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About 62,000 federal workers in four new “locality pay areas” would be eligible for higher pay increases if a proposal from the government’s chief HR office is finalized.
Locality pay for the nation’s 2.1 million federal employees is set by comparing federal and nonfederal pay rates for the same levels of work in various parts of the U.S. The country is currently divided into 47 locality pay areas, including a “Rest of U.S.” area for federal employees in regions that aren’t designated as separate. The addition of four new areas generally would mean higher raises for federal workers in those areas.
The locality pay system was developed to bring federal pay more in line with the private sector, but the methodology used to make comparisons is being questioned by the Trump administration. Jeff Pon, director of the Office of Personnel Management, said during a Federal Salary Council meeting April 10 that the agency would propose the four new locality pay areas while it re-examines the methodology.
The new pay areas would be Birmingham-Hoover-Talladega, Ala.; Burlington-South Burlington, Vt.; San Antonio-New Braunfels-Pearsall, Texas; and Virginia Beach-Norfolk, Va., according to the proposed rule issued July 9 by the OPM. The Virginia Beach-Norfolk area picks up some parts of North Carolina.
Federal employees in those four areas shouldn’t have to wait for higher pay until the administration overhauls the pay system, so the OPM was right to issue the proposed rule despite its misgivings about the system, Robert Dietrich, a labor relations consultant with RGS Inc., told Bloomberg Law July 9.
The General Schedule pay system “has been a political football” for many years, said Dietrich, a former federal HR official who worked at the departments of Defense and Labor during his 36-year career with the government. The GS system is commonly portrayed as being inflexible and monolithic, but it’s been tweaked many times over the years and offers more flexibility to federal HR practitioners than it gets credit for, Dietrich said.
“If someone were to say these should be held in abeyance while the system as a whole is overhauled, I would say it’s unfair to people who live and work in those areas,” Dietrich said.
The Federal Salary Council makes recommendations about federal pay. It includes representatives from agencies and labor unions as well as people from outside government with labor relations expertise. Union representatives said during the April 10 meeting that they support creating the new areas.
The OPM didn’t respond to requests for comment from Bloomberg Law.
Locality pay is sometimes included in the annual pay increase normally provided to employees in January. The president doesn’t always call for locality pay, though, and can also propose not providing the annual pay increase at all, as the Trump administration did for calendar year 2019.
Congress can overrule the president’s pay proposal for the federal workforce by providing a different pay increase in must-pass legislation. Federal lawmakers haven’t chosen to do so in recent years, but next year may be an exception as the Senate Appropriations Committee approved a fiscal year 2019 government spending bill June 19 that calls for a 1.9 percent pay increase next January for federal workers.
The administration says the government pays better than the private sector in certain fields, particularly when health and retirement benefits are taken into account. The White House said it’s calling for a pay freeze while it analyzes the federal pay system.
The private sector offers higher pay for in-demand fields such as cybersecurity and medicine, but the current federal pay system isn’t competitive in these areas because of salary limits, Pon said during the council meeting in April. The government should offer market-based pay so that it can compete better for people with in-demand skills without overpaying other employees, he said.
Federal employee unions say pay lags the private sector across the board and that federal benefits are comparable to those offered by large corporations.
Those interested in commenting on the OPM proposed rule must submit comments to the agency no later than Aug. 8.
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