Tens of thousands of federal employees living in areas of the country with lagging pay will see a salary boost next year under a final rule published Thursday by the Office of Personnel Management.

The rule, which takes effect on Dec. 18 and will apply to pay beginning Jan. 1, will directly impact some 33,300 General Schedule employees. After identifying qualifying areas with persistent pay gaps, the rule, as Federal Times previously reported, creates four locality pay areas: Fresno, California; Reno, Nevada; Rochester, New York; and Spokane, Washington. Locality pay rates for these four areas will be set by the President.

It also expands some existing locality pay areas by bringing in dozens of new counties.

“These changes will result in geographic differences in federal salaries better reflecting the overall geographic differences in salary in line with statutory goals,” according to the regulation.

This week, federal employee unions and experts in pay policy on the Federal Salary Council met to discuss a number of recommendations for fiscal 2024 and 2025, including unveiling a new report that shows the public-private sector pay gap has widened to 27%, up from 24% last year.

“... The overall remaining pay disparity including implemented locality payments has been greater than 20 percent since March 2007,” the November council report found. “Locality pay percentages have not increased rapidly since locality pay was first implemented in 1994.”

Salary bumps tied to location is one way government pay is augmented to keep up with the cost of labor over time, though many employees and advocates have said that high inflation over recent years has diminished the impact of these provisions.

The council noted, too, that in years when annual base pay boosts are smaller than what would otherwise be provided by statute, more authorization and approval for locality pay is required to close pay disparities, which may not be the quickest or most effective way of solving the problem.

“The alarming new pay gap proves what federal employees have been feeling all year: Their paychecks are not keeping up with inflation and monthly bills are increasingly harder to cover,” said Doreen Greenwald, president of the National Treasury Employees Union, in a statement. “It is outrageous that our nation’s civil servants have lost ground in the fight for fair pay, and it makes our push for an adequate raise in 2024 all the more urgent.”

For next year, Joe Biden recommended a 5.2% raise beginning Jan. 1, comprised of an average 4.7% across-the-board raise and 0.5% for locality. Even with a series of continuing resolutions supporting federal agencies’ current funding levels, that figure is unlikely to change unless Congress explicitly legislates an alternative. So far, it has not signaled an intent to do so, meaning the White House will likely certify the raise via executive order sometime next month.

Locality rates in particular are based on comparisons of GS pay and non-federal pay for the same kind of work in a certain area. It’s not, as some mistakenly claim, a measure of cost-of-living, though that is one of several factors that could affect the market rate for labor.

“A comparison of living costs between geographic areas is not permitted under the locality pay law, but even if it were, it would not be a reliable indicator of local labor costs,” per OPM’s rule.

The rule also follows up on another recommendation to include Washington state’s Jefferson County and Clallam counties in the Seattle locality pay area.

OPM said it plans to post the definitions of locality pay areas at the county level on its website after these final regulations are issued.

Molly Weisner is a staff reporter for Federal Times where she covers labor, policy and contracting pertaining to the government workforce. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as a copy editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.

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