The President’s Pay Agent Has Approved Four New Locality Pay Areas

The list of regions where federal employees are paid more to stay competitive with local private sector companies will likely get four items longer in 2024, after the President’s Pay Agent on Monday approved recommendations from the Federal Salary Council.

The pay agent, which is made up of Office of Personnel Management Director Kiran Ahuja, Office of Management and Budget Director Shalanda Young and Labor Secretary Marty Walsh, issued its annual report ahead of President Biden’s executive order finalizing an average 4.6% pay raise next year, approving all recommendations issued by the Federal Salary Council last August.

Soon joining the list of locality pay areas will be Fresno, Calif.; Reno, Nev.; Rochester, N.Y.; and Spokane Wash., although they will not be implemented until the 2024 pay raise at the earliest, because OPM must issue regulations to finalize their inclusion. Additionally, Dukes and Nantucket counties, Mass., will join the Boston locality pay area; Huron County, Mich., will join the Detroit locality pay area; and Pacific and San Juan counties, Wash., will be included in the Seattle locality pay area, again pending updates to federal regulations.

The pay agent also approved making Greensville County, Va., part of the Richmond, Va., locality pay area. In so doing, the Richmond locality pay area would effectively surround the city of Emporia, and so the pay agent also agreed to include the location as part of the Richmond pay area.

This year, the pay agent finally took action on a series of long-debated changes to how locality pay areas are evaluated. First, it adopted a council recommendation to take an additive approach to updating the locality pay area map in accordance with OMB’s updated map of metropolitan statistical areas and combined statistical areas, meaning that locations added to OMB’s map were likewise added to their relevant locality pay areas, while areas that were removed were held harmless.

And the body agreed to substantial changes to how counties are evaluated for inclusion in locality pay areas, increasing the commuting rate required for counties not included in OMB’s map of counties tied to an urban center to 20% and eliminating the requirement that a minimum number of General Schedule employees live in the county. The latter recommendation had previously been rejected in 2015, but the pay agent wrote that with the rise of telework and remote work arrangements over the last several years, it is time to revisit the idea.

“While the [Federal Salary] Council made this recommendation several times during the Obama administration and the pay agent did not approve it at that time, we now tentatively agree with this council recommendation based on the recent increase in agency use of remote work arrangements to advance agency mission and service delivery,” the report stated.

The pay agent also established 10 new locations to identify as “research areas” for the Bureau of Labor Statistics to monitor for possible future inclusion as new locality areas, although the list includes two of the just authorized new additions to the map: Asheville, N.C.; Brownsville, Texas; Dothan, Al.; Kalamazoo, Mich.; Lincoln, Neb.; Parkersburg, W.Va.; Reno, Nev.; Rochester, N.Y.; Scranton, Pa.; and Shreveport, La.

In addition to the approved changes, the pay agent repeated its nearly annual call for a better solution to maintaining competitiveness in compensation than the General Schedule pay system and accompanying map of locality pay areas.

“As has been noted in earlier pay agent reports and discussed in other venues, we believe there is a need to consider major legislative reforms of the white-collar federal pay system, which continues to utilize a process requiring a single percentage adjustment in the pay of all white-collar civilian federal employees in each locality pay area without regard to the differing labor markets for major occupational groups,” the report stated. “The current pay comparison methodology used in the locality pay program ignores the fact that non-federal pay in a local labor market may be very different between different occupational groups.”