Although the GS locality pay program has never been funded to the extent originally envisioned-under the enacting law, the indicated pay gaps with the private sector should have been virtually closed by now-locality pay does make some difference. Pay in the highest-paid locality, the San Francisco-Oakland-San Jose locality, exceeds the rate of similarly graded jobs in the “rest of the U.S.” locality about 10 percent. Locality pay is paid based on where employees work, not where they live. Locality pay is considered basic pay for retirement, federal life insurance, Thrift Savings Plan contributions and certain other purposes.