Update on Locality Pay Issues

The President’s Pay Agent has issued its report on locality pay for 2018.

NTEU National President Tony Reardon
NTEU National President Tony Reardon

Each year, the President’s Pay Agent, composed of the Secretary of Labor, and both the Directors of the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM), issue an annual report on locality pay. The Federal Salary Council (FSC), on which NTEU National President Tony Reardon serves, makes recommendations to the President’s Pay Agent regarding changes in locality pay areas and locality pay rates. Under the provisions of the Federal Employees Pay Comparability Act of 1991 (FEPCA), the federal government is now supposed to be providing locality pay in each area sufficient to close the gap between General Schedule (GS) base pay and private sector pay in each area to within 5 percent.

While the FSC met regularly in 2016 and made its recommendations to the Pay Agent for locality pay for calendar year 2018, no meetings were held in 2017. Recently, the administration has appointed two new FSC members, including the chair. NTEU has urged officials at OMB and OPM to convene the FSC, and additionally has shared our concerns about a lack of meetings on Capitol Hill. In particular, NTEU has raised significant concerns over a lack of progress in establishing new locality pay areas in Burlington, VT; and Virginia Beach, VA; which have been pending despite the FSC’s strong recommendation for them to be established and implemented.

The Pay Agent’s report formally approves the establishment of four new locality pay areas, all of which were recommended by the FSC: Birmingham, AL; Burlington, VT; San Antonio, TX; and Virginia Beach, VA. However, regulations must first be issued and finalized before these new locality pay areas can be created. While NTEU is pleased that these four areas have received formal approval to be established, we remain concerned about the lack of regulatory action for VA and VT, and will continue to press for progress so that federal employees in these areas receive the proper locality pay rates for calendar year 2019.

The Pay Agent also agreed with an FSC recommendation on using updated commuting pattern data obtained from the Census Bureau. However, the Pay Agent disagreed with several FSC recommendations on what criteria should be used to evaluate whether locations near or adjacent to an existing locality pay area should be added.

Of greatest concern to NTEU is language included in the report that states that, “Ultimately, we believe in the need for fundamental reforms of the white-collar Federal pay system.” Further, the report argues that the cost of employee benefits (such as retirement and health care benefits) need to be included in federal versus private-sector pay comparisons citing an April 2017 Congressional Budget Office (CBO) compensation study. NTEU strongly disagreed with the main CBO findings, which failed to review actual job duties and level of work when comparing federal and private sector jobs. These statements, coupled with recent news reports of the possibility that the administration will recommend a pay freeze for January 2019, signal a growing potential for legislative proposals seeking to abolish the GS pay system. Rest assured that through Tony’s work on the FSC and our advocacy on Capitol Hill, NTEU will fight to preserve a transparent and equitable pay system that requires the appropriate implementation of the current pay system to address the 34 percent pay gap, the issuance of regulations for these four new locality pay areas, and for agencies to be given the training and resources so that they provide employees with the pay, awards, and other incentives already available to them under current law. Data analysisNTEU will also support legislative proposals that seek to improve federal employee pay, and will continue to support better funding for the Bureau of Labor Statistics so that enhanced surveys of private sector pay, with more robust data, can produce more accurate comparisons of private sector and federal pay.