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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

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