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How Are 2024 GS Pay Scales with Locality Calculated?

Pay & Benefits

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4 min Category: Pay & Benefits

The end of the calendar year means possible General Schedule (GS) Pay Scales changes for the Federal workforce.  Here’s an in-depth look at the essential details to help you navigate the proposed changes for 2024, empowering you to make informed decisions for your financial future. 

Will the GS Pay Scales Increase in 2024?

The White House formalized their proposal for a substantial 5.2% total average increase in Federal wages on August 31, 2023. This percentage is comprised of a 4.7% across-the-board increase, with an average locality pay increase of 0.5%. This pay raise will take effect on January 1, 2024, unless Congress enacts an alternate plan. 

The proposed 5.2% average increase would mark the largest boost to Federal wages since 1980 when the Carter administration passed a 9.1% increase. Federal employees received a 4.6% total average increase in 2023, which was then the largest pay raise for Feds in 20 years. 

Changes to the GS Pay Scales in 2024

In addition to the wage increase, 2024 will see four new locality pay areas, established by OPM. This change will also take effect in January and nearly 33,000 Federal employees in these areas will see a slightly higher raise as a result. The new locality pay areas are: 

  • Fresno-Madera-Hanford, California 
  • Reno-Fernley, Nevada 
  • Rochester-Batavia-Seneca Falls, New York 

How Are GS Pay Scales Calculated?

The United States Office of Personnel Management (OPM) uses three factors to calculate GS pay scales. This system applies to most Civilian Feds under the General Schedule, unlike those who are paid under the Executive and Senior Level Pay Tables.

Factor 1: GS Pay Grade

The GS Pay Grade system includes 15 categories of pay ranges. GS-1 is the lowest, and GS-15 is the highest. Jobs are assigned to a grade based on the level of responsibility, requirements, and other factors. For example, a position that requires a high school diploma but no experience in that field may be a GS-2 position. A position that requires a master’s degree is usually a GS-9.

Factor 2: GS Pay Step System

The GS Pay Step system divides each pay grade into 10 steps. Each step is worth about 3% of the employee’s salary, so the higher the step, the higher the salary. When an employee gets a promotion or reaches a new level of seniority, they move to a higher step. In general, it takes 18 years to move from the lowest to the highest step within a single grade.

Factor 3: Locality

Locality relates to the region where the employee works. This factor adjusts the base rate of pay for the cost of living in a geographic area. While each position is assigned to a specific grade, and each employee is assigned to a step within that grade, the pay rate will vary by location. This way, the system accommodates the needs of workers in more expensive areas, such as California or major metropolitan areas.

While the system may seem complicated, these three factors help address the most fundamental questions involved in compensating a workforce:

  • The differences between positions in terms of responsibilities, difficulties, requirements, etc.
  • The need to compensate long-term workers for their service.
  • The cost-of-living differences when the workforce is located all over the country.

How Is the Locality Adjustment Calculated?

Of the three determining factors, locality adjustments can be the most complicated to predict. The amount of the adjustment is calculated as a percentage rate based on data from the United States Bureau of Labor Statistics Annual National Compensation Survey. The tool gathers data on compensation from government and non-government sectors in locations all over the country. This information is then compared to the base pay of federal employees in similar positions to calculate the locality pay adjustment factor.

The Office of Management and Budget (OMB) currently has 53 locality areas for OPM to use in setting locality adjustments for all 50 states and all United States territories and possessions. OMB uses defined Metropolitan Statistical Areas and Combined Statistical Areas for this purpose. Hawaii and Alaska have their own pay scales, and 51 other locality areas center on major metropolitan areas. Locations inside the continental United States that don’t fall into an established locality area are grouped as “Rest of United States.”

Year over year, OPM recommends changes as needed. The President recommends wholesale adjustments to the pay scales, and they are then approved by Congress each year. Federal employees in foreign locations are not subject to this locality adjustment system.

How Can I Use the Locality Pay Adjustment Factor Information?

Civilian Feds often earn more because of the locality pay adjustment factor. You can find the adjustment rate for your locality by visiting the locality area pay definitions published by OPM. This tool is also useful if you’re considering applying for a similar position in a different part of the country; you can estimate how much higher or lower the pay might be in a new location.

One of the most important reasons to thoroughly understand your current and future compensation is to calculate your family’s insurance and benefits needs. WAEPA (Worldwide Assurance for Employees of Public Agencies) offers handy calculators to help you determine how much life insurance coverage you should consider to help protect your family’s peace of mind.

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