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REPORT TO CONGRESS

SALINAS-MONTEREY, CALIFORNIA, FEDERAL WAGE SYSTEM WAGE AREA

I. Executive Summary

House Report 107-152 accompanying H.R. 2590 (enacted as Public Law 107-67, November 12, 2001) directed the Office of Personnel Management (OPM) to report on its intention concerning the geographic wage area definition of the Salinas-Monterey Federal Wage System (FWS) wage area. This report presents OPM's findings and recommendations concerning the definition of the Salinas-Monterey FWS wage area.

The FWS is a pay system that now covers about 206,000 trade, craft, and laboring employees who are paid from appropriated funds. About 420 FWS employees work in the Salinas-Monterey wage area. The goal of the FWS is to set pay rates for blue-collar Federal workers in line with local private sector labor market rates. By law, OPM defines the boundaries of FWS wage areas after consulting with the Federal Prevailing Rate Advisory Committee (FPRAC), the national labor-management committee responsible for advising OPM on matters affecting the determination of prevailing rates for blue-collar Federal employees. OPM initiates a system-wide review of FWS wage area boundaries at FPRAC every 10 years. However, any of the committee members may introduce a proposal to review the boundaries of a wage area at any time.

Each of the 132 separate FWS wage areas has a local wage survey committee that conducts local wage surveys and makes recommendations to the Department of Defense (DOD) on matters relating to the conduct of surveys in the wage area. The Local Wage Survey Committee for the Salinas-Monterey wage area recommended that OPM abolish the Salinas-Monterey wage area. We understand this recommendation is based in part on the fact that Monterey County is included as an "area of application" to the San Francisco-Oakland-San Jose, California, General Schedule (GS) locality pay area.

Different statutory authorities provide separate policies, principles, and criteria for defining FWS local wage area and GS locality pay area boundaries. Based on the advice of FPRAC, OPM has well-established regulatory criteria for defining FWS wage area boundaries on a consistent, system-wide basis. These criteria allow for reasonable flexibility, but also ensure that OPM is able to maintain an equitable, market-based pay system for blue-collar Federal employees. OPM's analysis of the criteria for defining FWS wage area boundaries indicates that the Government can best determine local prevailing rates for FWS employees in Monterey and San Benito Counties by maintaining a separate Salinas-Monterey wage area. OPM's next study of the definition of the Salinas-Monterey wage area will take place when we receive new census data next year.

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