Locality Pay

Locality pay

Many consumers enjoy similar prices from one store to another within the areas they live in. When travelling a bit further outside that region, prices have a tendency to vary, sometimes to wide degrees. From harder to reach locations in Alaska to areas with a dense population in New York, the cost of goods and services can sometimes be considerably higher than other locations within the United States. When such a wide degree in the cost of living exists, should a locality pay adjustment be introduced to employees’ wages?

Wages of many postal employees are currently determined by position and years of service. An individual could move from one of the least expensive places to live to one of the most in the same position, and wages would remain unaffected. This could potentially limit access to new employees in areas where comparable positions at other organizations are offering a rate of pay commensurate with the cost of living in that area.

When a sizeable disparity exists between the wages offered by one business and competing companies seeking employees, a locality pay component could be introduced into a pay scale to make wages more appealing to potential applicants. This would have the effect of equalizing an employer’s job offer to make it a more attractive alternative to the competition.

Introducing a locality pay component to wages isn’t for every organization as there are often many factors to consider in such a proposal. Engaging in meaningful discussion toward competitive practices, however, could help transform limited interest in a position into a highly satisfied candidate.

What do you think about introducing a locality pay component to federal employee wages?

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6 Comments

  1. Anonymous

     /  June 11, 2014

    The Postal Service is the only “government” entity that does not offer location pay. The Postal Service should have locality pay because it’s more expensive to live in some places than others. I can not apply for other positions in the Postal Service in other areas because we do not have the locality pay. It would be like taking a 20-30% cut my salary. I believe the Postal Service should offer locality pay.

  2. grannybunny

     /  June 11, 2014

    It’s my understanding that something akin to locality pay has already been instituted in North Dakota, where the oil boom has caused wages to skyrocket, and the rapid growth in population — chasing the boom — has caused a major housing shortage and a crisis in mail delivery.

  3. Anonymous

     /  June 12, 2014

    Do private businesses offer locality pay?

  4. Anonymous

     /  June 12, 2014

    Yes, in answer to the previous question. My son-in-law worked in Austin, Texas and his company offered to double his salary to send him to California, same position. Other private businesses offer a better package to get someone to move to a more expensive city. Actually most private businesses pick up all your expenses when you transfer to another position in another location regardless of the position.

  5. Anonymous

     /  June 12, 2014

    Would this work in the opposite direction? Could my pay get cut if I move?

    • grannybunny

       /  June 12, 2014

      I would think that if one moved from a location with locality pay to one without it, they would no longer receive the locality pay, which is not salary for the work itself, but simply an offset against the higher cost of living.

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