A new proposed rule issued by the Office of Personnel Management (OPM) would change the pay boundaries for approximately 17,000 federal employees in the Federal Wage System (FWS). This amounts to about 10% of the FWS workforce.
Of those 17,000 employees, 15,000 would be placed on higher wage schedules and 2,000 would be placed on lower wage schedules as a result of the proposed policy change. However, the rule states that federal employees who would be placed on a lower wage schedule would, in most cases, be able to retain their current rate of pay under current pay retention rules. Employees under temporary or term appointments and employees appointed after the changes would go into effect are not eligible for pay retention.
Specifically, the rule would change the regulatory criteria used to define FWS wage area geographic boundaries and make changes in certain wage areas. OPM’s goal in instituting the policy change is to make the FWS wage area criteria more similar to the General Schedule (GS) locality pay area criteria.
OPM said that if the rule is approved as written, more than 14,500 impacted federal employees would see an average wage increase of up to 12%, with the highest concentrations being at major military installations. Roles most impacted by the proposal would be those working in trade, craft and laborer jobs such as civilian maintenance mechanics, carpenters, air conditioning equipment mechanics, electricians, janitors, and forklift operators.
The states most impacted would be Maine, California, Pennsylvania, Alabama, and Maryland. Counties with the most FWS employees who would see a pay increase are:
- Calhoun County, AL
- San Bernardino County, CA
- San Joaquin County, CA
- Muscogee County, GA
- Ann Arundel County, MD
- York County, ME
- Franklin County, PA
- Monroe County, PA
Efforts to make this change via legislation in Congress date back to as far as 2013, however, the bills never became law. Senator Bob Casey (D-PA) was one of the lawmakers behind the effort. When going through the established legislative process didn’t work, the tactic changed to urge OPM and the Office of Management and Budget to bypass Congress and enact the change via direct regulation. That, as it turns out, was a successful strategy.
One flaw in that approach, however, is that if a different administration decides to revoke the rule in the future via the same process, nothing will stop it from happening since it’s not codified in federal law. The federal government used the same approach in its efforts to block Schedule F.
The public will have 60 days to submit comments on the proposed rule starting on Friday, October 11.
Growing the General Schedule’s Locality Pay System
The GS pay system has been undergoing extensive changes recently as well in terms of the numbers of federal employees getting moved into locality pay areas (and therefore becoming eligible for pay increases).
For instance, the Federal Salary Council has proposed adding about 15,000 federal employees to locality pay areas in 2025. In 2024, OPM issued a regulation adding about 33,000 federal employees to locality pay areas.
As FedSmith author Ralph Smith noted in a recent article, “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.”
And when a federal employee collects locality pay, it can significantly boost his or her salary over time.
What is the Federal Wage System?
The Federal Wage System (FWS) is a uniform pay-setting system that covers Federal appropriated fund and nonappropriated fund blue-collar employees who are paid by the hour. The system’s goal is to make sure that Federal trade, craft, and laboring employees within a local wage area who perform the same duties receive the same rate of pay. The FWS includes 130 appropriated fund and 118 nonappropriated fund local wage areas. Successful labor-management partnership is the hallmark of the FWS, with labor organizations involved in all phases of administering the pay system.
Under this uniform pay system –
- Your pay will be the same as the pay of other Federal jobs like yours in your wage area, and
- Your pay will be in line with pay for private sector jobs like yours in your wage area.
