Why Are the New Locality Pay Increases So Small?

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By on April 4, 2019 in Pay & Benefits, Q&A with 0 Comments

Man holding open his wallet to find no money and only a few coins falling into his hand as he appears worried that he has no money

Q: As a General Schedule (GS) employee in the new Virginia Beach locality pay area, I was shocked and confused as to why we are only receiving .27% more that rest of US (RUS).

It appears to me that the locality pay rates for the new locality pay areas have not been set, but the recently authorized pay increase was.

Reading down this list, locality pay area rates are required by law to be set IAW the BLS data used to justify the new locality pay areas. I have a hard time believing that the intent of creating the new pay areas was to be just above RUS.

Am I reading this wrong? Do you have any insight?

A: We usually see similar notes whenever there is a new locality pay area established and the new locality rates come out. Some readers expected an increase of 10% or more, but the increase is usually more in the area of 1/2 of 1%.

In fact, in writing articles about locality pay, I have tried to advise those in the new area not to expect a big increase; a large increase does not happen. There are always a number of disappointed people, based on the email we receive, in the newly established areas.

The new locality pay rates have been set. For Virginia Beach, for 2019, the OPM pay tables state “INCORPORATING THE 1.4% GENERAL SCHEDULE INCREASE AND A LOCALITY PAYMENT OF 15.91%”. The rate increase for the VA Beach area for 2019 is 1.87%.

The method of determining the locality pay (and the Federal Salary Council’s method of calculating the “differential” between private and federal sector pay) is not transparent. The Salary Council’s determination of the differential is not taken seriously by many groups, including the CBO, and that may be a factor.

If I understood how the calculations were actually made for each area, I would explain it—but it is not clear how the data are calculated. The Salary Council’s annual reports usually show the differential for each area (sometimes in the range of a 70% differential or more for a given area) but Congress is not about to approve an increase of this size.

Not sure this helps answer your question but at least you may have a little more information!

© 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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