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Bay Area, D.C. Feds to Receive the Largest Pay Raises Next Year

Obama issues 2016 locality pay rate increases, the first such raises in five years.

The Obama administration on Monday unveiled the exact adjustments to base salaries employees in each locality pay area will receive in 2016, with the largest increases concentrated in major American cities.

The first adjustments to locality pay since 2010 will rope about 108,000 federal employees into a specific locality area -- rather than the “rest of United States” designation -- for the first time, though the employees in existing localities will see the biggest raises next year. The adjustments will increase the total federal payroll by 0.3 percent, according to a letter sent to Congress by President Obama on Monday.

The increased locality pay rates will come on top of the third consecutive year in which base pay will grow by 1 percent.

California’s Bay Area, including San Francisco, Oakland and San Jose, will see the largest increase next year, with the locality rate increasing 0.6 percentage points. Employees in other California cities including Los Angeles and San Diego, as well as those in New York City, N.Y., and Washington, D.C., will receive increases between 0.5 and 0.6 percentage points. The adjustment in the capital area will jump 0.56 percentage points to 24.78 percent of an employee’s base salary.

The vast majority of existing localities will see their adjustments increase between 0.2 and 0.4 percent.

The administration recently finalized its plan to create 13 new locality areas: 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 pay adjustments for those areas range from just above the new “rest of U.S.” rate of 14.35 percent (Albuquerque, N.M.’s 14.37 percent) to Laredo, Texas’ 14.59 percent.

A full list of the locality rates can be found here.

The Office of Personnel Management has also changed the boundaries of the locality areas in 21 of the 33 existing regions to increase the number of employees receiving the larger salary bump.

“Civilian federal employees have already made significant sacrifices as a result of 3-year pay freeze that ended in January 2014,” Obama wrote in his letter, adding that the 1 percent raises in 2014 and 2015 were “lower than private sector pay increases.”

However, Obama wrote, “as the country's economic recovery continues, we must maintain efforts to keep our nation on a sustainable fiscal course. This is an effort that continues to require tough choices.”

Obama said 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 28.74 percent at a cost of $26 billion.

“Federal agency budgets cannot sustain such increases,” he said.

The new rates will go into effect on the first pay period in the new year, Obama ordered, and explained they “will not materially affect our ability to attract and retain a well-qualified federal workforce.”

OPM issued a final rule implementing the new pay areas in October, following the guidance of the Federal Salary Council and the President’s Pay Agent. Obama has received criticism from federal employee advocates for giving historically low across-the-board raises to base pay in recent years -- following three years of no raises at all -- and the new locality pay areas and definitions provide the administration with a different avenue for increasing feds’ compensation. The salary council, made up of labor union representatives and pay experts, has for years clamored for new localities.

“While the locality increase is quite small, averaging 0.3 percent,” said American Federation of Government Employees President J. David Cox, “this is a welcome recognition by the administration that federal employees have more than paid their share of helping to reduce the nation’s deficit and cannot endure another year of frozen wages.” Cox and National Treasury Employees Union Tony Reardon called on Congress to pass a larger base pay raise than called for by Obama.

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