

Using new criteria for evaluating “Rest of U.S.” locations as potential areas to add to existing locality pay areas would add one location to an existing locality pay area. McKinley County, NM, would be included in the Albuquerque-Santa Fe-Las Vegas, NM, locality pay area under OPM’s proposal. This would add about 1,600 federal employees to the locality pay system for general schedule employees. It as included in the OPM proposed changes issued in July 2018.

OPM has also proposed adding San Luis Obispo County to the Los Angeles-Long Beach, CA, locality pay area in its latest proposal. This would add about 100 federal employees to the locality pay system.

When the Pay Agent’s report is issued later this year, we will know more about the intentions of the Members who make up the President’s Pay Agent.

Federal Salary Council Recommendations by FedSmith Inc. on Scribd

© 2019 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. Follow Ralph on Twitter: @RalphSmith47

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