Pay Agent Adding to Locality Pay—Lays Groundwork for Higher Pay in 2023

The President’s Pay Agent has issued its annual report on locality pay and adds one county in Illinois into the locality pay system.

2022 Locality Pay Report Adds One County to Locality Pay System

The annual report on locality pay from the President’s Pay Agent has now been issued for 2022.

The Pay Agent submits an annual report to the president on locality pay. It consists of the Secretary of Labor and the Directors of the Office of Management and Budget and the Office of Personnel Management.

In its report, no new locality pay areas were created for 2022. The Pay Agent did add Carroll County, Illinois to the Davenport, Iowa locality pay area. However, this change will not be made until “appropriate rulemaking” procedures have been followed which usually includes a notice in the Federal Register regarding the change.

Role of the Pay Agent

The Pay Agent’s report compares rates of pay under the General Schedule to non-Federal pay, identifies areas in which a pay disparity exists and specifies the size of the disparity, makes recommendations for locality rates, and includes the views of the Federal Salary Council.

The last Federal Salary Council (FSC) report was issued on January 6, 2021. The report of the FSC is considered by the Pay Agent and is of particular importance to federal employees who work in a locality pay area. In other words, most federal employees are impacted by the locality pay rates.

Locality Pay Areas in Government

There are now 53 locality pay areas. These locality pay areas allow the General Schedule pay scale (and the LEO pay scale, which also uses these localities) to be adjusted each year for different parts of the United States.

Each locality area has a locality pay adjustment percentage. This percentage is updated every year. In effect, it determines how much over the GS base pay federal workers in each locality will earn.

Change Endorsed by Pay Agent for 2022

As noted above, steps will now be taken to add Carroll County, Illinois into the Davenport, Iowa, and Moline, Illinois locality pay area.

The reason this is significant is that the decision will likely impact more federal employees next year. The decision is a change that adds more employees into the locality pay system. As noted in its decision, the Pay Agent wrote:

The Council should continue to analyze and discuss the issue of whether the 2,500 GS employment threshold should change for evaluating Rest of U.S. metropolitan areas for possible establishment as new locality pay areas based on pay disparities calculated….

The change in adding employees to a pay area without regard to the current General Schedule employment threshold of 2,500 or more GS employees may add a number of new areas to the locality pay system. The Pay Agent has not made that decision but it has directed the Salary Council to “analyze and discuss the issue”.

The Pay Agent was careful to state that it is not waiving the General Schedule employment criterion for Carroll County, Illinois as recommended by the Salary Council. But, by noting that the county “now meets the GS employment criterion for establishment as an area of application to the Davenport locality pay area”, the result is to add employees in this county into the locality pay system.

Under the Biden administration, and noting its philosophy of promoting favorable policies for federal employee unions, the Salary Council will likely be made up of members agreeing with the union’s proclivity to add more locality pay areas and to add a larger geographic area to the pay areas. This will add more federal employees to this pay system.

The locality pay system is a way of raising pay for some federal employees without having to go through the legislative process in Congress. This change, when the Salary Council concludes its analysis, will almost certainly lead to more changes in locality pay for more federal employees in 2023 and 2024.

As noted in earlier articles, the changes occurring in the federal government are also allowing some federal employees to reduce their cost of living expenses while also gaining the benefits of receiving pay for a higher-paying locality pay system. Federal employees seeking to make some of these changes may end up with more purchasing power and higher pay.

Upcoming Executive Order to Determine Winners in Locality Pay

President Biden will likely issue a new Executive Order for the federal pay system in 2022 in the near future. The report of the President’s Pay Agent lays the groundwork for future changes in this system. The actual pay rates for each locality area in 2022 will not be known until OPM posts the pay rates for each locality pay area.

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