Federal Employees 'Must Sacrifice:' Third Year of Pay Freeze Proposed

By on October 15, 2011 in Current Events with 226 Comments

Senators Joe Lieberman (I-CT) and Susan Collins (R-ME) said in a letter to the Joint Select Committee on Deficit Reduction (the “super committee”) that federal employees “must sacrifice as part of an urgent need to curtail the cost of the federal government and reduce the national debt.”

The Senators said, “As a strong supporter of our federal workforce, we say this with regret, because we are asking many dedicated, hard-working, and patriotic public servants to pay a price for fiscal and economic conditions for which they are not responsible. But people across the country are struggling, most especially those who are suffering from historic levels of unemployment, and all Americans, including those of us in the public sector, must help get our country out of the hole we are in.”

And what are the sacrifices the Senators are recommending federal employees should make? They fall under the following areas:

Freezing pay

Federal civilian employees are currently under a two year pay freeze for 2011 and 2012. The Senators acknowledge that this freeze lowers employees’ yearly salary for the rest of their careers and negatively affects their retirement benefits, but regardless, they recommend extending the freeze for one more year, which would save an estimated $32 billion “without significant disruption to agency mission and activities.”

The Senators also recommend extending the pay freeze to the Legislative branch to include members of Congress and their staffs. While pay freezes on Congress generally do not save a great deal of money, the Senators said that it is an important symbolic gesture to show Congress is sharing in the sacrifice.

FERS contributions

The Senators say that they support the contribution percentage increase proposed by the President that would eventually take the contribution from the current 0.8% of employees’ salaries to 2% which is estimated to save $21 billion over 10 years.

Unused sick leave

The Senators also believe that the Joint Committee should reexamine a recent statutory change to the FERS system that allows federal employees to receive employment credit for unused sick leave upon retirement. The CBO originally estimated this benefit costs $561 million over 10 years, with the costs increasing even further as more FERS employees reached retirement age. If the reexamination indicates significant savings by repealing this benefit, the Senators would recommend doing just that.

High 3 to high 5

Many deficit reduction proposals have recommended changing benefits calculations based on a retiree’s highest five years of service instead of highest three years; the Senators see this as a reasonable proposal, but cautioned that if not structured correctly, it could have negative effects on employees who are closest to retirement who had been planning on the benefit. The change could subsequently result in the forced early retirement of many knowledgeable employees, thus harming an agency’s mission. But they said that the savings that could be seen from this change could be as much as $4 to $5 billion by 2020.

Federal employee unions wasted no time in decrying the Senators’ proposal. AFGE President John Gage said, “Federal employees have sacrificed more than any other group, giving up two years of pay increases to help lower the country’s deficit. It’s time to pass the hat and ask others to pay their fair share.”

NTEU said that the Senators’ recommendations were “counterproductive to providing the services our nation depends on.”

Whether or not these or any of the other deficit reduction proposals we’ve seen in recent months will be enacted by Congress is anybody’s guess at this point. You can read the full text of the Senators’ letter for all of their cost cutting recommendations.

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

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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