New Locality Pay Areas Likely for January 2019

What are the latest developments on new locality pay areas for 2019, and where does next year’s pay raise stand?

Finalizing Four New Locality Pay Areas

In July, 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.

As noted in an article last week, final regulations have not been issued by OPM, but there is a good chance these new areas will be added in time to become effective in 2019. According to OPM in its proposed regulations, 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.”

The proposed changes in locality pay areas would be applicable on the first day of the first applicable pay period beginning on or after January 1, 2019 if the regulations are finalized as proposed and in time to be implemented in January.

Confirmed by OPM

An official of OPM has confirmed the proposed regulations for the new locality pay areas should be issued in time for the new areas to be implemented in January 2019.

If a pay raise is approved for federal employees under the General Schedule for 2019, the average pay raise would most likely be 1.9%. The base pay would be 1.4% and an additional amount would be added for locality pay to bring the average up to 1.9%.

Locality Pay Raise Skews Federal Pay Rates

Locality pay skews the pay of federal employees under the General Schedule. The disparity in pay can grow over time as some localities often receive a higher raise than other localities.

For example, the area with the highest locality pay raise in 2018 was the Washington, DC locality pay area where the raise was 2.29%. In 2017, Washington area federal employees were second among the top 10 locality pay raise areas. On the other hand, in 2017, their raise was a little higher at 2.32%.

At the other end of the scale, the “Rest of the U.S.” came in last in 2018 with a raise of 1.67%. The “Rest of the U.S.” was also last in 2017. The 2018 raise is higher than the 0.71% received by the “Rest of the U.S.” in 2017.

About That 2019 Pay Raise

As of this writing, we do not know if there will be a federal employee pay raise in 2019. Last weekend, President Trump stated:

This would be a very good time to do a shutdown. I don’t think it’s going to be necessary, because I think the Democrats will come to their senses, and if they don’t come to their senses, we will continue to win elections.

The President also suggested media coverage of a “caravan” of Central American migrants making its way to America’s southern border added to his leverage. “I think probably, if I was ever going to do a shutdown over border security, when you look at the caravans, when you look at the mess, when you look at the people coming in, this would be a very good time to do a shutdown,” he said.

While agreement has been reached on funding for a number of agencies, there could be a shutdown as early as December 7th for a number of federal employees. The funding needed for a border wall is about $5 billion and that is perhaps the largest area of disagreement as Democrats do not support funding of a border wall despite the mass migration caravans. About 300,000 federal employees could be furloughed if agreement is not reached on a spending package.

Also, the amount of a federal employee pay raise, if any, will likely be determined by Congress through the appropriations process. While it seems likely that there will be a raise next year, President Trump has proposed a freeze on pay in 2019. The Senate has approved a raise for next year but the House has not agreed with the Senate language.

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