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How Does the General Schedule (GS) Pay System Work? Raises, Locality Pay and More
August 25, 2010
With recent major coverage in the national media debating if federal
employees are overpaid coupled with rising federal deficits that affect
decisions by lawmakers, many My Federal Retirement readers have
submitted questions about how the General Schedule (GS) pay system works -- with
particular concern in regard to the 2011 federal employee
pay raise.
To answer some of the most frequently asked questions, below
is a fact sheet describing the GS pay structure, promotions, annual pay
adjustments, and locality pay.
The General Schedule classification and pay system covers the majority of
civilian white-collar federal employees (about 1.3 million worldwide) in
professional, technical, administrative, and clerical positions.
GS classification standards, qualifications, pay structure, and related human
resources policies (e.g., general staffing and pay administration policies) are
administered by the U.S. Office of Personnel Management (OPM) on a
governmentwide basis. Each agency classifies its GS positions and appoints and
pays its GS employees filling those positions following statutory and OPM
guidelines.
The General Schedule has 15 grades--GS-1 (lowest) to GS-15 (highest).
Agencies establish (classify) the grade of each job based on the level of
difficulty, responsibility, and qualifications required. Individuals with a high
school diploma and no additional experience typically qualify for GS-2
positions; those with a Bachelor's degree for GS-5 positions; and those with a
Master's degree for GS-9 positions.
Each grade has 10 step rates (steps 1-10) that are each worth approximately 3
percent of the employee's salary. Within-grade step increases are based on an
acceptable level of performance and longevity (waiting periods of 1 year at
steps 1-3, 2 years at steps 4-6, and 3 years at steps 7-9). It normally takes 18
years to advance from step 1 to step 10 within a single GS grade if an employee
remains in that single grade. However, employees with outstanding (or
equivalent) performance ratings may be considered for additional, quality step
increases (maximum of one per year).
Entry Levels
A new GS employee is usually hired at step one of the applicable GS grade.
However, in special circumstances, agencies may authorize a higher step rate for
a newly-appointed federal employee based on a special need of the agency or
superior qualifications of the prospective employee. Current federal employees
who move to a GS position and are not considered newly appointed may have pay
set above step 1 based only on a previous federal civilian rate of pay (i.e.,
maximum payable rate rule) under the gaining agency's policies.
Promotions in the General Schedule
GS employees may advance to higher grades by promotion at certain intervals
(generally after at least a year), as determined by OPM regulations and
qualification standards and agency policies, up to the full promotion potential
advertised in the job announcement. After that, competition under merit system
principles is necessary to advance to a higher GS grade. Generally, a GS
promotion increase is equal to at least two steps at the GS grade immediately
before promotion to the higher GS grade.
Pay Adjustments, Locality Pay, and Special Rates
The GS base pay schedule is usually adjusted annually each January with an
across-the-board pay increase based on nationwide changes in the cost of wages
and salaries of private industry workers. Most GS employees are also entitled to
locality pay, which is a geographic-based percentage rate that reflects pay
levels for non-federal workers in certain geographic areas as determined by
surveys conducted by the U.S. Bureau of Labor Statistics. As of 2010, there are
32 locality pay areas, which cover the lower 48 States and Washington, DC, plus
Alaska, Hawaii, and the U.S. territories and possessions. Thirty-one of the
locality pay areas cover large metropolitan areas (e.g., Los Angeles, New York,
Washington, DC) while the remainder of the lower 48 States is covered by the
catch-all Rest of U.S. (RUS) locality pay area. GS employees in foreign areas
are not eligible for locality pay. The President and Congress may make changes
in the otherwise applicable across-the-board and locality pay adjustments. The
full list of locality pay area definitions can be found at http://www.opm.gov/oca/payrates/index.asp
Because of serious difficulties in staffing certain occupations at GS grade
levels in certain geographic areas, OPM may approve special rates which are
higher than the normal GS rates. For specific GS pay schedules, please see http://www.opm.gov/oca/payrates/index.asp.
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