How Locality Pay Adjustments Work - FederalPay.org
Employees paid on the General Schedule (GS) and the Law Enforcement Officer (LEO) Schedule receive a percentage increase to their salary to compensate for the different costs of living Across the U.S. and abroad. Each year the federal government calculates the cost of living in 33 different regions and the Rest of the U.S. (RUS). These regions generally cover major metropolises and their suburbs. San Francisco, New York and Washington D.C. boast the highest locality adjustment. Employees in these areas can earn 10% to 15% more than someone with the same pay grade elsewhere in the country.
The Federal Wage System Schedule also takes into account the different cost of living across the county; however the FWS adjustments are calculated differently using biannual wage surveys of 134 different appropriated funds wage areas and 118 non-appropriated funds wage areas. The Senior Executive Services (SES) Schedule does not take location into account.
For all of these pay schedules, the locality adjustment is based on place of employment, not place of residence. This allows employees to choose to commute from a more affordable area into an area with a higher cost of living in order to receive higher pay relative to where they live. Taking into account commute time and cost of transportation to their place of employment, the benefits are quite limited.
The locality adjustments keep the salaries of federal employees competitive with their private sector equivalent. Federal jobs still typically pay less than the private sector but it would be much worse without the locality adjustments. However, when taking into account the federal government’s benefits including great healthcare insurance plans, retirement contribution matching, generous paid leave policies, excellent job security and other benefits, the federal government’s compensation often surpasses anything offered in the private sector.
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