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Tens of Thousands of Feds to Receive Significant Pay Raise Next Year

Thirteen cities will soon receive their own locality pay designations.

Tens of thousands of federal employees will soon receive a pay raise thanks to an Obama administration decision to designate 13 cities as unique pay localities.

The decision comes after years of deliberation, including tentative approval in May 2013. The cities will now receive unique locality-based pay adjustments, rather than being lumped in with the “rest of United States” grouping.

The 13 cities are: Albany, N.Y.; Albuquerque, N.M.; Austin, Texas; Charlotte, N.C.; Colorado Springs, Co.; Davenport, Iowa; Harrisburg, Pa.; Kansas City, Mo.; Laredo, Texas; Las Vegas, Nev.; Palm Bay, Fla.; St. Louis, Mo.; and Tucson, Ariz.

The Saint Louis area alone is home to 30,000 federal employees, according to the area’s Federal Executive Board Executive Director Arch McKinlay. More than 18,000 feds live in the Kansas City metropolitan area, according to a 2013 OPM report. Albuquerque, Colorado Springs and Tucson were also among the 50 largest populations of federal workers.

“I’m very glad it happened,” McKinlay said. “It was disingenuous to say we were like the ‘rest of the world.’ ” The new designation helps to recognize the area has its own costs of living, he added. The ‘rest of United States’ provided a 14.16 percent pay bump on top of feds’ base salaries in 2014, lower than any of the 33 specific area adjustments.

Larry Hisle, McKinlay’s counterpart in Kansas City, was also appreciative, especially considering his region used to have its own locality pay.

“I think everyone is excited,” Hisle said. While the details are not yet known, he added, “it can only be a good thing.”

The Office of Management and Budget told labor groups the new pay adjustments will take effect in January. The Federal Salary Council -- made up union representatives and pay policy experts -- has for years called for the creation of the new localities, citing data from the Office of Personnel Management and Bureau of Labor and Statistics.

The President’s Pay Agent “tentatively” approved the council’s recommendations in 2013, but did not make a “final decision on what the timing should be for this possible change.” The salary council said at that time, and many times since, that BLS data showed pay in the 13 cities lagged significantly behind that of the private sector and local governments.

“The administration is committed to ensuring the federal government remains competitive in attracting and retaining the nation’s best and brightest individuals for public service,” an OMB official told Government Executive. The official added that is what prompted the administration to institute “modest” pay raises “after years of pay freezes, furloughs and sequestration,” and why it is moving forward with the locality pay areas.

The decision was welcome news to federal employee groups.

“I am delighted that the administration has supported this initiative and come through with its commitment to have the new localities in place starting next year,” said American Federation of Government Employees Public Policy Director and Federal Salary Council member Jacqueline Simon. Federal employees nationwide have suffered terribly from pay freezes and below-market salaries. This is tremendous news and will help many middle-class families pay their bills.”

The specifics of the pay adjustment for each city, as well as the exact boundaries for the metropolitan areas that will be included, will be determined in the coming months. 

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