The President’s Pay Agent has issued its report for the 2023 GS locality pay system. This follows up on decisions regarding recommendations from the Federal Salary Council. Here is a quick summary of how this new report will impact the federal workforce in January 2023.
Adding New Locality Pay Areas Recommended by Salary Council
The Pay Agent has agreed with adding locality pay areas as follows:
- Fresno, California
- Reno, Nevada
- Rochester, New York
- Spokane, Washington
As anticipated, however, these locality pay areas will not be effective in 2023. The Office of Personnel Management (OPM) will be issuing regulations to propose and then to make the final regulations effective. This will most likely become effective in January 2024.
The Salary Council also recommended eliminating the GS employment criteria for some areas that could be incorporated into existing locality pay areas.
Adding About 32,000 into Locality Pay System Likely in 2024
The changes the Council recommended for evaluating adjacent areas as potential “areas of application” would add a number of multi-county metropolitan areas and single counties to existing locality pay areas. In addition, the four locality pay areas listed above and the changes outlined in this article would add about 32,000 federal employees to the GS locality pay system according to a statement from the Office of Personnel Management.
FedSmith posted this article last week outlining the areas that would be impacted by this change. Based on data from the Salary Council, this recommended change could add about 16,000 federal employees into the GS locality pay system. This change would not be adopted until January 2024 and will not be effective in January 2023. As noted by the Pay Agent’s Report regarding this change:
[A]ny changes to the definitions of locality pay areas based on such criteria would require appropriate rulemaking. The timing of such rulemaking has not yet been determined, but the earliest such changes can go into effect at this point would be in January 2024.
Changes That Would Impact Richmond Locality Pay Area in 2024
The Pay Agent’s report states “We agree with the Council that Emporia city, VA—a U.S. county equivalent surrounded geographically by Greensville County, VA—would be completely surrounded by Richmond, VA, locality pay if Greensville County is added to the Richmond locality pay area as the Council Recommends.”
If Greensville County is added to the Richmond locality pay area, during the regulatory process, the Pay Agent concluded that change would require including Emporia city, VA, in the Richmond locality pay area as an area of application.
The new report concludes the “Pay Agent would plan on proposing Emporia city as an area of application to the Richmond locality pay area during the regulatory process referred to above for other tentatively approved Council recommendations regarding the boundaries of locality pay areas.”
The effect of this would be to add more federal employees into the Richmond, Virginia locality area in 2024 if the rulemaking process is completed by OPM in 2023. That is likely to happen so this change to the Richmond locality pay area will probably occur in January 2024.
Adding New Employees into the Boston, Detroit and Seattle Locality Pay Areas
The Salary Council recommended adding several areas into the Boston, Detroit and Seattle GS Locality Pay Areas. The Pay Agent “tentatively agreed” to these changes 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.
These changes would be made in 2024 after the rule-making process has been completed by OPM.
Adding Changes to Davenport-Moline, Iowa and Corpus Christi-Kingsville, Texas Locality Pay Areas
In this FedSmith article, the article notes that the “appropriate rulemaking” procedures were followed and, on December 3, OPM published a “final rule” adopting the proposals published in September. The amended Federal Register notice states, “The regulations are effective on January 4, 2023, and applicable for pay purposes on the first day of the first applicable pay period beginning on or after January 15, 2023.”
As the rule-making process has been completed for these two GS locality pay areas, Carroll County, Illinois, will be added as an “area of application” to the Davenport-Moline, Iowa-Illinois locality pay area, and Brook County, Texas will be added as an area of application to the Corpus Christi-Kingsville-Alice, Texas, locality pay area as noted in the Federal Register notice quoted above.
$19.2 Billion in Costs for Locality Pay
The President’s Pay Agent report states there is an estimated cost of $19.2 billion for reducing pay disparities as intended by the statute. While acknowledging that this is a considerable expense, the report also states:
[I]t is important to emphasize that the underlying methodology for locality pay of relying on one singular locality rate covering a locality pay area has lacked credibility since the beginning of locality pay in 1994 to such a degree that the statutory formula for closing pay gaps has been overridden either by Congress or by successive Presidents each and every year since that first year.
2023 GS Locality Pay Rates
The amounts of the 2023 locality pay rates are not yet available. These will presumably be ready when the president’s executive order is issued for the 2023 federal employee pay raise.