How Will the Pay Raise Impact Locality Pay?

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By on February 18, 2019 in Pay & Benefits with 0 Comments

Numbers '2019' pictured over a growing stack of cash depicting a pay raise for 2019

The federal government moves slowly. Government appropriations are often approved months into the fiscal year. Then, as if by magic, everything happens at once.

The magic is now occurring with the 2019 federal pay raise.

New Events in Federal Pay Raise Scenario

In the past few days, federal employees learned they will receive an average pay raise of 1.9% for 2019 (after the pay tables were published showing no raise in 2019), employees in new locality pay areas will learn their pay raise amount, and some federal employees will be receiving (or have already received) back pay if they were among the agencies impacted by the federal government shutdown.

1.9% Average Pay Raise

The 2019 federal pay raise will be retroactive. According to the new appropriations bill: “All adjustments…shall be effective as of the first day of the first applicable pay period beginning on or after January 1, 2019.”

This means many readers will be seeing an unexpected influx of money. For those federal employees who were reportedly receiving food stamps, applying for unemployment, borrowing from their TSP, setting up a “go-fund-me” account, or obtaining a loan to meet expenses during the partial shutdown, this creates an opportunity to start an emergency fund for meeting unanticipated financial emergencies.

While the average raise will be 1.9%, some employees will receive more and some less. According to the appropriations legislation:

The adjustment in rates of basic pay…that takes effect in fiscal year 2019 under section 5303 of title 5, United States Code, shall be an increase of 1.4 percent, and the overall average percentage of the adjustments taking effect…shall be an increase of 0.5 percent (with comparability payments to be determined and allocated among pay localities by the President).

This is what has occurred in recent years. Last year, for example, there was an average pay raise of 1.9%. Employees in the Washington, DC area received a pay raise of 2.29%. The “Rest of the U.S.” category received a raise of 1.67%.

Locality Pay Areas

In July 2018, the Office of Personnel Management (OPM) issued a proposal 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.

While the OPM action in issuing a final rule for these four new locality pay areas is not surprising, it was a surprise that OPM also added Corpus Christi, TX, and Omaha, NE to the mix of new locality pay areas.

New Locality Pay Areas and the 2019 Pay Raise

Here is what OPM published in the Federal Register about the new locality pay areas and the 2019 pay raise in December 2018:

Those changes in locality pay area definitions are applicable on the first day of the first pay period beginning on or after January 1, 2019. Locality pay rates for the six new locality pay areas will be set by the President.

Issuing An Executive Order With Pay Tables

As noted in the Federal Register notice:

Locality pay rates now applicable in those areas will not change automatically because locality pay percentages are established by Executive order under the President’s authority…and the President decides each year whether to adjust locality pay percentages.

This is normally done through an Executive Order issued by the president. Now that the percentage increase for the 2019 pay raise has been established, we anticipate an Executive Order will be issued in the next few days outlining the amount of locality pay for each locality pay area—including the amount for the new locality pay areas.

President’s Pay Agent Report

As noted in a previous article on locality pay, “While the OPM action in issuing a final rule for…four new locality pay areas is not surprising, it is a surprise that OPM is now adding Corpus Christi, TX, and Omaha, NE to the mix as well.”

That was a surprise because the President’s Pay Agent approves or disapproves recommendations of the Salary Council. While the Salary Council recommended adding Corpus Christi and Omaha as locality pay areas, OPM took this action without a published decision by the Pay Agent.

Recently, and without fanfare, OPM published the “Annual Report of President’s Pay Agent for Locality Pay in 2019”. We do not know when this was published by OPM, but the report is dated November 30, 2018. The report was posted on the OPM website in early 2019.

This new Pay Agent’s report reads:

In this report, we approve, subject to appropriate rulemaking, the Council’s new recommendation to establish a separate Corpus Christi, TX, locality pay area and a separate Omaha, NE, locality pay area.

So, apparently, Corpus Christi and Omaha have now been added as locality pay areas. Federal employees in these areas will learn in the next few days how their pay will be impacted with the 2019 pay raise and their new distinction as a locality pay area.

Summary

While it took months, once Congress passed the appropriations bill, events on the 2019 pay raise came together quickly. With the pending publication of the pay tables and issuing a 2019 Executive Order on federal pay, the federal workforce will know the approximate size of their paycheck this year.

© 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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