Federal Employee Pay Freeze as a Political Symbol

President Obama has proposed a two-year pay freeze for federal employees. While the freeze will impact most readers, the action may be more important as to what may be in store for federal agencies and federal employee benefits in the future.

Americans have been reading about riots in Europe over the past few months. Government employees, led by their unions in many cases, students and even pensioners have taken to the streets in Greece, England, and Ireland to protest cuts in their benefits as governments try to prevent a financial meltdown and to bring government spending into line with their revenue. As in America, these countries (and others) have been spending more than they were taking in and, in some cases, the borrowing and spending greatly exceeded their revenue or the total value of the nation’s gross domestic product.

We are not immune to these financial pressures and, as most readers now know, President Obama has proposed a two-year salary freeze for federal employees. No doubt, this is not the end of an attempt to bring federal spending more into line with revenue.

The political pressure has been building. While some of our readers have complained about the articles that discuss a possible pay freeze as being unsympathetic or not “advancing the interests of the federal workforce,” as some thought we should be doing, we have kept readers informed of the various positions of interested parties on the topic knowing full well some readers don’t like reading about possible benefit or pay cuts.

The president’s proposed freeze would require Congressional approval before it can be implemented. It would impact about two million workers in 2011 and 2012 and save about $28 billion. $28 billion is a huge number but, as hard as it is to believe that is a small fraction of the $1.3 trillion annual budget deficit. What is more important to the federal workforce is that Republicans (and probably some Democrats) are asking for much larger reductions in federal spending. Some of these proposals would have a larger impact on the federal workforce and include proposals to change the calculation for federal retirement, reducing federal hiring, etc.

The co-chairmen of the Obama deficit-cutting commission also put federal employees in their sights by calling for a three-year freeze on compensation for civilian workers and a 10% reduction in the federal work force by 2020. This action would eliminate about 200,000 jobs. The pay freeze alone would reportedly save $42.3 billion over five years, the co-chairmen projected.

The president’s action is more important as a symbol of political action by the political class. The action by President Obama this week appears to signaling a willingness to reach toward Republicans ahead of negotiations on deficit-cutting that are likely to dominate the political atmosphere in Washington next year.

And, of course, the federal workforce has its share of lobbyists in the form of unions and associations such as the National Active and Retired Federal Employees (NARFE) which will be out in force to try and reverse the president’s recommendation for a freeze.

The Heritage Foundation says that compensation for federal employees is 30% to 40% higher than for comparable jobs in the private sector. Federal employee unions call that assertion a “myth.” The Federal Salary Council, which consists of federal employee union representatives and government officials says that federal employees are underpaid by 24% or so.

Federal employee unions are already hitting the airwaves with press releases attacking the president’s action.

Presumably because his salary is paid by federal employees, AFGE President John Gage referred to the savings by freezing federal employee pay as “peanuts at best.” It is unlikely most Americans would agree with this assessment and won’t create good public relations with the nation’s taxpayers but presumably those dues paying members are looking for dramatic rhetoric. He also described the president’s action as “a superficial panic reaction to the draconian cuts the deficit commission will recommend.” While he did not mention it, we can probably assume that less “superficial” cuts are in the offing in coming months.

NTEU, perhaps because it had to get its ire under control or just because it wanted to hit the airwaves with a calculated response was initially more measured and may have had future political relations with the administration on its mind when publishing on its website: “NTEU is mindful of our nation’s economic circumstances, but we are very disappointed with the White House’s position and intend to explore all of our options, including working with Congress to overturn it.” But, after a few hours and, perhaps with some time for reflection, this union got its PR section warmed up with a quote from NTEU’s Colleen Kelly to USA Today: “I would say that any CEO who would propose a pay freeze without consulting employees is not going to be a very successful CEO.”

NARFE issued a press release within a short time after the president’s statement and NARFE’s president stated: “In light of the growing number of critical challenges being shouldered by federal workers, the government cannot afford to make substantial reductions to the earned compensation of individuals who have dedicated their careers to public service. For that reason, we urge the president to reconsider this ill-conceived decision.”

Keeping in mind that the director of OPM owes his job to President Obama, the government’s human resources agency issued a very short press release that is supportive of the pay freeze. Its press release stated: “Federal employees work hard for our nation each day, and this sacrifice the President asked them to make today is significant and emblematic of the shared sacrifice we all will have to make if we are to bring the deficit to heel and preserve an economic future for our children.”

So, not surprisingly, the lobbying has already begun. The president’s pay freeze proposal is the latest political event highlighting cutting back on federal spending and it will not be the last of these events. Whether the efforts of the special interest groups will turn around the political tide remains to be seen.

We can reasonably predict a few public protests by federal unions, at least when future cuts may be announced, but we aren’t likely to see federal employees taking to the streets and setting fire to trash cans or effigies of Barack Obama burning while swinging from a lanyard.

But, without a doubt, federal employees are now a political symbol of federal spending and the spiraling federal debt.

What happens to the salaries and benefits of federal employees in coming months may give insight into whether the Congress and the administration are going to make a concerted effort to reduce the federal deficit. And, as we know from the initial recommendations issued by the co-chairmen of the debt commission, there will be few segments of society spared from the ultimate cuts if Congress and the administration decide to seriously attack the subject.

These future cuts, if they occur, will overshadow the two-year pay freeze for federal employees. Yesterday’s action may have been the opening round and put federal employees on the front pages in the nation’s media but, in all likelihood, we can anticipate future actions that will further raise the ire of the federal workforce.

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. Follow Ralph on Twitter: @RalphSmith47