Obama proposes eliminating locality pay surveys

In his fiscal 2011 budget, President Obama has proposed ending the locality pay surveys that help determine the gap between public and private sector pay and replacing them with a new method for measuring compensation.

The administration plans to eliminate the locality pay surveys that cover 31 separate areas and the "rest of United States." Data from those surveys and the Employment Cost Index, another survey conducted by the Bureau of Labor Statistics that tracks changes in private sector compensation, help determine the president's annual recommendations about locality pay rates for federal employees. Locality pay is intended to close the gap between public and private sector pay.

Instead of those surveys, pay gaps would be determined by an economic model combining data from the Occupational Employment Statistics database and the Employment Cost Index. The administration says this combination would provide a more comprehensive view of private sector compensation. The OES data would be used to determine what people in different occupations and different areas are paid, and the ECI data would be used to sort payments by pay grades.

"This approach is more cost-effective, with no diminution in accuracy," the administration wrote in its proposal. "Another advantage is that it will allow BLS to more nimbly add new localities, if there is such a demand."

Jacqueline Simon, director of the public policy department at the American Federation of Government Employees said that while the data in the new approach would be less detailed, statistical modeling methods could compensate for the change. And she said the administration was correct that the shift could make it easier to add new locality pay areas.

"It will eliminate the argument we've had in the past that you can't expand the number of localities because there isn't a sufficient number of surveys to include them," Simon said. "That'll bring a lot of relief to several metropolitan areas that ought to be localities."

The 1990 Federal Employees Pay Comparability Act required that the President's Pay Agent -- a council made up of the Labor Secretary and the directors of the Office of Management and Budget and Office of Personnel Management -- use BLS surveys to determine locality pay. In 1996 and 1997, BLS phased in a new mechanism for those surveys that uses sampling, rather than a fixed list of occupations. The Federal Salary Council has pushed for changes to that method, but began using the new data in 2005.

The proposal to cut the locality pay surveys is part of the administration's efforts to reduce spending. Eliminating the surveys is one of a number of changes administration officials say would allow them to shrink the Bureau of Labor Statistics' budget by $8 million, from $60 million in fiscal 2010 to $52 million in 2011.