WASHINGTON — An estimated 32,000 federal employees are expected to be re-designated to a higher pay locality area for fiscal year 2023, according to a report by the U.S. Office of Personnel Management.

Federal employees each year receive pay adjustments across the board, based on the Employment Cost Index for private industry workers minus 0.5 percentage points. Locality-based adjustments are granted in areas where the pay difference between federal and non-federal pay is greater than five percent.

Pending the regulatory process, Fresno, California, Reno, Nevada, Rochester, New York, and Spokane, Washington, would be established as new locality pay areas. A number of workers in other locations would be moved to an already existing locality pay area, OPM said in a report.

“With 85 percent of the federal workforce living outside of the D.C. area, OPM is working to ensure locality pay is competitive in all communities across the country,” Press Secretary Viet Tran said in a statement to Federal Times. “Alongside the Department of Labor and the Office of Management and Budget, OPM has reviewed the Federal Salary Council’s recommendation to create four new pay localities – and expand existing areas.”

As part of the annual review, the federal Pay Agent identifies areas with local disparities in pay and makes recommendations to the president to address them. The Secretary of Labor, along with the directors of the White House Office of Management and Budget and OPM, make up the president’s Pay Agent.

“The changes in locality pay areas tentatively approved above will not be made until appropriate rule-making to make those changes is complete,” OPM said in the report. “The timing of such rule-making has not yet been determined, but the earliest the changes in locality pay area boundaries discussed above can go into effect at this point would be in January 2024.”

Per the Federal Employee’s Pay Comparability Act of 1990, the U.S. Bureau of Labor and Statistics is required to collect survey data on non-federal salaried workers. The National Compensation Survey gauges how salaries differ by level of work from “the occupational average,” according to the report. The Occupational Employment and Wage Statistics data, meanwhile, estimate the average salaries by occupation in each locality pay area.

Under the changes for 2023, federal employees will see a pay increase across the board of 4.1% and a locality pay average increase of 0.5%, starting Jan. 1.

Zamone “Z” Perez is a rapid response reporter and podcast producer at Defense News and Military Times. He previously worked at Foreign Policy and Ufahamu Africa. He is a graduate of Northwestern University, where he researched international ethics and atrocity prevention in his thesis. He can be found on Twitter @zamoneperez.

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