Federal Building at Wilshire Boulevard, Los Angeles CA, APRIL 20, 2017. San Francisco, Washington-Baltimore, Los Angeles and New York typically exceed the "rest of the US" locality by 20 percent.

Some federal employees have been wondering why the metropolitan areas that already are among the highest-paid GS localities stand to receive some of the largest raises under the division of the locality pay component of the retroactive pay raise. The answer lies in how locality rates are determined.

Under the law setting the raise, the 1.9 percent raise was divided, with a 1.4 percent across the board component and the money equaling another 0.5 percentage points parceled out among the localities in differing amounts. That variation is based on pay comparisons between similar federal and non-federal jobs (not by cost of living, as is commonly believed).


Over the years, differences in locality payouts have resulted in pay in areas such as San Francisco, Washington-Baltimore, Los Angeles and New York exceeding by more than 20 percent the pay for jobs at the same GS grade and step in the lowest-paid, the catchall “rest of the U.S.” locality. Despite that difference, the most recent report from the Federal Salary Council, using Labor Department data, showed that those cities still have the largest pay gaps.

The result was that the largest raises are going to Washington-Baltimore, 2.27; San Francisco-San Jose-Oakland, 2.18; Seattle-Tacoma, 2.15; and San Diego-Carlsbad, 2.13. At the low end of the raises, just above the 1.66 percent for the RUS locality are Cincinnati, 1.69; Indianapolis, 1.70; and Cleveland, 1.71.

The roughly 70,000 employees in the six new localities received an extra pay boost by moving out of the RUS locality. Those are Birmingham, Ala., 1.75; Burlington, Vt., 2.11; Corpus Christi, 1.96; Omaha, 1.84; San Antonio, 2.02; and Virginia Beach, Va., 1.87. The Salary Council has a number of other city areas now part of RUS under consideration to become separate localities in the future, based on their pay gaps.