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Key developments in the world of federal employee benefits: health, pay, and much more.

Locality Pay Still in a Deep Freeze


Federal employees could be heading for their second consecutive year of a 1 percent pay raise.

President Obama announced the proposal earlier this week. Many are unhappy with the modest size of the recommendation, though clearly a small raise is better than no raise -- which was what feds received in 2011, 2012 and 2013.

However, while federal workers’ base pay likely will see a boost in 2015, that’s only one part of their overall compensation. The other aspect, locality pay rates, has been frozen since 2010. Obama has not yet recommended any adjustments for 2015.

Obama recommended a 2 percent raise to feds’ base pay in 2010, but suggested a freeze to locality pay rates. Congress instead granted a 1.5 percent base raise and a 0.5 percent boost to the location adjustments.

This two-pronged raise, which historically had been the standard approach to providing federal pay raises, created a location-based differential in the total pay hikes that employees received annually.  Employees in the Washington, D.C. region received an overall salary bump of 2.42 percent in 2010, for example, while the “rest of United States” category received just a 1.77 percent increase.

The Office of Personnel Management currently uses 33 metropolitan or state-based designations in determining locality pay adjustments, as well as the “rest of U.S.” grouping. Locality rates were locked in during the three-year pay freeze which lasted from 2011 to 2013, and were not altered for 2014.

Each year the Federal Salary Council -- made up of union representatives and pay policy experts -- recommends to administration officials what raise should be given to the workforce, using Labor Department data on the private sector.

The council repeatedly has pushed for increases in locality pay adjustments as the primary means to close the gap between public and private-sector pay, which they calculated to be more than 35 percent. The problem has been exacerbated, members of FSC have said, because OPM has not created new regional designations in several years.

In a statement criticizing Obama’s proposed 1 percent pay raise on base salary, National Treasury Employees Union President Colleen M. Kelley said, “Federal employees have fallen even further behind in many regions because there has not been a locality pay increase in four years.”

FSC makes its recommendations to the President’s Pay Agent, an advisory panel made up of the Labor secretary, the Office of Management and Budget director and the OPM director. The panel found that to bring all localities within 5 percent of their private-sector counterparts, OPM would have to raise regional pay adjustments by an average of 28 percent. That would come with a $25 billion price tag.

In 2012, PPA said “any such changes should be made when the government can better afford them.” In 2013, the panel endorsed the addition of 12 new localities, though the Obama administration declined to implement the changes.

For now, it seems, feds will have to live with the base pay adjustments.

No COLAs for USPS Workers

Letter carriers will not receive a new cost-of-living adjustment scheduled in their collective bargaining agreement, the group’s union has announced.

The National Association of Letter Carriers said the latest update to the Consumer Price Index showed no increase between July 2013 and January 2014, which negates any new COLA as per NALC’s national agreement. A previous COLA that amounts to $146 annually will go into effect in March, however.

U.S. Postal Service employees represented by the American Postal Workers Union also will not receive a COLA until at least July 2014.

More Buyouts

The U.S. Geological Survey, the Bureau of Land Management, Naval Sea Systems Command and Naval Air Systems Command are offering buyout and early retirement incentives to a very limited number of employees, according to a Federal News Radio report.

Those agencies join the Social Security Administration, Environmental Protection Agency and Broadcasting Board of Governors in offering incentives to reduce their workforces. 

(Image via doomu/

Eric Katz joined Government Executive in the summer of 2012 after graduating from The George Washington University, where he studied journalism and political science. He has written for his college newspaper and an online political news website and worked in a public affairs office for the Navy’s Military Sealift Command. Most recently, he worked for Financial Times, where he reported on national politics.

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