Locality pay frozen in 2011

In a letter to Congress, Obama said he would not raise locality pay that federal employees receive based on where they live. A boost in locality pay rates combined with an increase in base pay traditionally makes up the total raise federal employees receive annually.

"Our country faces serious economic conditions affecting the general welfare," the president wrote. "As the economic recovery continues, the time has come to put our nation back on a sustainable fiscal course, an effort that requires tough choices and shared sacrifice."

The letter establishes separate locality pay areas for Alaska and Hawaii. Interim regulations issued in September also extend the "Rest of U.S." rates to include American Samoa, Puerto Rico, the Northern Mariana Islands and Guam. The rule will apply beginning with the first pay period after Jan. 1.

The announcement follows the president's proposal, issued Monday, to implement a pay freeze for 2011 and 2012 that will apply to all civilian workers, including Defense Department employees, but not to military personnel. Workers who are promoted to a higher General Schedule grade still will be eligible for pay raises, officials said.

Obama in 2009 also proposed freezing locality pay for 2010. Congress decided to include a 0.5 percent increase in addition to a base pay raise, however.