Order Code RL33158
CRS Report for Congress
Received through the CRS Web
Federal White-Collar Pay:
FY2006 and FY2007 Salary Adjustments
November 21, 2005
Barbara L. Schwemle
Analyst in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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Federal White-Collar Pay:
FY2006 and FY2007 Salary Adjustments
Summary
Federal white-collar employees are intended by law to receive an annual pay
adjustment and a locality-based comparability payment, effective in January of each
year, under Section 529 of P.L. 101-509, the Federal Employees Pay Comparability
Act (FEPCA) of 1990. The law has never been implemented as originally enacted;
annual and locality payments pursuant to the statute have been reduced each year.
Although the annual adjustment and the locality payment are sometimes referred to
as cost-of-living adjustments, neither is based on changes in the cost of living.
The annual pay adjustment is based on the Employment Cost Index (ECI),
which measures change in private-sector wages and salaries. The size of the locality
payment is determined by the President and is based on a comparison of nonfederal
and General Schedule salaries in 32 pay areas nationwide. By law, the disparity
between nonfederal and federal salaries was to be gradually reduced to 5% during the
years 1994 to 2002. Continuing in each year thereafter, FEPCA requires that
amounts payable may not be less than the full amount necessary to reduce the pay
disparity to 5%. An average 3.1% pay adjustment in January 2006 is included in the
conference report accompanying the Transportation, Treasury, Housing and Urban
Development, the Judiciary, the District of Columbia, and Independent Agencies
Appropriations Act for FY2006 (H.R. 3058) as agreed to by the House of
Representatives and the Senate. On October 21, 2005, as part of its memorandum
to the Pay Agent on the January 2007 locality payments, the Federal Salary Council
recommended that the 3.1% pay adjustment be allocated as 2.1% annual and 1.0%
locality pay. Once the President signs H.R. 3058, he must issue an Executive Order
allocating the increase between annual and locality pay. Legislation (S. 1928)
currently pending in the 109th Congress would deny a pay adjustment to federal
civilian employees, but not to federal law enforcement officers, in January 2006. No
action has occurred on this bill.
As for the January 2007 pay adjustment, the ECI shows that the annual across-
the-board increase would be 1.7%. The Federal Salary Council recommends that to
carry out FEPCA, the 2007 locality payments range from 14.10% in the “Rest of the
United States” (RUS) pay area to 49.65% in the San Jose-San Francisco pay area and
be 31.36% in the Washington, DC, pay area. Because the new locality rate replaces
the existing locality rate, the rate change is derived by comparing 2006 locality
payments with those recommended for 2007. This comparison, which will enable
the net (annual and locality) pay adjustment for January 2007 to be calculated, can
be made once the pay adjustment for January 2006 is finalized.
The Department of Homeland Security (DHS) and the Department of Defense
(DOD) have issued final regulations to implement their new personnel systems,
which include changes to the process for adjusting federal pay. In July 2005, the
Administration released a draft proposal that would extend changes similar to those
at DHS and DOD government-wide, but legislation has not been introduced. This
report will be updated.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Pay Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Annual Pay Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Locality-Based Comparability Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Methodology for Determining the Locality-Based
Comparability Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recommendations by the President and Congress . . . . . . . . . . . . . . . . . . . . . 7
January 2006 Pay Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
January 2007 Pay Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Annual Pay Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Locality-Based Comparability Payments . . . . . . . . . . . . . . . . . . . . . . . 10
Changes in the Pay Adjustment Process Advocated . . . . . . . . . . . . . . . . . . . . . . 11
List of Tables
Table 1. Annual and Locality Pay Adjustments Under FEPCA,
1991 to 2005, with January 2006 Projection . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 2. January 2006 Recommended Locality Payments,
Authorized Locality Payments, and Net Annual and
Locality Pay Increase, Based on 3.1% Pay Adjustment . . . . . . . . . . . . . . . . 15
Table 3. January 2007 Recommended Locality Payments . . . . . . . . . . . . . . . . . 18

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Federal White-Collar Pay: FY2006 and
FY2007 Salary Adjustments
Introduction
Federal white-collar employees1 paid under the General Schedule (GS), Foreign
Service Schedule, and Veterans Health Administration Schedule are intended by law
to receive an annual pay adjustment and a locality-based comparability payment,
effective in January of each year, under Section 529 of P.L. 101-509, the Federal
Employees Pay Comparability Act (FEPCA) of 1990.2 Although the annual
adjustment and the locality payment are sometimes referred to as cost-of-living
adjustments, neither is based on measures of the cost of living. FEPCA has never
been implemented as originally enacted. The annual pay adjustment was not made
in 1994; in 1995, 1996, and 1998, reduced amounts of the annual adjustment were
provided. For 1995 through 2005, reduced amounts of the locality payments were
provided and are being provided for 2006. Table 1 shows the annual and locality pay
adjustments (projected) made under FEPCA for years 1991 through 2006.
Pay Adjustments
Annual Pay Adjustment
Federal white-collar employees usually receive an annual pay adjustment. The
President may annually adjust salaries of administrative law judges. Individuals in
senior-level (SL) and scientific and professional (ST) positions may receive the
annual adjustment at the discretion of agency heads.3 Annual adjustments for
1 This report does not cover salary adjustments for federal officials, federal judges, Members
of Congress, or the United States Postal Service. See CRS Report 98-53, Salaries of
Federal Officials: A Fact Sheet, and CRS Report RS20388, Salary Linkage: Members of
Congress, Certain Federal Officials, and Certain Federal Judges, by Barbara L. Schwemle.
Also see CRS Report 97-615, Salaries of Members of Congress: Congressional Votes, 1990-
2005; CRS Report 97-1011, Salaries of Members of Congress: A List of Payable Rates and
Effective Dates, 1789-2006; CRS Report RL30014, Salaries of Members of Congress:
Current Procedures and Recent Adjustments; and CRS Report RL30064, Congressional
Salaries and Allowances, by Paul E. Dwyer. For Senior Executive Service pay, see CRS
Report RL33128, Senior Executive Service Pay for Performance System, by L. Elaine
Halchin.
2 104 Stat. 1389, at 1427.
3 According to 5 U.S.C. 5376, the minimum rate of basic pay for SLs and STs is equal to
(continued...)

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contract appeals board members depend on whether Executive Schedule pay is
adjusted.
The annual pay adjustment is based on the Employment Cost Index (ECI),
which measures change in private-sector wages and salaries. Basic pay rates are to
be increased by an amount that is 0.5 percentage points less than the percentage by
which the ECI, for the quarter ending September 30 of the year before the preceding
calendar year, exceeds the ECI for that same quarter of the second year (if at all). The
pay adjustment is effective as of the first day of the first applicable pay period
beginning on or after January 1 of each calendar year. For example, the annual
adjustment for January 2006 is based on the ECI for the quarter ending September
30, 2004. The change in the ECI from the previous September 30 (2.6%) is reduced
by 0.5 percentage points, thereby yielding a 2.1% annual adjustment. Therefore, the
data used to calculate the annual adjustment are 15 months old at the time of the
adjustment.
In the event of a national emergency or serious economic conditions affecting
the general welfare, FEPCA authorizes the President to issue an alternative pay plan
that uses a different percentage increase than the one required by the ECI-based
formula. The alternative plan must be submitted to Congress by September 1
preceding the scheduled effective date.4
Locality-Based Comparability Payments
GS employees are also intended to receive locality-based comparability
payments; the Pay Agent5 may also extend these payments to employees in the
Foreign Service and in senior-level, scientific and professional, administrative law
judge, administrative appeals judge, and contract appeals board member positions.6
The Pay Agent determines the applicable pay cap level for certain non-General
Schedule employees to whom locality pay is extended.7 OPM published final
3 (...continued)
120% of the minimum rate of basic pay for GS-15; the maximum rate of basic pay for SLs
and STs is equal to level IV of the Executive Schedule. For 2005, basic pay ranges from
$107,550 to $140,300.
4 104 Stat. 1389, at 1429-1431; 5 U.S.C. §§5301-5303.
5 The Pay Agent comprises the Secretary of Labor (Elaine L. Chao), the Director of the
Office of Management and Budget (Joshua B. Bolten), and the Director of the Office of
Personnel Management (Linda M. Springer).
6 The President, by Executive Order, delegated to the Pay Agent the authority to extend
locality-based comparability payments to certain categories of positions not otherwise
covered. U.S. President (Clinton), “Delegating a Federal Pay Administration Authority,”
Executive Order 12883, Federal Register, vol. 58, no. 229, Dec. 1, 1993, p. 63281.
7 The President, by Executive Order, delegated to the Pay Agent the authority to determine
the applicable pay cap level for certain non-General Schedule employees to whom locality
pay is extended. U.S. President (Clinton), “Adjustments of Certain Rates of Pay and
Delegation of a Federal Pay Administration Authority,” Executive Order 13106, Federal
(continued...)

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regulations in December 2001 to clarify and redefine the limitations.8 Blue-collar
workers under the Federal Wage System (FWS) receive a prevailing rate adjustment
that is generally capped at the average percentage pay adjustment received by federal
white-collar employees.9 For 2005, notwithstanding the cap, the blue-collar pay
adjustment in a particular location is no less than the increase received by GS
employees in that location. Blue-collar workers in Alaska, Hawaii, and other
nonforeign areas receive a pay adjustment that is no less than the increase received
by GS employees in the Rest of the United States (RUS) pay area.10 Special-rate
employees receive either the special rate or the locality payment, whichever is higher.
Law enforcement officers receiving special rates under Section 403 of FEPCA
receive both special rates and locality pay. Federal employees in Alaska and Hawaii
and outside of the continental United States, receive a cost-of-living (COLA)
allowance rather than locality pay.
Under an interim rule published by OPM in the Federal Register on August 5,
2004, a locality rate of pay would be considered as basic pay in computing danger
pay allowances and post differentials for certain employees who are temporarily
assigned to foreign areas and for whom the Department of State has established
allowances for danger.11
The locality-based comparability payments procedure established by FEPCA
provides that payments are to be made within each locality determined to have a
7 (...continued)
Register, vol. 63, no. 236, Dec. 9, 1998, p. 68152.
8 The proposed regulations stated the following: “To provide consistent treatment between
General Schedule (GS) and non-GS employees receiving locality payments, OPM proposes
to provide that (1) non-GS positions whose maximum scheduled annual rate of pay is less
than or equal to the maximum payable scheduled annual rate of pay for GS-15 will be
subject to a locality pay cap equal to the rate for level IV of the Executive Schedule, and (2)
non-GS positions whose maximum scheduled annual rate of pay exceeds the maximum
payable scheduled annual rate of pay for GS-15, but is not more than the rate for level IV
of the Executive Schedule, will be subject to a locality pay cap equal to the rate for level III
of the Executive Schedule.” U.S. Office of Personnel Management, “Locality-Based
Comparability Payments,” Federal Register, vol. 65, Mar. 24, 2000, pp. 15875-15877. U.S.
Office of Personnel Management, “Locality-Based Comparability Payments,” Federal
Register, vol. 66, Dec. 28, 2001, pp. 67069-67070.
9 For FY2005, this provision is at Section 613 of the Consolidated Omnibus Appropriations
Act for FY2005, P.L. 108-447. The Transportation, Treasury, Housing and Urban
Development, the Judiciary, and Independent Agencies Appropriations Bill for FY2006
(H.R. 3058) includes the provision at Section 913 of the House-passed bill, Section 811 of
the Senate-passed bill, and Section 813 of the conference report (H.Rept. 109-307).
10 For FY2005, this provision is at Section 640(b) of the Consolidated Appropriations Act
for FY2005, P.L. 108-447. The Transportation, Treasury, Housing and Urban Development,
the Judiciary, and Independent Agencies Appropriations Bill for FY2006 (H.R. 3058)
includes the provision at Section 943(b) of the House-passed bill , Section 836(b) of the
Senate-passed bill, and Section 843(b) of the conference report (H.Rept. 109-307).
11 U.S. Office of Personnel Management, “Locality-Based Comparability Payments,”
Federal Register, vol. 69, Aug. 5, 2004, pp. 47353-47354.

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nonfederal/federal pay disparity greater than 5%. When uniformly applied to GS
employees within a locality, the adjustment is intended to make their pay rates
substantially equal, in the aggregate, to those of nonfederal workers for the same
levels of work in the same locality.
FEPCA authorizes the President to fix an alternative level of locality-based
comparability payments if, because of a national emergency or serious economic
conditions affecting the general welfare, the President considers the level that would
otherwise be payable inappropriate. At least one month before these comparability
payments would be payable (by November 30, 2006, for the 2007 payment), the
President would have to prepare and transmit to Congress a report describing the
intended alternative level of payments, including the reasons why the alternative level
would be necessary.12
Once the annual and locality pay percentage amounts are determined, the actual
pay rates are calculated as follows. First, the basic General Schedule (GS) is
increased by the annual adjustment percentage, resulting in a new GS schedule.
These new basic GS rates are then increased by the locality payment. For 2007, the
resulting pay rates (annual + locality) are compared with the 2006 pay rates (annual
+ locality) to derive the net increase in pay.
Methodology for Determining the Locality-Based Comparability
Payments. Under the law, the Bureau of Labor Statistics (BLS) conducts surveys
that document nonfederal rates of pay in each locality pay area. (In January 2007,
there will be 32 pay areas nationwide.) Prior to October 1996, the surveys were
conducted under the Occupational Compensation Survey Program (OCSP), which
had been approved by the Federal Salary Council13 and the Pay Agent. Since then,
the surveys have been conducted under the National Compensation Survey (NCS)
program, which was not approved for use with the January 2000 through January
2003 locality payments. In its memorandum to the Pay Agent on the January 2001
locality payments, the council recommended five improvements in the NCS
program.14 For the January 2004 through January 2006 locality payments, a phase-in
12 104 Stat. 1389, at 1429-1436, as amended by 106 Stat. 1355-1356 and 1360; 5 U.S.C.
5301-5302 and 5304-5304a.
13 The council includes nine members. Members generally recognized for their impartiality,
knowledge, and experience in labor relations and pay policy are Terri Lacy, chair; Mary
McNally Rose, vice-chair; and Rudy J. Maestas. The other members represent the American
Federation of Government Employees (vacant, pending appointment); the National Treasury
Employees Union (Colleen M. Kelley); the National Federation of Federal Employees
(Richard N. Brown); the American Federation of Government Employees, AFL-CIO
(vacant, pending appointment); the Association of Civilian Technicians (Thomas G. Bastas);
and the Fraternal Order of Police (James Pasco).
14 These recommendations, endorsed by the Pay Agent, were that (1) three factors, rather
than nine, be used to assign the correct federal grade levels to the nonfederal jobs surveyed,
and grade level guides for occupational families be provided; (2) a model be developed to
estimate missing data; (3) the matching of federal survey jobs with nonfederal survey jobs
be improved, and subcategories be provided for occupations that are not elsewhere
(continued...)

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of NCS survey data was approved.15 The Federal Salary Council recommends that
100% of the NCS data be used for the January 2007 locality payments and that the
OCSP data no longer be used.
The survey results are submitted to the Office of Personnel Management
(OPM), which serves as the staff to the Federal Salary Council and the Pay Agent.
OPM documents federal rates of pay in each of the pay areas and compares
nonfederal and GS salaries, by grade, for each pay area. The average salaries at each
grade, both federal and nonfederal, are then aggregated and compared to determine
an overall average percentage pay gap for each area. By law, the disparity between
nonfederal and federal salaries is to be reduced to 5%. Therefore, the overall average
percentage pay gap for each pay area is adjusted annually to this level by OPM. This
adjusted gap, called the target gap, is used to determine the locality rates for each pay
area recommended to the President by the Pay Agent, after receiving advice from the
Federal Salary Council. The pay gaps on which the locality payments are based are
22 months old by the effective date of the adjustment; thus, March 2005 gaps
determine the January 2007 locality payments.
FEPCA also stipulates that a certain percentage of the target gap between GS
average salaries and nonfederal average salaries in each pay area is to be closed each
year. Twenty percent of the gap was closed in 1994, the first year of locality pay, as
authorized by FEPCA. An additional 10% of the gap was to be closed each year
thereafter, meaning that 30% of the gap was to be closed in 1995, 40% in 1996, 50%
in 1997, 60% in 1998, 70% in 1999, 80% in 2000, and 90% in 2001. By January
2002, and continuing each year thereafter, FEPCA specified that amounts payable
could not be less than the full amount necessary to reduce the pay disparity of the
target gap to 5%. In each of the years since 1994, the locality pay increase has been
implemented at a much lower percentage than the law requires. As a result, the gap
is being reduced slowly; 23.5% of the gap was closed in 1995, 25.9% in 1996, 28.3%
in 1997, 29.2% in 1998, 31% in 1999, 33.5% in 2000, 38.1% in 2001, 42.3% in
2002, 44% in 2003, 53.7% in 2004, and 58.84% in 2005.16 These percentages
represent the gap as recalculated after each adjustment.
14 (...continued)
classified; (4) for supervisory occupations, the highest level of work supervised be graded
and the grade level be adjusted based on the level of supervision, instead of grading the
supervisory job itself; and (5) criteria be developed to identify and exclude jobs that would
be classified above GS-15 in government. (Memorandum for the President’s Pay Agent
from the Federal Salary Council, Level of Comparability Payments for January 2001 and
Other Matters Pertaining to the Locality Pay Program [Washington: Oct. 22, 1999], p. 8.)
Each of the recommendations has been implemented, and the full effect of the changes will
be seen gradually.
15 For the January 2004 locality payments, equal weights of 50% were applied to the NCS
and OCSP results. For January 2005, weights of 75% and 25% were applied to the NCS and
OCSP results, respectively. The Federal Salary Council recommends that weights of 90%
NCS and 10% OCSP be applied for January 2006.
16 If the January 2006 locality pay adjustment is an average 1.0%, 62.75% of the average
target gap will be closed in 2006.

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Evaluating Areas in the Vicinity of Locality Pay Areas. To evaluate
areas currently in the “Rest of the United States” pay area for possible inclusion in
adjacent locality pay areas, the following criteria17 apply:
For adjacent Metropolitan Statistical Areas (MSAs) and Combined
Statistical Areas (CSAs): To be included in an adjacent locality pay area, an
adjacent MSA or CSA currently in the RUS locality pay area must have at least
1,500 GS employees and an employment interchange measure18 of at least 7.5%.
For adjacent counties that are not part of a multi-county MSA or CSA: To
be included in an adjacent locality pay area, an adjacent county that is currently
in the RUS locality pay area must have at least 400 GS employees and an
employment interchange measure of at least 7.5%.
For federal facilities that cross locality pay area boundaries: To be included
in an adjacent locality pay area, that portion of a federal facility outside of a
higher-paying locality pay area must have at least 750 GS employees; the duty
stations of the majority of these employees must be within 10 miles of the
separate locality pay area; and a significant number of these employees must
commute to work from the higher-paying locality pay area.19
For counties currently included in an MSA-based locality pay area that
would be excluded under the new MSA and CSA definitions: To continue
to be included in the locality pay area, any county (or portion of a county in the
case of York County, ME, where the full county was never in the adjacent
locality pay area), must have an employment interchange rate of at least 15%.
Areas already included in a locality pay area through an application of the
criteria are not subject to further review.
17 Report on Locality-Based Comparability Payments for the General Schedule, Annual
Report of the President’s Pay Agent (Washington, Dec. 2003), p. 19.
18 The council recommended that commuting rates be calculated using the employment
interchange measure, which is defined by the Census as “A measure of the ties between two
adjacent entities.” It is “the sum of the percentage of employed residents of the smaller
entity who work in the larger entity and the percentage of the employment in the smaller
entity that is accounted for by workers who reside in the larger entity.” (Memorandum for
the President’s Pay Agent from the Federal Salary Council, Level of Comparability
Payments for January 2005 and Other Matters Pertaining to the Locality Pay Program,
Washington, DC: Oct. 28, 2003, p. 7. [Hereafter referred to as Federal Salary Council
Memorandum for January 2005.])
19 The Federal Salary Council, in its October 21, 2005 memorandum to the Pay Agent on the
January 2007 locality payments, recommends that this criteria be revised to also include the
requirement that “To be included in an adjacent locality pay area, the whole facility must
have at least 500 GS employees, with the majority of those employees in the higher-paying
locality pay area....” The remainder of the existing criteria text would stay the same.
(Memorandum for the President’s Pay Agent from the Federal Salary Council, Level of
Comparability Payments for January 2007 and Other Matters Pertaining to the Locality
Pay Program, Washington, DC: Oct. 21, 2005, p. 5. [Hereafter referred to as Federal Salary
Council Memorandum for January 2007.])

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Requests for Changes in Locality Pay Area Boundaries. To be
considered by the council, requests for changes in the boundaries of locality pay areas
must include the following information:
! Credentials of the requesting group that establish how the group
represents GS employees in the area.
! Identification of the geographic area covered by the proposal.
! The number of GS employees in the area, by agency.
! A detailed explanation of why the area should be added to the
adjacent locality pay area.
! Current job vacancy rates in the area for GS positions.
! Documentation of recruitment or retention problems for GS
employees in the area.
! Documentation that agencies have tried other pay flexibilities,
including requests for special salary rates and use of recruitment,
retention, and relocation payments, and that these flexibilities did
not solve recruitment and retention problems.
! An indication that the headquarters of affected agencies know about
and support the request.
! Distance measures, by road, between the requesting area and the
locality pay area.
! A summary of transportation facilities linking the requesting area
and the locality pay area, including commuter rail or other mass
transit facilities.
! Agency organizational relationships between activities covered by
the proposal and activities in another locality pay area.20
Recommendations by the President and Congress
The President usually includes a proposal on the federal civilian pay adjustment
in the Budget of the United States issued in February of each year. The pay
adjustment is considered annually by Congress, which may legislate an adjustment
that is different from the one recommended by the President or that might be
authorized by the President in an alternative plan. The January 1999, January 2000,
and January 2002 through January 2006 overall pay adjustment amounts were set by
20 Federal Salary Council Memorandum for January 2005, p. 10.

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Congress.21 Any congressional recommendation on the pay adjustment has usually
been included in the appropriations bill that funds the Department of the Treasury
and General Government. In the 109th Congress, this measure is known as the
Department of Transportation, Treasury, Housing and Urban Development, the
Judiciary, the District of Columbia, and Independent Agencies Appropriations Bill.
January 2006 Pay Adjustment
Federal white-collar civilian employees, including those in the Department of
Homeland Security and the Department of Defense, will receive an average 3.1% pay
adjustment in January 2006, as authorized in the conference report accompanying the
Transportation, Treasury, Housing and Urban Development, the Judiciary, the
District of Columbia, and Independent Agencies Appropriations Bill for FY2006
(H.R. 3058) agreed to by the House of Representatives and the Senate.22 Once the
President signs H.R. 3058, he must issue an Executive Order (by early January 2006)
allocating the adjustment between annual and locality pay. (A 3.1% pay adjustment
for the uniformed military is included in the National Defense Authorization Act for
FY2006 [H.R. 1815, S. 1042].)
The Office of Management and Budget’s (OMB’s) statement of administration
policy on the House version of H.R. 3058 expressed strong opposition to the
government-wide pay adjustment provision and stated that recruitment or retention
problems “are limited to a few areas and occupations.” Similarly, the statement on
the Senate version of the legislation reflected strong opposition to any provision
providing a government-wide pay adjustment in excess of the 2.3% recommended
by the President in the FY2006 budget.23 The American Federation of Government
21 P.L. 105-277, P.L. 106-58, P.L. 107- 67, P.L. 108-7, P.L. 108-199, P.L. 108-447, and the
conference report (H.Rept. 109-307) accompanying H.R. 3058 (109th Congress),
respectively, provided the pay adjustments but reserved to the President the decision as to
how the increases would be allocated between the annual and locality pay adjustments.
22 H.R. 3058 passed the House of Representatives on June 30, 2005, on a 405-18 (Roll No.
358) vote and the Senate on October 20, 2005, on a 93-1 (No. 264) vote. The House of
Representatives agreed to the conference report (H.Rept. 109-307) by a 392-31 (Roll No.
605) vote on November 18, 2005. Under a unanimous consent agreement the same day, the
Senate agreed to the adoption of the conference report upon the Senate’s receipt of it from
the House and notwithstanding the adjournment of the Senate. The 3.1% pay adjustment
is included at Section 943 of the House-passed bill, Section 836 of the Senate-passed bill,
and Section 843 of the conference report. U.S. Congress, Conference Committees, 2005,
Making Appropriations for the Departments of Transportation, Treasury, and Housing and
Urban Development, the Judiciary, District of Columbia, and Independent Agencies for the
Fiscal Year Ending September 30, 2006, and For Other Purposes, conference report to
accompany H.R. 3058, 109th Cong., 1st sess., H.Rept. 109-307 (Washington, DC: GPO,
2005).
23 U.S. Executive Office of the President, Office of Management and Budget, Statement of
Administration Policy, H.R. 3058 — Transportation, Treasury, Housing and Urban
Development, the Judiciary, and the District of Columbia Appropriations Bill, FY2006, June
29, 2005, p. 4. U.S. Executive Office of the President, Office of Management and Budget,
(continued...)

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Employees (AFGE) and the National Treasury Employees Union (NTEU) issued
statements supporting a 3.1% pay adjustment.24
The Federal Salary Council included a recommendation on the allocation of the
3.1% pay adjustment in its memorandum to the Pay Agent on the January 2007
locality payments.25 The council proposed that the increase be divided as 2.1%
annual (as required by the Employment Cost Index) and 1.0% locality. Table 2
shows the January 2006 recommended locality payments, the authorized locality
payments, and the net annual and locality pay increase if a 3.1% pay adjustment is
allocated and the Pay Agent (through its annual report to the President, expected in
December 2005) and the President (through the Executive Order) endorse this
allocation.
A provision to deny federal civilian employees a pay adjustment in January
2006 is included in legislation currently pending in the 109th Congress. S. 1928, the
SMART Act, was introduced by Senator John Ensign on October 27, 2005, and was
referred to the Senate Committee on Homeland Security and Governmental Affairs.26
The provision would not affect a pay adjustment for federal law enforcement officers
(LEOs) who are considered LEOs for retirement purposes. No further action has
occurred on the bill, which identifies the pay freeze as one of several spending
reductions designed to offset the cost of rebuilding the Gulf Region in the aftermath
of Hurricanes Katrina and Rita.
If the annual and locality-based comparability payments had been granted as
required by FEPCA, the average net pay increase nationwide in January 2006 would
have been 6.93%.
January 2007 Pay Adjustment
Annual Pay Adjustment. Recent ECI data indicate that the annual across-
the-board pay adjustment in January 2007 should be 1.7%. This figure reflects the
September 2004 to September 2005 change in private-sector wages and salaries of
2.2%, minus 0.5%.27
23 (...continued)
Statement of Administration Policy, H.R. 3058 — Transportation, Treasury, Judiciary,
HUD, and Related Agencies Appropriations Bill, FY2006, Oct. 19, 2005, p. 3.
24 “AFGE Applauds Senate Bill’s Pay Parity Inclusion,” Oct. 21, 2005
([http://www.afge.org]) and “Senate Approves Funding Bill With Pay Parity Provision,”
Oct. 21, 2005 ([http://www.nteu.org]).
25 Federal Salary Council Memorandum for January 2007, Attachment 2.
26 The cosponsors of the bill are Senators Sam Brownback, Tom Coburn, John Cornyn, Jim
DeMint, Lindsey Graham, John McCain, and John Sununu.
27 U.S. Department of Labor, Bureau of Labor Statistics, Employment Cost Index —
September 20053 (Washington, DC: Oct. 28, 2005), pp. 2, 14.

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CRS-10
Locality-Based Comparability Payments. The Federal Salary Council
reported that as of March 2005, the overall gap between GS average salaries
(excluding existing locality payments, special rates, and certain other payments) and
nonfederal average salaries was 30.36%.28 The amount needed to reduce this
disparity to 5%, as mandated by FEPCA, averages 24.15% for 2007.29 To meet the
target for closing the pay gap, the council recommends locality pay raises ranging
from 14.10% in the “Rest of the United States” (RUS) pay area to 49.65% in the San
Jose-San Francisco pay area. The payment recommended for the Washington, DC,
pay area is 31.36%. Because the new locality rate replaces the existing locality rate,
the change in locality rates is derived by comparing 2006 locality payments with
those recommended for 2007. This comparison, which will enable the net (annual
and locality) pay adjustment for January 2007 to be calculated, can be made once the
pay adjustment for January 2006 is finalized. Table 3 shows the council’s
recommended locality payments for January 2007.
The council recommends that the 32 locality pay areas recommended for 2006
continue in 2007. The Kansas City, Orlando, and St. Louis pay areas were
recommended to become part of the “Rest of the United States” pay area in 2006
because the pay gaps in these areas are below that in RUS and, therefore, should
receive the same adjustment as RUS.30 The Pay Agent endorsed this
recommendation and OPM published proposed regulations in the Federal Register
on June 20, 2005, to implement this change.31 The resources previously used to
conduct surveys in Kansas City, Orlando, and St. Louis were to be used to carry out
surveys “in as many of the following locations as possible”: Phoenix-Mesa-
Scottsdale, AZ MSA; Memphis, TN-MS-AR MSA; Austin-Round Rock, TX MSA;
Louisville-Elizabethtown-Scottsberg, KY-IN CSA; Buffalo-Cheektowaga-
Tonawanda, NY MSA; and Raleigh-Durham-Cary, NC CSA.32 Based on Bureau of
Labor Statistics data available to the Federal Salary Council, the council recommends
that implementation of the new locality pay areas for Buffalo, Phoenix, and Raleigh
28 The calculation of the overall average pay gap excludes the locality payments made in
2005. The average locality rate paid in 2005 was 14.99%; the overall average pay gap in
2005 was 13.37%.
29 Federal Salary Council Memorandum for January 2007, p. 3.
30 Under the methodology that has been used since locality pay was first implemented in
1994, areas with little data available in BLS surveys and pay gaps that were two-tenths of
a percentage point (0.2%) or more below RUS or below the RUS pay area for three surveys
were to be dropped as surveyed discrete pay areas, and the resources used to conduct these
surveys were to be redirected to survey new locations.
31 U.S. Office of Personnel Management, “General Schedule Locality Pay Areas,” Federal
Register, vol. 70, no. 117, June 20, 2005, pp. 35383-35385. The proposed regulations also
would add Fannin County to the Dallas, TX, locality pay area because the Office of
Management and Budget revised the Dallas Combined Statistical Area (CSA); make a minor
change in the description of the Los Angeles, CA, locality pay area; and note that Culpeper
County, VA, is part of the Washington, DC-Baltimore, MD, CSA and therefore part of the
Washington/Baltimore locality pay area proper and no longer an area of application.
32 Federal Salary Council Memorandum for January 2005, pp. 3-4.

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CRS-11
be completed, but that Austin, Louisville, and Memphis should not be made separate
locality pay areas at this time.33
The Pay Agent’s consideration of the council’s recommendations is to be
discussed in its annual report to the President on the 2005 locality payments,
expected to be released in December 2005.
Changes in the Pay Adjustment Process Advocated
The methodology for setting federal pay adjustments has been questioned since
shortly after FEPCA’s enactment. For example, in 1993, a draft memorandum from
the Pay Agent to the Federal Salary Council concluded that “the current methodology
is flawed because the completeness of the data varies greatly among survey areas,
because the gaps are not credible in light of other labor market indicators, and
because the single percentage adjustment for all jobs in a locality is a poor reflection
of market realities.”34 A white paper on compensation issued by OPM in April 2002
reviewed current policies and the need for more flexibility in setting General
Schedule pay, but it did not include any recommendations.35 In forwarding
recommendations to the President on locality pay, the Pay Agent stated in December
2003 that although it supported updating the boundaries of locality pay areas, such
changes were “an interim measure, pending fundamental reforms in the Federal
white-collar pay system.” The Agent expressed “serious concerns about the utility of
a process that requires a single percentage adjustment in the pay of all white-collar
civilian Federal employees in each locality pay area without regard to the differing
labor markets for major occupational groups or the performance of individual
employees.”36
The Senate Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia of the Committee on Governmental
Affairs conducted a hearing to examine the progress made in implementing human
capital flexibilities on July 20, 2004. Testifying before the subcommittee, OMB’s
Deputy Director for Management, Clay Johnson III, identified pay increases targeted
to meet specific recruitment or retention needs as an eventuality for the federal
workforce. According to Mr. Johnson,
Today, we have targeted, not widespread, recruitment and retention problems in
our civilian workforce, and pay surveys reveal that we are currently overpaying
employees in some occupational groups in some locations.... [W]e certainly
should not grant all civilian employees the same increase no matter what the need
33 Federal Salary Council Memorandum for 2007, p. 4.
34 Draft memorandum from the President’s Pay Agent to Anthony F. Ingrassia, Acting
Chairman, Federal Salary Council (Mar. 1993).
35 U.S. Office of Personnel Management, A White Paper; A Fresh Start for Federal Pay:
The Case for Modernization (Washington, DC: OPM, April 2002).
36 Report on Locality-Based Comparability Payments for the General Schedule, Annual
Report of the President’s Pay Agent (Washington, DC: Dec. 2003), cover letter.

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CRS-12
because that wouldn’t be focusing on the desired result: that would be providing
too small an increase where we do have recruitment and retention problems, and
too large an increase where we do not have a problem.37
In August 2004, the Coalition for Effective Change38 released a paper that
strongly endorsed implementation of a pay-for-performance system in the federal
government. The group identified several factors as essential to establishing such a
system, including that it be flexible, reviewable, periodically evaluated and adjusted,
and adequately funded.39 Implementation of new personnel systems at the
Department of Homeland Security (DHS) and the Department of Defense (DOD) is
underway, with the publication of final regulations in the Federal Register.40
Changes to the pay adjustment process are anticipated. The regulations state that
implementing directives (DHS) and issuances (DOD) will be forthcoming and will
provide details on the changes and how they will be implemented. Annual, locality-
based, and performance-based pay adjustments for employees who meet or exceed
their performance expectations may be components of the new compensation
systems. Reform of the federal government’s pay and performance management
systems is identified as a top priority in a report entitled “OPM’s Guiding Principles
for Civil Service Transformation.” The report advocates government-wide legislation
that provides personnel flexibilities similar to those provided to DHS and DOD to
other executive branch agencies. Replacing the 15 grades of the General Schedule
with broad pay bands encompassing ranges of pay rates and basing pay adjustments
on performance expectations met and exceeded rather than time in service
requirements fulfilled are among the flexibilities mentioned in the report.41
OMB released a draft legislative proposal, the Working For America Act, in
mid-July 2005 and circulated it among Members of Congress and staff, the executive
37 U.S. Congress, Senate Committee on Governmental Affairs, Subcommittee on Oversight
of Government Management, the Federal Workforce, and the District of Columbia, Building
the 21st Century Federal Workforce: Assessing Progress in Human Capital Management,
hearing, 108th Cong., 2nd sess., July 24, 2004 (Washington, DC: GPO, 2004), p. 39.
38 The coalition includes the American Foreign Service Association, Blacks in Government,
Executive Women in Government, the Federal Bar Association, the Federal Librarians
Round Table, the National Association of Retired Federal Employees, the National
Academy of Public Administration, and the Senior Executives Association.
39 Coalition for Change, Linking the Pay of Federal Employees to Their Performance, Aug.
2004.
40 The Department of Homeland Security and the Department of Defense published final
regulations on their new personnel systems in the Federal Register on Feb. 1, 2005, and
November 1, 2005, respectively. See U.S. Department of Homeland Security and U.S.
Office of Personnel Management, “Department of Homeland Security Human Resources
Management System,” Federal Register, vol. 70, no. 20, Feb. 1, 2005, pp. 5271-5347, and
U.S. Department of Defense and U.S. Office of Personnel Management, “Department of
Defense Human Resources Management and Labor Relations Systems: Final Rule,” Federal
Register, vol. 70, no. 210, Nov. 1, 2005, pp. 66115-66220.
41 U.S. Office of Personnel Management, OPM’s Guiding Principles for Civil Service
Transformation, (Washington, 2004), p. 6.

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CRS-13
branch departments and agencies, and other interested parties.42 The draft bill would
change the process for adjusting federal pay by providing
! a national increase that would vary by occupational group and pay
band and would be based on national labor market rates for
employees whose performance is “fully successful” or better;
! a locality increase that would vary by occupational group, pay band,
and location and would be based on local labor market rates for
employees whose performance is “fully successful” or better; and
! performance increases based on an employee’s rating level within a
pay pool funded with monies that would have been used for step
increases, quality step increases, and promotions.
Details on how such changes would be implemented were not included with the
draft legislation, and The Working For America Act has not been introduced.
42 “President’s Management Agenda, Working for America Act,” available at
[http://www.whitehouse.gov/results/agenda/working.html].

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CRS-14
Table 1. Annual and Locality Pay Adjustments Under FEPCA,
1991 to 2005, with January 2006 Projection
Net
Locality
Increase,
ECI-Based
Locality
Payments
Annual
Annual
Annual
Payments
Required by
and
Year
Adjustment
Adjustment
Authorized
FEPCA
Locality
Required by
Authorized
(National
(National
Pay
FEPCA
Average)
Average)
(National
Average)a
1991
—
4.1%
—
—
4.1%
1992
4.2%
4.2%
—
—
4.2%
1993
3.7%
3.7%
—
—
3.7%
1994
2.2%
0
3.95%
3.95%
3.95%
1995
2.6%
2.0%
6.44%
5.05%
3.08%
1996
2.4%
2.0%
8.58%
5.56%
2.49%
1997
2.3%
2.3%
11.29%
6.37%
3.09%
1998
2.8%
2.3%
14.30%
6.93%
2.84%
1999
3.1%
3.1%
16.95%
7.50%
3.65%
2000
3.8%
3.8%
20.62%
8.62%
4.89%
2001
2.7%
2.7%
23.12%
9.77%
3.76%
2002
3.6%
3.6%
25.92%
10.95%
4.72%
2003
3.1%
3.1%
27.59%
12.12%
4.21%
2004
2.7%
2.7%
25.71%
13.81%
4.10%
2005
2.5%
2.5%
25.51%
15.01%
3.54%
2006
2.1%
2.1%
25.85%
16.22%
3.19%
(projected)
Sources: For the ECI-required annual adjustment, see U.S. Department of Labor, Bureau of Labor Statistics,
Employment Cost Index, September of each year. For the locality payments required by FEPCA, see Report on
Locality-Based Comparability Payments for the General Schedule, Annual Report of the President’s Pay Agent,
December of each year. For the annual and locality pay adjustments authorized, see E.O. 12736, Dec. 12, 1990;
E.O. 12786, Dec. 26, 1991; E.O. 12826, Dec. 30, 1992; Presidential memorandum of Dec. 1, 1993; E.O. 12944,
Dec. 28, 1994; E.O. 12984, Dec. 28, 1995; E.O. 13033, Dec. 27, 1996; E.O. 13071, Dec. 29, 1997; E.O. 13106,
Dec. 7, 1998; E.O. 13144, Dec. 21, 1999; E.O. 13182, Dec. 23, 2000; E.O. 13249, Dec. 28, 2001; E.O. 13282,
Dec. 31, 2002, and E.O. 13291, Mar. 21, 2003; E.O. 13322, Dec. 30, 2003, and E.O. 13332, Mar. 3, 2004; and
E.O. 13368, Dec. 30, 2004.
Notes: Locality-based comparability payments began in 1994. The January 2006 projection is based on an
average 3.1% pay adjustment allocated as 2.1% annual and an average 1.0% locality-based comparability
payment. The 3.1% pay adjustment is authorized in the conference report (H.Rept. 109-307) accompanying H.R.
3058, as agreed to by the House of Representatives and the Senate.
a. The actual pay rates are calculated as follows. First, the basic General Schedule (GS) is increased by the
annual adjustment percentage, resulting in a new GS schedule. The new basic GS rates are then increased
by the locality payment. The resulting pay rates (annual + locality) are compared with the pay rates
(annual + locality) for the previous year to derive the net increase in pay for the current year. The salary
tables currently in effect for 2005 are available online at [http://www.opm.gov].

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CRS-15
Table 2. January 2006 Recommended Locality Payments,
Authorized Locality Payments, and Net Annual and Locality Pay
Increase, Based on 3.1% Pay Adjustment
Net
2006 Locality
2006
Increase in
Payments
Authorized
Annual and
Pay Areas
Recommended by
Locality
Locality
Federal Salary
Payments
Pay
Council
(Projected)
(Projected)a
Atlanta-Sandy Springs-
26.38%
15.10%
3.20%
Gainesville, GA-AL CSA
Boston-Worcester-Manchester,
31.96%
19.99%
3.39%
MA-NH CSA, plus the
Providence-New Bedford-Fall
River, RI-MA MSA, Barnstable
County, MA, and Berwick,
Eliot, Kittery, South Berwick,
and York towns in York
County, ME
Buffalo-Niagara-Cattaraugus,
21.27%
13.52%
3.75%
NY CSA
Chicago-Naperville-Michigan
31.06%
21.15%
3.34%
City, IL-IN-WI CSA
Cincinnati-Middletown-
22.16%
17.08%
3.02%
Wilmington, OH-KY-IN CSA
Cleveland-Akron-Elyria, OH
24.89%
15.41%
3.15%
CSA
Columbus-Marion-Chillicothe,
18.50%
14.85%
2.88%
OH CSA
Dallas-Fort Worth, TX CSA
28.10%
16.39%
3.27%
Dayton-Springfield-Greenville,
20.76%
13.83%
2.98%
OH CSA
Denver-Aurora-Boulder, CO
30.56%
19.49%
3.34%
CSA, plus the Ft. Collins-
Loveland, CO MSA and Weld
County, CO
Detroit-Warren-Flint, MI, CSA,
28.43%
21.00%
3.23%
plus Lenawee County, MI
Hartford-West Hartford-
38.03%
21.30%
3.62%
Willimantic, CT CSA, plus the
Springfield, MA MSA and New
London County, CT
Houston-Baytown-Huntsville,
34.16%
26.37%
3.41%
TX CSA
Huntsville-Decatur, AL CSA
19.77%
13.35%
2.94%

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CRS-16
Net
2006 Locality
2006
Increase in
Payments
Authorized
Annual and
Pay Areas
Recommended by
Locality
Locality
Federal Salary
Payments
Pay
Council
(Projected)
(Projected)a
Indianapolis-Anderson-
17.92%
12.85%
2.87%
Columbus, IN CSA, plus Grant
County, IN
Kansas City-Overland Park-
17.00%
12.52%
2.25%
Kansas City, MO-KS CSA
Los Angeles-Long Beach-
32.61%
23.18%
3.38%
Riverside, CA CSA, plus the
Santa Barbara-Santa Maria-
Goleta, CA MSA and all of
Edwards Air Force Base, CA
Miami-Fort Lauderdale-Miami
22.88%
17.84%
3.04%
Beach, FL MSA, plus Monroe
County, FL
Milwaukee-Racine-Waukesha,
23.96%
14.74%
3.11%
WI CSA
Minneapolis-St. Paul-St. Cloud,
28.22%
17.31%
3.26%
MN-WI CSA
New York-Newark-Bridgeport,
42.28%
22.97%
3.77%
NY-NJ-CT-PA CSA, plus
Monroe County, PA and
Warren County, NJ
Orlando-The Villages, FL CSA
17.00%
12.52%
2.80%
Philadelphia-Camden-Vineland,
29.33%
18.04%
3.30%
PA-NJ-DE-MD CSA, plus Kent
County, DE, Atlantic County,
NJ, and Cape May County, NJ
Phoenix-Mesa-Scottsdale, AZ
19.87%
12.65%
2.95%
MSA
Pittsburgh-New Castle, PA CSA
20.25%
13.81%
2.96%
Portland-Vancouver-Beaverton,
26.23%
17.16%
3.18%
OR-WA MSA, plus Marion
County, OR, and Polk County,
OR
Raleigh-Durham-Cary, NC CSA
24.51%
15.57%
5.62%
Richmond, VA MSA
21.27%
14.15%
3.00%
Sacramento — Arden-Arcade
29.91%
17.91%
3.33%
— Truckee, CA-NV CSA, plus
Carson City, NV
St. Louis-St. Charles-
17.00%
12.52%
2.49%
Farmington, MO-IL CSA

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CRS-17
Net
2006 Locality
2006
Increase in
Payments
Authorized
Annual and
Pay Areas
Recommended by
Locality
Locality
Federal Salary
Payments
Pay
Council
(Projected)
(Projected)a
San Diego-Carlsbad-San
32.23%
19.19%
3.41%
Marcos, CA MSA
San Jose-San Francisco-
49.01%
28.68%
3.95%
Oakland, CA CSA, plus the
Salinas, CA MSA and San
Joaquin County, CA
Seattle-Tacoma-Olympia, WA
29.88%
17.93%
3.33%
CSA
Washington-Baltimore-
32.55%
17.50%
3.44%
Northern Virginia, DC-MD-
VA-WV CSA, plus the
Hagerstown-Martinsburg, MD-
WV MSA, the York-Hanover-
Gettysburg, PA CSA, Culpeper
County, VA, and King George
County, VA
Rest of the U.S.
17.00%
12.52%
2.83%
Average
25.85%
16.22%
3.19%
Source and Notes: Memorandum for the President’s Pay Agent from the Federal Salary Council,
Level of Comparability Payments for January 2007 and Other Matters Pertaining to the Locality Pay
Program (Washington, DC: Oct. 21, 2005), Attachment 2. The component parts of each pay area
are described in U.S. Office of Management and Budget, Revised Definitions of Metropolitan
Statistical Areas, New Definitions of Micropolitan Statistical Areas and Combined Statistical Areas,
and Guidance on Uses of the Statistical Definitions of These Areas, OMB Bulletin No. 03-04, June
6, 2003.
Notes: MSA refers to a Metropolitan Statistical Area. CSA refers to a Combined Statistical Area. The
percentages shown in the columns on authorized locality payments and net increase are based on an
average 3.1% pay adjustment, allocated as 2.1% annual and an average 1.0% locality-based
comparability payment. The 3.1% pay adjustment is authorized in the conference report (H.Rept. 109-
307) accompanying H.R. 3058, as agreed to by the House of Representatives and the Senate.
a. The actual pay rates are calculated by the following means. First, the basic General Schedule (GS)
is increased by the annual adjustment percentage, resulting in a new GS schedule. These new
basic GS rates are then increased by the locality payment. The resulting pay rates (annual +
locality) are compared with the pay rates (annual + locality) for the previous year to derive the
net increase in pay for the current year.

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CRS-18
Table 3. January 2007 Recommended Locality Payments
Pay Areas
2007 Recommended Locality Payments
Atlanta-Sandy Springs-Gainesville, GA-AL CSA
25.13%
Boston-Worcester-Manchester, MA-NH CSA, plus the
Providence-New Bedford-Fall River, RI-MA MSA,
32.44%
Barnstable County, MA, and Berwick, Eliot, Kittery,
South Berwick, and York towns in York County, ME
Buffalo-Niagara-Cattaraugus, NY CSA
21.59%
Chicago-Naperville-Michigan City, IL-IN-WI CSA
29.29%
Cincinnati-Middletown-Wilmington, OH-KY-IN CSA
20.85%
Cleveland-Akron-Elyria, OH CSA
22.42%
Columbus-Marion-Chillicothe, OH CSA
16.70%
Dallas-Fort Worth, TX CSA
28.45%
Dayton-Springfield-Greenville, OH CSA
19.41%
Denver-Aurora-Boulder, CO CSA, plus the Ft.
26.19%
Collins-Loveland, CO MSA and Weld County, CO
Detroit-Warren-Flint, MI, CSA, plus Lenawee County,
27.71%
MI
Hartford-West Hartford-Willimantic, CT CSA, plus
the Springfield, MA MSA and New London County,
35.78%
CT
Houston-Baytown-Huntsville, TX CSA
29.90%
Huntsville-Decatur, AL CSA
16.57%
Indianapolis-Anderson-Columbus, IN CSA, plus Grant
14.77%
County, IN
Los Angeles-Long Beach-Riverside, CA CSA, plus
the Santa Barbara-Santa Maria-Goleta, CA MSA and
34.03%
all of Edwards Air Force Base, CA
Miami-Fort Lauderdale-Miami Beach, FL MSA, plus
23.65%
Monroe County, FL
Milwaukee-Racine-Waukesha, WI CSA
24.95%
Minneapolis-St. Paul-St. Cloud, MN-WI CSA
28.29%
New York-Newark-Bridgeport, NY-NJ-CT-PA CSA,
43.40%
plus Monroe County, PA and Warren County, NJ
Philadelphia-Camden-Vineland, PA-NJ-DE-MD CSA,
plus Kent County, DE, Atlantic County, NJ, and Cape
28.40%
May County, NJ
Phoenix-Mesa-Scottsdale, AZ MSA
19.94%
Pittsburgh-New Castle, PA CSA
18.30%
Portland-Vancouver-Beaverton, OR-WA MSA, plus
23.19%
Marion County, OR, and Polk County, OR
Raleigh-Durham-Cary, NC CSA
23.34%

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CRS-19
Pay Areas
2007 Recommended Locality Payments
Richmond, VA MSA
17.51%
Sacramento — Arden-Arcade — Truckee, CA-NV
31.65%
CSA, plus Carson City, NV
San Diego-Carlsbad-San Marcos, CA MSA
33.80%
San Jose-San Francisco-Oakland, CA CSA, plus the
49.65%
Salinas, CA MSA and San Joaquin County, CA
Seattle-Tacoma-Olympia, WA CSA
26.21%
Washington-Baltimore-Northern Virginia, DC-MD-
VA-WV CSA, plus the Hagerstown-Martinsburg, MD-
31.36%
WV MSA, the York-Hanover-Gettysburg, PA CSA,
Culpeper County, VA, and King George County, VA
Rest of the U.S. (RUS)
14.10%
Average
24.15%
Source: Memorandum for the President’s Pay Agent from the Federal Salary Council, Level of Comparability Payments
for January 2007 and Other Matters Pertaining to the Locality Pay Program (Washington, DC: Oct. 21, 2005),
Attachment 1. MSA refers to a Metropolitan Statistical Area. CSA refers to a Combined Statistical Area. The
component parts of each pay area are described in U.S. Office of Management and Budget, Revised Definitions of
Metropolitan Statistical Areas, New Definitions of Micropolitan Statistical Areas and Combined Statistical Areas, and
Guidance on Uses of the Statistical Definitions of These Areas, OMB Bulletin No. 03-04, June 6, 2003. The Kansas
City-Overland Park-Kansas City, MO-KS CSA; Orlando-The Villages, FL CSA; and St. Louis-St. Charles-Farmington,
MO-IL CSA become part of the Rest of the United States pay area in January 2006 and receive the same locality pay
adjustment as RUS.

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