Salary Council: Add 15,000 Federal Employees to Higher Paying Locality Pay Areas

Total Employees in Locality Pay Areas Increasing

Since 2015, the federal government’s locality pay areas (LPA) have increased from 34 to 58, or about 71%. This increase includes the four new areas designated as LPAs in 2024. Locality pay areas have different pay rates for the federal government’s general schedule employees. The rate of any pay increase frequently varies between the pay areas.

While the number of new locality pay areas since 2015 is impressive, the actual increase in the number of employees covered is much larger. For example, in 2024, while four new locality pay areas were added to the pay system, about 33,000 federal employees were added. A number of federal employees were added to existing locality pay areas rather than going into new LPAs as the definition of the pay areas continues to evolve and expand.

The “Rest of the US” category of locality pay is shrinking. In 2023, most federal employees (1,546,343 or 68.7%) were in a locality pay area. These figures do not include approximately 33,000 federal employees added to the system for 2024.

The locality pay system will eventually include the vast majority of federal employees as more are being added yearly, as changes recommended by the Federal Salary Council, approved by the President’s Pay Agent, and implemented by the Office of Personnel Management.

Proposed Changes for 2025 Locality Pay Areas

The Federal Salary Council (FSC) recently proposed adding about 15,000 federal employees to existing locality pay areas for 2025 from the “Rest of the U.S.” Being added to a locality pay area usually results in higher pay for impacted employees.

FSC is recommending the Pay Agent add Wyandot County, OH, to the Columbus,
OH, locality pay area and Yuma County, AZ, to the Phoenix, AZ, locality pay area. These recommendations do not create new locality pay areas. In this case, they are adding employees to existing pay areas using various techniques to reduce employees in the “Rest of the U.S.” and add more to higher-paying locality pay areas.

The FSC highlighted locations that contacted the FSC between October 28, 2022, and November 14, 2023. Here is what the FSC wrote about proposed changes to these areas:

A proposal from the Federal Salary Council does not mean a decision to make these additions is finalized. The recommendations have to be approved by the President’s Pay Agent. That approval usually follows, although not necessarily in the recommended time frame. Once the Pay Agent decides to move ahead, the Office of Personnel Management has to issue a proposed change in the Federal Register and a final decision in the Federal Register a few months later.

This is a list of proposed changes to locality pay areas. As noted by the FSC, “If the Pay Agent applies the updated commuting data and core-based statistical areas (CBSAs) in line with past practice, in 2025 about 14,797 employees would be redesignated to a higher-paying locality pay area as a result.”

The changes would add about 15,000 employees to locality pay areas from the “Rest of the U.S.” category. 41 employees would move into different pay areas (Atlanta and Cleveland) instead of their existing pay areas (Birmingham and Coshocton County, OH).

Here is one example to indicate the size of some of these pay areas. La Paz County, Arizona, would become part of the Los Angeles, California, pay area. According to Google Maps, it is about a five-hour drive along Interstate 10 to Los Angeles, or about 288 miles.

Proposed Changes to 2025 LPA

How is GS Locality Pay Determined?

According to OPM, here is how the General Schedule locality system pay raises are determined.

• The law requires a two-part GS pay adjustment in January each year with pay adjustments based on surveys conducted by the U.S. Bureau of Labor Statistics (BLS).
• Based on legal requirements, BLS conducts locality pay surveys in geographic areas designated by the President’s Pay Agent as locality pay areas, with survey data representing non-Federal salaries (including State and local) at distinct levels of work.
• Since a distinct work-level-to-work-level pay comparison is required, beginning pay rates for GS jobs must be compared to beginning pay rates for non-Federal jobs at the same level of work, etc.

In the locality pay program, Federal pay is compared to non-Federal pay for the same levels of work. The results of such pay comparisons can be found in annual recommendations of the Federal Salary Council and annual reports of the President’s Pay Agent.