What can I do if our office is closed and moved to a lower locality pay area just to save money?

Question

Our federal agency is looking to cut spending wherever possible. One thing they’re looking at is moving two of our offices from their current locations to areas that have a much lower “locality pay”. If this happens, is there anything the employees can do to fight the 10% or so pay cut they will be taking by being forced to move to another location?

Answer 1

First things first, get yourself a Federal Employees Almanac. A new one is issued every year which explains in detail every rule that applies to federal employees. They are typically 350 pages long and written in small print. One can be purchased here.

http://www.federaldaily.com/2007fea/

To answer your question; no, you can't do anything about it. Locality pay is considered separate from your regular rate of pay except when calculating your benefits. Ideally, the change in locality pay should not adversely affect you because the cost-of-living in the new location will be lower. The only real concern is how it would affect you if you are enrolled in the TSP plan.

If you are close to retirement, the change in pay should not adversely affect your TSP since it is based on your "high three". If you are not close to retirement, I would consider applying for another job within the federal government at another location that has a higher locality pay so as to continue increasing your "high three".

In the latter case, be aware that the federally government is considering switching to a "high five" instead of a "high three" to calculate retirement benefits. This is anticipated to save the federal government upwards of $5 billion.

Answer 2

You have basically two alternatives.

1. Stick with your current salary (total amount, regardless of how it's calculated) and see if they'll keep you at the new location.
2. Go with the new calculation method and take the (assumed) pay cut.

If you choose to try to keep the current pay level, your company may terminate your employment. Alternatively, you may be able to obtain a transfer to another area where your pay scale would remain the same ... but don't hold your breath. As an added 'bonus', it might not be anywhere close to where you currently reside/work ... which would entail moving, probably at your own expense, just to keep the income level.

If you choose to move to the new location and take the cut, then you'll get most of it back within a few years, as salaries climb based on seniority, etc. If you really like the job (and the new location isn't too far away), you might not even have to change residences.

The reason they're moving to the 'cheaper' area is that there are people willing to work for less. If you fight it, you're likely to be on the end that gets left behind - rather than having a paying job and a good benefits package. Ultimately, it will be your choice ... but the chances of landing another job in industry at the federal wage rate (and benefits) is slim in most areas of the country.

Answer 3

Your mortgage is probably getting the best interest rate so leave it be... I would do 2 things... pay off some of the high interest ccards if that is what your other debt is and save a little for the move. This is why!!! If you don't save some for the move you'll probably end up putting moving expenses on a ccard so your back to where you started. Next, paying off some of the other debts will help your payment to debt ratio which will in turn help you get the better interest rate when buying the new home when you relocate... hope this helps... good luck!!!

Answer 4

Check with your state labor and wage office. It all depends on the local laws.

Answer 5

Welcome to the corporate work place. My job was outsourced to Manila, Mexico City, India and El Salvador. This put 561 people out of work.

We all have our problems.