Specifics of Pay Impact to Be Determined

The exact amount of pay increases for employees affected by the new localities and by the expansion of existing ones is uncertain at present; that would be set by the pay comparison figures due to be announced in the fall, which are finalized by an executive order typically issued in late December. Nor do the rules address whether the intent is to pay the increase all at once or to phase it in. The situation suggests that a 2016 federal employee pay raise—currently, a 1.3 percent boost seems the most likely outcome—will be broken into two components, one paid across the board and the other divided up as locality pay, in amounts varying among localities according to the indicated pay gaps there. That was standard practice for many years but hasn’t been done since the 2010 raise, due to a three-year freeze on salary rates which was followed by two years of 1 percent raises paid entirely across the board. However, there could be a rob Peter to pay Paul effect for employees in existing metro localities (as well as in Alaska and Hawaii, which are separate localities in their entirety). The rules note that “past practice has been to allocate a percent of the total GS payroll for locality raises and to have the overall dollar cost for such pay raises be the same, regardless of the number of locality pay areas. If a percent of the total GS payroll is allocated for locality pay increases, the addition of new areas results in a smaller amount to allocate for locality pay increases in existing areas. Implementing higher locality pay rates in the 13 new locality pay areas could thus result in relatively lower pay increases for employees in existing locality pay areas than they would otherwise receive.” Presumably that same effect would be increased by bringing outlying into existing areas, as well, although the rules do not address that issue.