2023 Locality Pay Report Proposes Changes Increasing Pay for About 16,000 Federal Employees

A 2023 locality pay report recommends changes that would increase pay for about 16,000 federal employees if adopted.

Higher Pay For Many Federal Employees by Expanding, Revising Locality Pay Areas

The Federal Salary Council (FSC) report for 2023 locality pay has been published by the Office of Personnel Management (OPM). There are a number of recommendations of interest to the federal workforce as these recommendations could result in a pay increase for about 16,000 federal employees according to the organization.

While the report indicates it is for “the level of comparability payments for January 2023”, many of the recommendations would not be implemented until January 2024. If approved by the President’s Pay Agent, the Office of Personnel Management (OPM) will issue a proposed change to existing locality pay areas in the Federal Register and open the topic up for comments. Several months later, a final rule is announced in the Federal Register to implement the changes to be made.

Role of the President’s Pay Agent

While FSC makes recommendations on federal salaries, the final decision is made by the President’s Pay Agent.

The President’s Pay Agent consists of the Secretary of Labor and the Directors of the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM).

The Pay Agent has not yet issued a report for the 2023 locality pay that has been published. Until that occurs, it is unknown which of the FSC recommendations will be adopted.

New Locality Pay Areas Proposed

The Council recommends establishing new locality pay areas in these locations:

  • Fresno, California
  • Reno, Nevada
  • Rochester, New York and
  • Spokane, WA.

Those four “Rest of US” research areas meet the pay disparity criterion for these areas using data from the salary survey methodology that the Pay Agent has approved for use.

The FSC also recommended that these locations bordered only by water and higher-paying locality pay areas be included in higher-paying locality pay areas because they are similar to locations completely bordered by land that is included in higher-paying locality pay areas:

  • Dukes and Nantucket Counties, MA, which would be included in the Boston locality pay area as areas of application;
  • Huron County, MI, which would be included in the Detroit locality pay area as an area of application; and
  • Pacific and San Juan Counties, WA, which would be included in the Seattle locality pay area as areas of application.

The FSC also issued recommendations on outstanding issues. This included how to reform the locality pay system where agencies have problems recruiting and retaining employees, but do not meet the criteria to be added to as new locality pay areas.

The FSC proposed new criteria that a potential locality pay area region must have:

  • A 7.5% commuting rate for locations in OMB-designated Metropolitan Statistical Areas and Combined Statistical Areas
  • A 20% commuting rate for locations outside of those areas, and a 20% commuting rate for areas surrounded by different locality pay areas.
  • Eliminating the requirement that a region has to have at least 2,500 General Schedule employees.

According to the FSC, Bureau of Labor Statistics (BLS) resources have allowed applicable estimates for 10 statistical areas for areas with fewer than 2,500 GS employees. In terms of GS employment, those locations should be established as Rest of US research areas. These 10 areas will be established as new US research areas:

  • Asheville, NC
  • Brownsville, TX
  • Dothan, AL
  • Kalamazoo, MI
  • Lincoln, NE
  • Parkersburg, WV
  • Reno, NV
  • Rochester, NY
  • Scranton, PA
  • Shreveport, PA

This means that these areas will be followed and tracked for possible future inclusion in the locality pay program.

Changes Would Impact Pay of 16,000 Federal Employees

If the president’s pay agent adopts the council’s recommendations, a total of around 16,000 federal workers would be granted additional pay increases. This would be the result of either creating new locality pay areas or new areas of application for existing pay areas.

Also, about 15,000 employees would move to higher-paying localities due to changing criteria for creating a locality pay area. About 1,300 more employees would be added to the locality pay program from the proposed adoption of OMB’s new statistical area maps in these areas.

Locality Pay AreaLocation AddedAdded GS Employees
Albuquerque, NMMora County17
Atlanta, GAFloyd County, GA
Habersham County, GA
Stephens County, GA
Burlington, VTWashington County, VT102
Charlotte, NCAnson County, NC2
Cleveland, OHWayne County, OH75
Corpus Christi, TXDuval County, TX110
Des Moines, IA
Mahaska County, IA
Marion County, IA
Minneapolis, MNSteele County, MN2
Phoenix, AZGila County, AZ161
San Jose, CAMerced County, CA
Stanislaus County, CA
Virginia Beach, VAFranklin City, VA
Southampton County, VA
Washington, DCMadison County, VA10
Total GS Employees1,294

Frequently Asked Questions

What is the Federal Salary Council?

The President establishes the Federal Salary Council to include three seats for experts in labor relations and pay policy and six for employee organizations representing large numbers of General Schedule employees.

The Council submits annual recommendations on the locality pay program to the President’s Pay Agent. The Council’s recommendations cover the establishment or modification of pay localities, the coverage of salary surveys used to set locality pay, the process for making pay comparisons, and the level of comparability payments that should be made.

What is the President’s Pay Agent?

Section 5304(d)(1) of title 5, United States Code, authorizes the President to designate a Pay Agent. In Executive Order 12748, the President designated the Secretary of Labor and the Directors of the Office of Management and Budget and the Office of Personnel Management to serve as the President’s Pay Agent.

Under section 5304 of title 5, the Pay Agent provides for Federal Salary Council meetings, considers the recommendations of the Federal Salary Council, defines locality pay areas, and submits an annual report to the President on the locality pay program.

The 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.

What Are Locality Pay Areas?

Locality pay areas consist of (1) a main metropolitan area defined by the Office of Management and Budget (OMB) and forming the basic locality pay area and, where criteria recommended by the Federal Salary Council and approved by the President’s Pay Agent are met, (2) areas of application. Areas of application are locations that are adjacent to the basic locality pay area and meet approved criteria for inclusion in the locality pay area. These building blocks of locality pay areas are further discussed below.

The OMB-defined metropolitan areas comprising basic locality pay areas are called combined statistical areas (CSAs) and metropolitan statistical areas (MSAs). The Federal Salary Council recommended and the President’s Pay Agent approved using CSAs and MSAs as the basis for locality pay area boundaries because CSA and MSA boundaries are defined based on important labor market factors, including commuting rates, population size, and population density.

In developing methods for defining the geographic boundaries of locality pay areas, the Council and Pay Agent were mindful that some locations adjacent to a basic locality pay area should be included in the locality pay area. The Council recommended and the Pay Agent approved the current criteria used to evaluate adjacent counties in a consistent fashion. Counties meeting those criteria are called areas of application.

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