Human Capital:

Locality Pay for Federal Employees

T-GGD-89-27: Published: Jun 26, 1989. Publicly Released: Jun 26, 1989.

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GAO discussed locality pay for federal employees. GAO found that: (1) although the federal government set federal pay rates to ensure that it would pay federal employees fairly, the uniform general schedule pay system did not equitably compensate employees doing the same work in different locations; (2) differences in private-sector pay rates for certain occupations across localities resulted in differences in the degree to which the federal government was competitive in local job markets; (3) cost-of-living-based locality pay would equalize employee purchasing power throughout the country and adjust pay for all federal white-collar employees in specified areas, while labor-market-based locality pay would keep the federal government competitive with other employers and provide pay adjustments for employees in occupations where federal pay was lower than in the private sector; (4) development of reliable measures of cost-of-living differences among localities created a problem in establishing a cost-of-living-based locality pay system; (5) the largest single determinant to a cost-of-living pay system was housing; and (6) because of wide variations in the average rates of pay for the same occupation in the private sector, the government could achieve locality pay through a slower increase in pay in the appropriate areas until establishment of proper pay differentials.

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