The federal government’s locality pay system is a strange system. That is not unique in government but it does give federal employees options that allow a wide divergence in living styles.
Here is a list of locality pay areas sorted by those that received the highest 2022 federal pay raise down to the ones that received a smaller pay raise under the 2022 federal GS salary schedule.
2022 GS Locality Pay Areas from Highest to Lowest Pay Increase
|Locality Pay Area||2022 Pay Raise|
|SAN JOSE-SAN FRANCISCO-OAKLAND, CA||3.14%|
|LOS ANGELES-LONG BEACH, CA||3.13%|
|SAN DIEGO-CARLSBAD, CA||3.07%|
|NEW YORK-NEWARK, NY-NJ-CT-PA||3.02%|
|STATE OF HAWAII||2.92%|
|MINNEAPOLIS-ST. PAUL, MN-WI||2.88%|
|BURLINGTON-SOUTH BURLINGTON, VT||2.84%|
|ST. LOUIS-ST. CHARLES-FARMINGTON, MO-IL||2.81%|
|STATE OF ALASKA||2.79%|
|VIRGINIA BEACH-NORFOLK, VA-NC||2.79%|
|DALLAS-FORT WORTH, TX-OK||2.77%|
|COLORADO SPRINGS, CO||2.76%|
|HARTFORD-WEST HARTFORD, CT-MA||2.76%|
|AUSTIN-ROUND ROCK, TX||2.74%|
|SAN ANTONIO-NEW BRAUNFELS-PEARSALL, TX||2.74%|
|OMAHA-COUNCIL BLUFFS-FREMONT, NE-IA||2.73%|
|DES MOINES-AMES-WEST DES MOINES, IA||2.70%|
|LAS VEGAS-HENDERSON, NV-AZ||2.7%|
|HOUSTON-THE WOODLANDS, TX||2.69%|
|KANSAS CITY-OVERLAND PARK-KANSAS CITY, MO-KS||2.67%|
|DETROIT-WARREN-ANN ARBOR, MI||2.63%|
|PITTSBURGH-NEW CASTLE-WEIRTON, PA-OH-WV||2.63%|
|ALBUQUERQUE-SANTA FE-LAS VEGAS, NM||2.60%|
|ATLANTA—ATHENS-CLARKE COUNTY–SANDY SPRINGS, GA-AL||2.60%|
|RALEIGH-DURHAM-CHAPEL HILL, NC||2.58%|
|PALM BAY-MELBOURNE-TITUSVILLE, FL||2.45%|
|MIAMI-FORT LAUDERDALE-PORT ST. LUCIE, FL||2.44%|
|CORPUS CHRISTI-KINGSVILLE-ALICE, TX||2.43%|
|REST OF THE UNITED STATES||2.42%|
Cost of Living Does Not Determine 2022 Locality Pay
Locality pay raises are not based on the cost of living in an area. Instead, the Bureau of Labor Statistics (BLS) conducts locality pay surveys in geographic areas designated by the President’s Pay Agent as locality pay areas. The survey data show non-Federal salaries (including State and local) at distinct levels of work. From these data, the salary for each locality is calculated for the coming year.
Based on the 2022 General Schedule (GS) pay system, a person living in the same locality pay area can actually live in a locality pay area, make the same salary more than one hundred miles away from the central city area, and live in a very high cost of living area or a low cost of living area.
A Low Cost of Living in a High Locality Pay Area?
Here is one example.
The Washington, DC locality pay area includes areas from several states. According to the definitions from the Office of Personnel Management (OPM), this pay area includes Washington, DC as well as Baltimore, Maryland; Arlington, Virginia; and a number of counties in the rest of Virginia and Maryland. It also includes a few counties in Pennsylvania and West Virginia.
In 2022, a federal employee who lives in Arlington, Virginia will receive $110,798.24 per year as a GS-12, step 8. The cost of living index for Arlington County is 168.7. This is based on a US average of 100. An amount below 100 means Arlington is cheaper than the US average. A cost of living index above 100 means Arlington, Virginia is more expensive.
In other words, it costs a lot more to live in Arlington than in many other areas in the United States.
While it is expensive, Arlington is also close to downtown Washington, DC so living there can mean a relatively short (if frustrating) commute to work to a federal office in the District of Columbia. The median home cost in Arlington is $785,800 and the median income is $154,331.
On the other hand, Hampshire County, West Virginia is also in the Washington, DC locality pay area. The cost of living index in Hampshire County is 86.2. The median income here is $26,828 and the median home price is $153,400. The salary for a federal employee who is a GS 12, Step 8, and living in Hampshire County is still $110,798.24—the same as living in Arlington, Virginia.
Obviously, there are many disadvantages to living that far away from a government office in downtown Washington. It is about a 2.5-hour drive (or more) depending on traffic. Many people prefer living in an urban area for a variety of reasons including a shorter commute.
Hampshire County has a population density of 37.4 people per square mile. By comparison, Arlington County has 9,180 per square mile. For someone wanting a larger home for less money and less congestion, a more rural area could offer more options for a better environment for a preferred lifestyle.
Options Provide Greater Flexibility for Federal Employees
In other words, a federal salary in a rural area will buy more goods and services (if they are available) than in an urban area.
A person can live in an area that is about a 2.5 hour drive each way to go to work and back every day. The actual commute would probably turn out to be about six hours of driving, sleeping, and working eight hours a day and that would leave a couple of hours to eat dinner and see the kids. Some people who do this rent an apartment closer to downtown Washington and go home on the weekends.
General Schedule locality pay areas are expanding over time to include much larger geographic areas, and with more telework options becoming available for the federal workforce, that can work out well financially. Living in a rural, low-cost living area and being paid a salary for an office located downtown in a large city will greatly increase the disposable income for a family. Occasional trips to the assigned office location may be a small price to pay for the greater disposable income.
The ongoing COVID pandemic has been filled with bad news for many people. One favorable aspect for some is that telework has become more common, more widely accepted, and that is likely to continue. Between expanding telework and COVID, and the expansion of locality pay areas over time, some federal employees will be able to live in a less expensive area and still receive the higher pay.