Laptops & Locality Pay
Locality pay exists because some areas have significantly different costs of living from others. San Francisco, for example, has a locality pay 41.4% higher than federal General Schedule base pay. This is because of the vastly higher cost of living in San Francisco compared to much of the country; while the median rent in San Francisco costs $3,035 per month, the median rent in the state of West Virginia is $727 per month. Achieving the same lifestyle in some areas simply costs more than in others, which is why the federal government adjusts pay rates based on where you work.
Before telework, this was not a complicated issue. The requirement of being able to physically commute to and from the office imposed limits on where it was practical to live. As such, locality pay followed work location. If your office was located in the San Francisco locality pay area, you were paid accordingly. Telework, however, has thrown a new wrinkle into this issue.
Say your office is located in San Francisco, but you are one of the feds whom agencies have indicated will be allowed to telework permanently. Nothing, then, is physically tying you to living within commuting distance of your office. If you make a change of address to an area with a far lower cost of living, under the current system, you would continue to be paid at the same level as before, only now your paycheck would go significantly farther.
Some agencies see this as a problem. Some do not. Of the agencies that identify it as a problem, there is a problematic patchwork of shifting rules in place. One agency, for example, might determine that a temporary move does not require a shift in locality pay, but a permanent move does. What defines a permanent move? If a family sells their house, and buys a new one in a new area, that seems fairly definitive. What if instead of selling however, they simply rent their house out, and rent or buy a new one in a different area. Was that a permanent move?
The good news is that the Office of Personnel Management (OPM) has issued some guidance on this issue in the form of an FAQ, accessible here. The bad news is that this guidance is neither comprehensive nor straight-forward, and that it leaves too much of the decision up to agencies, resulting in uneven application at best and unclear directions at worst.
The first order of business for addressing this is for OPM to issue a set of simple, clear, and comprehensive guidelines that address these questions so that no federal employees are blindsided by an unanticipated reduction in pay. While it would be ideal if fairness could be considered as a factor, practicality may have the final word. To create a system without massive loopholes that remains clear and easily understandable may prove unworkably difficult.
Further, it may even incentivize employees in areas with lower locality pay to move to higher locality pay areas, significantly increasing costs to the federal government. Tracking who is or is not where they claim to be would also become a gargantuan project, consuming untold resources and invading privacy. It may prove that there is no real choice but to preserve the current system, in which feds are paid based on the location of their offices, regardless of their new homes’ physical location. If so, however, this would clearly be unfair to feds performing identical job functions while living in the same areas, who nonetheless receive significantly lower pay.
What do you think the ideal solution should be? FMA welcomes your input as we work with our partners in the federal government and in Congress. To make your voice on this issue heard, please email Adam Kay at akay@fedmanagers.org.
If you are not already a member of FMA, please consider becoming a member.
The views reflected in this column are those of FMA and do not necessarily represent the views of FEDmanager. To learn more about the Federal Managers Association (FMA), visit their website: FedManagers.org.