How do locality pay and cost-of-living adjustments affect GS versus contractor salary competitiveness in 2025 hotspots (e.g., NCR, San Diego, Norfolk)?
Executive summary
Locality pay in 2025 adds a large, fixed percentage to GS base pay — locality ranges from about 17.06% to 46.34% and San Diego’s locality is 33.72% for 2025 — while GS base pay itself rose about 1.7% (OPM) or 1.7–2% depending on reporting [1] [2] [3]. Market contractor pay estimates vary widely by data source and city: national contractor averages in 2025 range from roughly $63k (PayScale) to ~$91k (ZipRecruiter) and Washington, D.C. contractors average ~$93k [4] [5] [6]. These gaps — fixed GS locality boosts versus volatile market contractor wages and regional cost pressures such as San Diego housing — shape competitiveness in hotspots [2] [3] [7].
1. How locality pay mechanically changes GS competitiveness
Locality pay is a statutory percentage added to a GS employee’s scheduled rate; the 2025 Federal Register lists locality percentages from 17.06% up to 46.34% and the OPM tables and GS pay tables apply those percentages to the base GS salary [2] [1]. Locality is therefore a predictable, non-negotiable premium tied to place: for example, San Diego’s 2025 locality adjustment is 33.72%, which materially raises a GS worker’s take‑home relative to the national GS base [3] [1]. That predictability creates a baseline floor for federal pay in expensive metro areas that private contractors must beat to recruit experienced GS-level talent.
2. Contractors: market variability, not locality guarantees
Private-sector contractor pay is market-driven and shows wide dispersion across sources and cities. PayScale reports an average government-contractor salary around $63,139 in 2025, while ZipRecruiter and Comparably list national averages near $90k and ~$74k respectively; Glassdoor/industry sites show different contractor and general-contractor ranges too [4] [5] [6]. Those differences reflect sampling, occupational definitions, and geography: contractors in Washington, D.C. and tech hubs routinely report above‑average pay, whereas national aggregates pull median and entry-level data downward [6] [8]. Contractors can outpay GS roles in peaks, but pay is inconsistent and frequently tied to specific skill scarcity.
3. Cost-of-living pressure in hotspots shifts the calculus
High local costs — especially housing — push required market pay higher in places like San Diego. Multiple cost indexes put San Diego well above national averages (examples: 15%–46% higher depending on source), and local CPI inflation and rent caps show pressure on living costs through 2025 [7] [9] [10]. Where locality covers a significant percentage (San Diego’s 33.72%), GS employees maintain purchasing power more reliably; contractors may offer higher nominal salaries, but those offers must be read against local rent, transportation and CPI trends [3] [7] [11].
4. Practical comparisons in three hotspots: NCR, San Diego, Norfolk
- NCR/Washington, D.C.: D.C.-area contractors report averages near $93k — about 26% above national contractor averages in one source — while D.C. locality pay is among the highest in OPM tables, creating strong public-sector competitiveness in total cash [6] [12].
- San Diego: GS locality 2025 = 33.72% boosts many GS grades significantly; local contractor pay must clear that plus account for housing costs that multiple cost-of-living sources mark 15–46% above U.S. norms [3] [7] [9].
- Norfolk: available sources do not list a specific 2025 locality percentage or contractor averages for Norfolk in the provided set; available sources do not mention Norfolk contractor pay explicitly [13] [14].
5. Benefits, stability and non‑salary factors change ‘competitiveness’
GS compensation includes predictable step increases, locality and retirement/benefit packages that contractors often do not match; analysts note GS offers steady, incremental growth and locality-driven adjustments, whereas contractor pay is market-based and can pay more in spikes but lacks the same guarantees [15] [16]. Recruiting math therefore must compare total compensation (salary + benefits + job security + locality) not just headline pay.
6. What hiring managers and employees should watch in 2025
Use the OPM locality tables and GS pay tables as the baseline for public pay comparisons; OPM published complete locality tables and salary tables for 2025, and the Federal Register formalized the locality percentages effective January 2025 [1] [2] [14]. For contractor benchmarking, treat private-sector aggregates as noisy signals — different surveys produce diverging national and metro averages [4] [5] [6]. Finally, factor in local CPI, housing and rent trends (San Diego examples) because those determine how far any dollar of pay actually goes [7] [9] [10].
Limitations and competing views: OPM and Federal Register provide authoritative mechanics for GS/locality [1] [2]. Market salary surveys (PayScale, ZipRecruiter, Glassdoor, Comparably) disagree on contractor averages and definitions; those sources reflect different samples and should be triangulated for hiring or career moves [4] [5] [6]. Norfolk-specific contractor/locality details were not found in the supplied results; available sources do not mention Norfolk city-level pay in 2025 [13].