How Many Federal Employees Are in a Locality Pay Area and How Will Agencies Pay $5 Billion Increase?

The number of locality pay areas has increased 63% since 2015. How many federal employees are in a locality pay area, and what is the total cost of locality pay?

GS Locality Pay Areas Rapidly Increasing

Since 2015, the number of locality pay areas has gone from 33 to 57, a 62.7% increase. This includes the four new areas designated as locality pay areas in 2024.

While the number of new locality pay areas is impressive, the actual increase is larger than it first appears. For example, in 2024, while four new locality pay areas were added to the pay system, the actual number of federal employees added was about 33,000. This is because some federal employees were added into existing locality pay areas rather than going into a new one.

These four new locality areas in 2024 were:

  • Fresno-Madera-Hanford, CA;
  • Reno-Fernley, NV;
  • Rochester-Batavia-Seneca Falls, NY; and
  • Spokane-Spokane Valley-Coeur d’Alene, WA-ID.

Total Number of Federal Employees in GS Locality Pay Areas

The latest data available for the number of federal employees in the locality pay system is as of August 2023. This means that the additions to the system for 2024 are not included in these locality pay area (LPA) totals.

Federal Employees in LPA1,546,34368.7%
Federal Employees in Rest of U.S.702,23731.2%
Source: Office of Personnel Management (OPM)

The total number of federal employees in a locality pay area is approximately 1,579,243 including the 2024 locality pay area changes.

Locality Pay Areas With Least Number of Employees to Largest Number

The locality pay area with the smallest number of federal employees is Burlington—SouthBurlington—Barre, Vermont, with 3,238. At the other end of the spectrum, the Washington, DC locality pay area is the largest, with 390,738 federal employees. The Washington, DC locality pay area actually covers a very large area for commuting to an office with parts of DC-MD-VA-WV-PA in the pay area.

The 2023 pay tables for Burlington, VT Incorporated the 4.1% General Schedule Increase and a Locality Payment of 18.31%. The Washington, DC area incorporated the 4.1% General Schedule Increase and a Locality Payment of 32.49%.

As of August 2023, the average locality pay area has 40,824 employees, and the median number of federal employees across all locality pay areas is 16,793.

Smallest Locality AreasNumber of Employees
Albany-Schenectady, NY-MA5,149
Source: Office of Personnel Management (OPM)

Locality Pay Areas with Largest Number of Federal EmployeesNumber of Employees
WA-Washington-Baltimore-Arlington, DC-MD-VA-WV-PA390,738
NY-New York-Newark, NY-NJ-CT-PA76,987
LA-Los Angeles-Long Beach, CA72,174
BO-Boston-Worcester-Providence, MA-RI-NH-ME48,972
ST-Seattle-Tacoma, WA48,648
Source: Office of Personnel Management (OPM)

Cost of Locality Payments

According to the President’s Pay Agent, the total cost attributable to the locality rates over rates for 2023 is “about $22.018 billion on an annual basis.” This amount does not include the additional cost of federal employee benefits impacted by locality pay raises. For 2024, the total locality payments will be $50.087 billion.

In 2015, before the increase in locality payments cited above, the total cost of locality pay was $44.299 billion.

The President’s Pay Agent is the Director of OPM, the Secretary of Labor, and the Director of the Office of Management and Budget. The Pay Agent reviews recommendations of the Federal Salary Council on locality pay issues. OPM issues regulations proposing and implementing the decisions of the Pay Agent through notices in the Federal Register.

This decision-making method routinely determines and implements local pay areas without Congressional involvement.

Impact on Agency Budgets With $5 Billion More in Salary Expense

The 2024 pay raise for federal employees was the largest raise since the Carter administration. While we do not yet know how agencies will pay for this salary increase, agencies are now working with budgets with no growth from the previous year. How will agencies pay for the increased cost of salaries and benefits?

The current funding for some agencies expires on January 19th. For other agencies, funding will expire on February 3rd. There are potentially large budget cuts coming for agencies. This could cause federal agencies to face steep cuts starting in a few months.

One possibility is a full-year continuing resolution. According to Paul W. Krawzak writing in Roll Call, this could result in budget cuts of as much as 10% in some agencies. A combination of the increased cost of the mandated raises and budget cuts will put agencies in a position of having to make hard choices. These choices could range from not filling vacant positions to save money to furloughs or a hiring freeze. According to Krawzak:

Either way, there’s little to no room for agencies across the government to absorb the federal pay boost, which is expected to require at least $5 billion more than the previous fiscal year, without increases to their salaries and expenses accounts.

The current federal debt now stands at about $34 trillion. Eventually, perhaps in 2024, there will be consequences for accumulating this much debt.

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