Federal Salary Council pushing 6 new locality pay areas in effect for 2019

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With any luck, federal employees in six new areas of the U.S. may have access to special locality pay rates starting in January 2019.

The Federal Salary Council and Office of Personnel Management are trying to push six new locality pay areas through the regulatory process this year, with the intent to have those new locations in effect in time for the first pay period in 2019. At the same time, the council is considering major changes to the methodology it uses to compare federal and private sector pay.

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Four of the six new areas up for consideration, including Birmingham, Alabama; San Antonio, Texas; Burlington, Vermont; and Virginia Beach/Norfolk, Virginia, already received approval from the President’s Pay Agent, a body made up of the Labor secretary, the Office of Management and Budget (OMB) director and OPM director. But federal employees in those locations haven’t seen pay changes because the regulatory process has languished.

The Federal Salary Council on Tuesday also voted to add two additional locations — Corpus Christi, Texas, and Omaha, Nebraska, — to the list of 45 existing locality pay areas. The pay agent must first approve the addition of these new areas, but OPM believes it may be able to combine all six through one rulemaking process.

If the administration does move forward with the six, it would bring the total number of locality pay areas to 51, in addition to the “rest of U.S.”

As the president has indicated in his 2019 budget, civilian employees may not receive a pay raise next year, but changes would be in place going forward.

The move comes as the Federal Salary Council also agreed to review the current methodology it uses to make recommendations and key decisions about the locality pay program.

The vote is significant because, in a sense, it acknowledges that other organizations have vastly different takes on federal compensation and want the conversation to move in a different direction.

Moving forward, the council plans to hear from experts both in and outside of government on how it could best compare federal pay with the private sector.

“It can’t be one-size-fits-all,” new council Chairman Ron Sanders said of the current methodology. “You can’t look at all occupations as if they were equal, [and] you can’t look at all employees as if they were equal, or areas as if they were equal. We need more precision, and that’s where I’d like to take the council.”

The council, which was relatively silent and didn’t meet publicly during the first year of the Trump administration, now has new members and leadership.

It heard on Tuesday from federal employees in Charleston, South Carolina; Imperial County, California; and Nashville, Tennessee. Employees and managers from these regions said they’re struggling to recruit and retain border patrol agents, medical professionals at the Veterans Affairs Department and scientific experts at the Army Corps of Engineers, among others.

“These strike me as jobs where you’re competing in a national labor market and STEM and STEM-related occupations, and that’s hidden by the methodology,” Sanders said.

Employees in more than 40 locations this year also asked the salary council to examine their recruitment and retention challenges and consider adding them to the locality pay list. The council, however, has declined all of them.

Instead, it wants to find a broader solution with the current locality methodology, rather than continue to address case-by-case issues in specific areas.

“That doesn’t mean we’re giving up on you,” Sanders said. “It just means that doing this case by case by case is problematic.”

Many of the federal unions, which also sit on the council, hesitantly voted to begin review of the locality methodology.

“We’re open to having conversations and discussions, but I think it’s [about] comparing pay to pay, benefits to benefits and not trying to package benefits, pay [and] all of those things together,” American Federation of Government Employees National President J. David Cox said.

In the past, the Federal Salary Council has suggested seemingly minor but complex changes to its methodology, which differs drastically from the formulas other organizations have used to study public and private sector compensation. The president’s pay agent has also pushed back on those recommendations.

“I’d really like to see the council contribute to the kind of discussion that [OPM Director]Jeff [Pon] … has been asked to lead,” Sanders said. “Whether something comes of it is a matter for the president and the Congress. But I do think there’s going to be an effort, and I’d like the council to be relevant to that effort. That’s going to require us to roll up our sleeves and do some work and have some honest, candid discussions about the role of the council, the methodology that’s used to determine pay gaps, to identify pay gaps, all of those things.”

The salary council currently applies a measure from the Bureau of Labor Statistics, which uses the National Compensation Survey to measure non-federal compensation in a particular labor market and compare it to federal pay for GS employees who perform vaguely similar work in the same region.

According to BLS, private sector workers are paid, on average, 31.86 percent more than their counterparts in the federal government.

The Congressional Budget Office, however, said federal employees are compensated at a rate that’s 17 percent higher than private sector workers. The Cato Institute put the gap even higher.

Regardless of what the salary council decides about its pay methodology, OPM is poised to make changes on its own to federal pay and compensation.

“We’re really looking forward to seeing what the next 40 years looks like from a policy and strategy standpoint, and commensurate with that it’s really changing the way in which we look at jobs, pay, work, work-life, even the way in which we have structured our jobs,” said Pon, who spoke briefly at the council meeting. “We’re going to be taking a look at a lot of those things, not just salary, but a comprehensive look at how we care for our federal workers.”

Sanders, meanwhile, said he plans to lead the council in a different direction than it’s taken in the past.

“[The rules defining the council] are pretty broad, and I’m going to play right to the edge of that envelope,” he told Federal News Radio. “That’s the only way we can contribute.”