The Office of Personnel Management pay scale determines the salary of all federal government employees. The OPM determines the salary of all white-collar federal employees under the federal classification system using a General Schedule base rate and a locality adjustment.
The General Schedule has 15 grades and each grade has 10 pay steps. A federal employee's position determines his pay grade while his seniority and performance determine his pay step within the grade. The locality pay adjustment is a percentage that applies to the base pay of each federal employee. Employees who live in more expensive areas such as San Jose and San Francisco have a higher locality pay adjustment.