Obama’s 2.1 Percent Pay Raise Announcement Boosts Locality Pay

President Obama’s surprise move last week to give civilian federal employees a 2.1 percent pay raise for 2017 means an increase in locality pay.

The announcement, a combination of a 1 percent across-the-board pay bump combined with a 1.1 percent boost in locality pay, goes into effect in January 2017 unless Congress takes action to stop it.

In late November, Obama said he was moving forward with his recommended 1.6 percent pay raise for feds in 2017 – a 1 percent base increased and a 0.6 percent locality pay bump. But on Dec. 8, the administration unveiled its new 2.1 percent recommendation in light of Congress’ decision to give troops a 2.1 percent increase in 2017 “and reconsideration of current and projected economic conditions,” the president said in a message announcing the decision.

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The largest locality pay increases remain concentrated in major American cities, with the biggest boosts for California’s Bay area, the Washington-Baltimore-Arlington area (which also includes parts of Pennsylvania and West Virginia), and the New York-Newark, N.J. area (which includes parts of Connecticut and Pennsylvania). The locality pay rate in 2017 for San Jose-San Francisco-Oakland, Calif., is 38.17 percent; for the D.C. area it is 27.10 percent; and for the NYC metro area it is 31.22 percent. General Schedule employees’ base pay is adjusted upward either by their specific locality’s percentage, or by the “rest of United States” designation. The “rest of U.S.” rate for 2017 is 15.06 percent.

Click here for the full list of 2017 locality pay rates. To compare, here is the list of locality pay rates in 2016.

The statutory formula for determining locality pay, which presidents historically ignore in favor of their own rates, would have boosted the adjustments by an average of 28.49 percent at a cost of $26 billion, and “federal agency budgets cannot sustain such increases,” Obama wrote in a letter accompanying the 2017 locality pay rates.

“Civilian federal employees made significant sacrifices as a result of the three-year pay freeze that ended in January 2014,” wrote Obama in the Dec. 8 letter to Congress. “Since the pay freeze ended, annual adjustments for civilian federal employees have also been lower than private sector pay increases and statutory formulas for adjustments to the General Schedule for 2014 through 2016. However, keeping our nation on a sustainable fiscal course requires tough choices.”

Locality pay rates for federal employees were frozen between 2010 and 2015.

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