U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

PAY DISPARITIES AND COMPARABILITY PAYMENTS

Table 2, below, lists the pay disparity for each pay locality. Table 2 also derives the recommended local comparability payments under 5 U.S.C. 5304(a)(3)(I) for 2008 based on the pay disparities, and it shows the disparities that would remain if the recommended payments were adopted.

Table 2 includes the Buffalo locality pay area. Since data for Buffalo are still used as part of the salary survey data for the RUS locality pay area, we have adjusted the RUS area pay disparity to net out Buffalo. The table also includes the Indianapolis locality pay area where the pay disparity is below that for the RUS locality pay area. Based on the recommendations of the Federal Salary Council, we have combined the pay disparities for Indianapolis and RUS in a cost neutral fashion, but will continue Indianapolis as a separate locality pay area. The Council and the Pay Agent will review salary survey data for Indianapolis again next year. The adjusted RUS pay disparity is the original RUS disparity adjusted to remove Buffalo and add Indianapolis by weighting the individual location pay disparities by GS base payroll in each area. The "RUS-adjusted disparity" column shows the adjusted RUS pay disparity.

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 over a 9-year period (5 U.S.C. 5304(a)(3)(I)). The "Disparity to Close" shown in Table 2 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. The last column shows the pay disparity that would remain in each area if the indicated payments were made. For example, in Atlanta, the 38.50 percent pay disparity would be reduced to 5.00 percent if the locality rate were increased to 31.90 percent (138.50/131.90-1) X 100 = 5.00 percent).

The actual remaining pay disparity as of January 2008 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 2007 and January 2008. Second, non-Federal pay will have increased by some amount from March 2006 to January 2008. 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 2.  Local Pay Disparities and 2008 Comparability Payments

Average Locality Rate

The average locality comparability rate in 2008, using the basic GS payroll as of March 2006 to weight the individual rates, would be 31.02 percent under the methodology used for this report (based on the disparity to close). The average rate authorized in 2006 was 16.18 percent. At this time, we do not know what locality rates will be approved for 2007. The locality rates included in this report would represent a 12.77 percent average pay increase over 2006 locality rates.

Overall Remaining Pay Disparities

The full pay disparities contained in this report average 37.57 percent using the basic GS payroll to weight the local pay disparities. However, this calculation excludes existing locality payments. When the existing locality payments (i.e., those paid in 2006) are included in the comparison, the overall remaining pay disparity as of March 2006 was (137.57/116.18-1) X 100, or about 18.41 percent. Table 3, below, shows the overall remaining pay disparity in each of the 32 approved locality pay areas as of March 2006.

Table 3.  Remaining Pay Disparities in 2006