Pay Agent Accepts New Localities, Rejects Giving Others Bigger Adjustments

The President’s Pay Agent, the final arbiter to make recommendations to the president on federal employee compensation, approved two new localities for 2018 but rejected a proposal that would have boosted salaries for workers living on the outskirts of existing pay areas.

As recommended by the Federal Salary Council, the pay agent approved of bringing feds located in Virginia Beach, Va., and Burlington, Vt., out of the “rest of United States” pay adjustment and into their own localities. Employees in specific pay localities receive larger annual adjustments to their base pay than do those in the “rest of U.S.” The salary council is made up of union representatives and other pay experts, while the pay agent consists of the Labor Department secretary and the directors of the Office of Personnel Management and the Office of Management and Budget.

The agent tentatively approved the localities “after appropriate rulemaking” -- which will require the Bureau of Labor Statistics to deliver economic data on the areas -- meaning the new designations will not go into effect until 2018 at the earliest. There are more than 45,000 federal employees in the Virginia Beach area, according to a 2013 OPM report. The federal government, including both those it directly and indirectly employed, accounted for 42 percent of jobs in Virginia Beach as of 2013 -- the second highest rate in the country. Federal employees in that area averaged a 10.6 percent pay gap over the last three years compared to non-federal pay for employees doing the same level of work, according to FSC’s analysis. In Burlington, the gap was more than 21 percent.

The salary council also recommended changing the criteria for including an area in an existing locality. Currently, the council and pay agent must consider the number of General Schedule employees in an area when deciding whether to include it in a locality. An area that encompasses multiple counties must have at least 1,500 GS employees to join a locality pay area and an area in a single county must have at least 400 GS employees. The salary council recommended scrapping those employee thresholds, saying the number of federal employees has no bearing on the economic conditions of the area.

As it has for several consecutive years, the pay agent rejected that argument.

“The pay agent continues to believe that the GS employment criterion assesses the degree of the problem of adjacent areas in terms of federal employment levels -- a larger number of affected employees/agencies signifies a bigger problem,” the agency leaders wrote.

The council had included dozens of counties housing tens of thousands of federal employees that would have benefited from the new conditions of joining a locality.

GS employees' base pay is adjusted upward either by their specific locality’s percentage, or by the “rest of U.S.” designation. For 2016, the “rest of U.S.” rate was 15.06 percent, whereas those in specific localities ranged from 15.36 percent to 38.17 percent. Read our full report on the 2017 locality pay adjustments here.