A Perfect Storm for Federal Employee Pay and Benefits

By on February 22, 2011 in Current Events with 283 Comments

The Perfect Storm is a 2000 sea-faring disaster film adapted from the book of the same title released in 2000. A “perfect storm” is an expression describing an event where a rare combination of circumstances will drastically aggravate a situation.

Federal employee pay and benefits may be running into the political equivalent of The Perfect Storm.

What is “Fair?” 

Many readers argue that complaints about their benefits by the public are not “fair” and that federal pay and benefits are less than what many would make in the private sector.

On the other hand, many Americans are suffering the results of their own “perfect storm” with real unemployment reaching about 16%; investments plummeting in a recession; and a lack of confidence in government in dealing with the economic and political problems in the world and numerous articles and studies purporting to show federal employees are overpaid and with too much job security in a system that rewards people based on how long they have been coming to work rather than rewarding the most productive.

Throw in government statistics that show inflation is very low to non-existent over the past couple of years while food, gas and commodity prices in general are going up fast, a federal deficit now at record levels and going up faster than anyone has ever experienced, debates in the media about public employee unions contributing to budget and economic problems in states around the country by negotiating unreasonable pay and benefit packages (that may also benefit the managers negotiating on behalf of government) and the stage is set for a political fight of historic proportions.

Role of Federal Sector Unions 

Throw in some $400 million in campaign contributions given by unions to President Obama’s campaign and Democrats running for public office in 2008; riots in the Middle East contributing to rapidly escalating oil prices; demonstrations in Wisconsin; allegations that the Democratic National Committee is supporting financially and otherwise the political unrest in Wisconsin;  the rapid rise of the “Tea Party” that has seemingly awakened many in American’s oft-quoted  “silent majority” and an historic turnover at state, local and in Congress last November and the ingredients are in place for significant change in America.

And, in the middle of this witches brew: federal employee pay and benefits for an aging federal workforce with a high number planning or at least hoping to retire in relative peace and security in the near future.

Readers who comment that the complaints about their pay and benefits are “unfair” may be correct, but in a political debate this probably won’t count for much in the current environment.

No one can predict what, if anything will happen to pay and benefits for federal employees. Last week’s events that raised the possibility of eliminating funding for within-grade increases and federal promotions did not survive the first round of the budget battle and many readers are probably breathing easier.

What Does the Future Hold? 

But a word to the wise: there are going to be more threats to federal pay and benefits. The current political events are going to test the political skill and dexterity of the administration. There may very well be a government shutdown as there is evidence for both Democrats and Republicans that the public may side with their point of view and both sides can envision the political benefits that would flow to them as a result. Add to the mix that President Obama’s ratings in the polls are headed south again and this will limit his ability to work with both sides, even in the event he should choose to try to lead and influence the outcome in some way to benefit the entire country.

In a political battle such as the one unfolding, brute political strength is likely to prevail. The most likely scenario in a political gridlock is a temporary compromise that results in some cutting back of federal pay and benefits, such as an extension of the current two-year federal pay freeze and a budget that results in some reductions in federal spending while waiting for the public’s decision in next year’s national elections.

If the Democrats are seen by the public as unwilling or unable to deal with the budget problems and are too closely aligned with large public employee unions because of the money flowing into their campaign coffers, there could well be a new president and a Congress with both houses more closely resembling the current political views of the House of Representatives. Or, if the Republicans are viewed as wanting to cut too much from the budget and fighting too hard to prevent tax increases or too harsh in the actions they take against public employee unions, Democrats will fare better in 2012.

Many readers post comments that they are just waiting to retire after Congress approves a buy-out to encourage federal employees to retire. If that is the only reason you are still working for the government, you may want to step back and reconsider your position. The chances of a bill passing that provides more money or benefits to the federal workforce in the current environment seem slim. While buy-outs were all the rage during a couple of years under the Clinton administration, the political environment in 2011 is much different. Furloughs and hiring fewer workers to replace those who leave are more likely possibilities.

Public employees are seen by many Americans as having become a privileged class. The pay and benefits of public workers are increasingly viewed as harming taxpayers who are footing increasingly large amounts of debt and interest. In this environment, getting a majority in Congress to take the political heat for supporting higher pay and more benefits seems unlikely.

Many readers are also asking if the federal retirement program changes, whether they be “grandfathered” into the current system. Who knows? It could be that there are wholesale changes, such as a “high five” calculation instead of a “high three.” It is possible that only those currently retired will remain under the same system. Or, perhaps, there will not be any changes other than to new federal employees. Or, when all is said and done, there may not be any significant changes to the federal system and state and local governments will follow the federal system as a model. (If you are under the FERS system, closely watch changes to the Social Security portion of your future retirement and how you may be impacted by future changes.)

We are in a time of political turmoil that most of us alive today have not experienced. Our standard of living is declining as the purchasing power of the dollar declines and America’s influence in the world is in question and changing for a host of reasons.

As a nation, we are maintaining much of our standard of living by borrowing (and printing in large quantities) trillions of dollars without any economic backing for the new money being injected into our economic system. While politicians of all persuasions agree we cannot continue to borrow trillions of dollars without economic consequences, there is little doubt the federal community will be impacted in some ways that are less than desirable–we just don’t know and cannot accurately predict the decisions they will make and how those decisions will impact the federal community.

 

 

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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