A federal pay freeze

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Tuesday, November 30, 2010

Bashing federal workers as overpaid and underemployed is a favorite political sport. This broad depiction is neither fair nor accurate, and going after the federal workforce is more of a symbolic move than a real answer to deficit reduction. Slashing the number of federal employees risks leaving government without enough workers to do the job. It could end up costing more as tasks are outsourced to the private sector. Meantime, comparisons between average federal and private-sector pay can be tricky. Federal workers earned an average $123,000 in 2009, compared with $61,000 for private-sector employees, but this gap does not reflect differences in the composition of the two workforces; the federal workforce is heavily white-collar. The Federal Salary Council, a government entity that studies private- and public-sector pay in comparable jobs, pegs the differential at 24 percent - in the other direction, with public employees underpaid in this analysis. The reality is probably more complex than either assessment. Federally employed lawyers and doctors could probably do better in the private sector. Clerical and blue-collar workers tend to make more in federal government jobs.

This discussion is an important prelude to assessing President Obama's announcement Monday that he wants to freeze federal pay for two years. A more rational system would come up with a better compensation scheme than the current lock-step arrangement. Neither across-the-board increases - the previously scheduled amount was 1.4 percent - nor across-the-board freezes are the best way of doing business. However, such a system is a long way from reality. Under current circumstances, a two-year freeze is appropriate. The federal budget is under enormous strain. The savings from a two-year freeze - $28 billion over five years - are relatively small, but not trivial. The symbolic effect of showing that government can discipline itself is also important. In an era that will call for shared sacrifice, when governors and county executives are freezing pay and furloughing workers and many private-sector employees have lost their jobs, it's not unreasonable to expect federal workers to bear a share. A downside to a freeze is that it may spur valuable, experienced employees to leave government for more lucrative pastures. That is a risk, and one worth bearing in mind as the debate moves forward. But a two-year freeze at a time of low inflation is a fair step.


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