Most white-collar federal employees would be in line for a 2.5 percent raise next year and an additional 1 percent raise based on their geographic location under a recommendation made by a federal advisory group yesterday.
The recommendation by the Federal Salary Council, which oversees the General Schedule locality pay system, was in keeping with past practice and with legislation pending in Congress that would provide an average 3.5 percent raise to civil service employees in January.
The council did not recommend a precise raise for civil service employees in each of the 31 metropolitan areas and a catchall area, called the "rest of the U.S.," that make up the locality pay system. That decision was left to the discretion of the president.
In the past, however, Washington-Baltimore, San Francisco, New York and other competitive labor markets have usually received pay adjustments slightly higher than the average set by Congress. This year, for example, Congress authorized an average 4.1 percent raise, but employees in the Washington-Baltimore area ended up with a 4.42 percent raise under the formula used to set locality rates.
The Federal Salary Council, which includes union officials and compensation experts, also voted to recommend an expanded locality pay zone for the Washington-Baltimore area, which stretches from West Virginia to Southern Maryland.
For the first time, under a council proposal, the Washington-Baltimore federal pay region would reach into Pennsylvania, picking up Adams and York counties. Both counties have a growing population of federal employees and commuting patterns that align with the Washington region, officials said.
In addition, Frederick County and Winchester in Virginia and Hampshire and Morgan counties in West Virginia would transfer into the Washington locality pay zone in January, according to proposed rules issued last week by the Office of Personnel Management.
The jurisdictions would change in part because of new metropolitan statistical area definitions that grew out of the 2000 Census. Boundary lines for several other areas also would change, shifting about 15,000 General Schedule employees from the catchall zone into metropolitan areas.
The shift from the catchall zone into a metropolitan pay area can translate into a substantial salary increase. This year, for example, a GS-11, Step 1 employee in Winchester who makes $48,947 would get $50,809 as a Washington-Baltimore regional employee.
Locality pay, which is based on an employee's official duty station, counts toward retirement credits, Thrift Savings Plan investments and federal life insurance, just as basic pay does.
Yesterday's meeting of the salary council -- the only one this year -- was convened by council Chairman Terri Lacy. She was joined by Mary K. Rose, the council vice chairman, and four members, including two union presidents, Colleen M. Kelley of the National Treasury Employees Union, and Richard N. Brown of the National Federation of Federal Employees.
They were briefed by Labor Department and OPM officials, including Mary E. McCarthy, an assistant commissioner at the Bureau of Labor Statistics, and Donald J. Winstead, a deputy associate director at OPM.
The locality pay system relies on Bureau of Labor Statistics survey data that help provide a comparison of federal and nonfederal jobs in labor markets across the nation. The council is making a transition to a new compensation survey and methodology to measure the pay gap between federal and nonfederal jobs.
According to most recent calculations provided to the salary council, federal jobs lag behind their nonfederal counterparts by 16.06 percent, on average. Members of Congress who support higher salaries for civil service employees frequently point to the pay gap as a reason to increase the federal payroll and, they hope, improve recruitment and retention of employees.
Yesterday, the council recommended dropping Kansas City, Orlando and St. Louis as separate locality zones, effective in 2006, because the measured pay gap in those cities has been falling below the catch-all zone. That zone usually gets the lowest raise when locality adjustments are made.
The council also recommended creating three new metropolitan pay zones -- in Buffalo, Phoenix and Raleigh -- in 2006 because of labor market conditions.
The salary council's recommendations will go to the Bush administration for review. A preliminary decision, at least on locality pay, should be reached before the end of November, officials indicated.