The President's Pay Agent

LOCAL PAY DISPARITIES AND COMPARABILITY PAYMENTS

Table 6, below, lists the pay disparity for each locality under OCSP and the NCS program and the weighted average of the two pay disparities (with NCS weighted 90 percent and OCSP weighted 10 percent). Table 6 also derives the recommended local comparability payments under 5 U.S.C. 5304(a)(3)(I) for 2006 based on the weighted average disparities, and it shows the disparities that would remain if the recommended payments were adopted.

Table 6 includes three new locality pay areas. BLS survey data from Buffalo, Phoenix, and Raleigh were originally collected as part of the survey conducted for the Rest of U.S. locality pay area. The Pay Agent has adopted the Federal Salary Council's recommendation to make these three areas separate locality pay areas and to adjust the RUS disparity to net out these three areas. The adjusted RUS pay disparity is the original RUS disparity adjusted to remove data from Buffalo, Phoenix, and Raleigh using the GS base payroll in each area for weights. The "RUS-adjusted disparity" column shows the adjusted RUS pay disparity.

Table 6 also includes three locations to be discontinued in 2006-Kansas City, Orlando, and St. Louis. There is no need to adjust the RUS pay disparity to include these three locations because BLS already included them in the RUS survey data it submitted to the Pay Agent.

The law requires comparability payments only in localities where the pay disparity exceeds 5 percent; the goal was to reduce local pay disparities to no more than 5 percent not later than the year 2002 (5 U.S.C. 5304(a)(3)(I)). The "Disparity to Close" shown in Table 6 represents the pay disparity to be closed in each area based on the 5 percent remaining disparity threshold. The "Locality Payment" shown in the table represents 100 percent of the disparity to close. (Note: Since FEPCA contemplated that the target pay disparity would be closed by 2002, the amounts shown in columns 5 and 6 are the same.) The last column shows the pay disparity that would remain in each area if the indicated payments were made. For example, in Atlanta, the 32.70 percent NCS/OCSP pay disparity would be reduced to 5.00 percent if the locality rate were increased to 26.38 percent (132.70/126.38-1) X 100 = 5.00 percent).

The actual remaining pay disparity as of January 2006 may differ from the calculations above for two reasons. First, Federal pay will have increased by the amount of the across-the-board increases that become effective in January 2005 and January 2006. Second, non-Federal pay will have increased by some amount from March 2004 to January 2006. For the purpose of this report, we assume that future changes in Federal and non-Federal pay will effectively cancel each other out and that the pay disparities will remain about the same.

Table 8.  Local Pay Disparities and 2005 Comparability Payments

* Locations to be merged with RUS in 2006.

Average Locality Rate

The average locality comparability rate in 2006, using the basic GS payroll as of March 2004 with planned pay area definitions to weight the individual rates, would be 25.84 percent under the methodology used for this report. The average rate authorized in 2004 was 13.85 percent.

Overall Remaining Pay Disparities

The pay disparities contained in this report average 32.13 percent using the basic GS payroll and planned pay area definitions to weight the local pay disparities. However, this calculation excludes existing locality payments. When the existing locality payments (i.e., those paid in 2004) are included in the comparison, the overall remaining pay disparity as of March 2004 was (132.13/113.85-1) X 100, or about 16.06 percent. Table 7, below, shows the overall remaining pay disparity in each of the 32 locality pay areas established by the Pay Agent as of March 2004.

Table 7.  Remaining Pay Disparities in 2004