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 href="http://www.myfederalretirement.com/public/569.cfm">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 href="http://www.opm.gov/oca/payrates/index.asp">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 href="http://www.opm.gov/oca/payrates/index.asp">http://www.opm.gov/oca/payrates/index.asp.