FAGIN: Federal pay freeze should precede a larger fiscal conversation

Barry Fagin Updated: December 8, 2010 at 12:00 am • Published: December 8, 2010

As a long-time, hard-working federal employee who gives up a lot to work where he does, I have just one thing to say about the proposed federal employee pay freeze. I think it’s a terrific idea.

Well, maybe not exactly terrific, particularly if you think about how little difference it would actually make. But symbolic gestures can matter in politics. If this one lays the groundwork for something that’s actually important, then I’m all for it.

To get an idea of how utterly insignificant a federal pay freeze would be, take a look at the numbers fro 2008, the most current data available. For that year, the federal government payroll was about 15 billion dollars. During that same year, the Bush administration’s budget spent 2.9 trillion dollars.

Let’s suppose a pay freeze would save 10% of payroll costs, a figure that errs generously on the side of money saved. The fraction of spending reduced would have been 1.5 billion out of 2.9 trillion, a whopping one half of one tenth of one percent of all federal outlays. And let’s not forget this is 2-year-old data. Bush was the biggest spender since LBJ, but when it comes to red ink Obama and the until-recently-Democratic Congress make Bush look like a piker.

Hooray for the courage of Washington D.C! Through the miracle of bipartisan consensus, they boldly solved one half of one tenth of one percent of our spending problem. For our next trick, we’re going to treat drug addiction by flooding the streets with crack that’s only 99.95 percent pure.

Given that a pay freeze wouldn’t actually accomplish anything tangible, what about the intangible? How would a national government pay freeze work as a symbolic gesture? That’s a tougher question. Particularly since it’s hard to know what a pay freeze would actually mean.

Federal employee compensation is determined by the classification of your position and the “step” within that classification. It’s complicated to explain in a column, but basically your “step” goes up by one every year. Your salary is determined by a table released by the Office of Personnel Management. Look up your classification and your step in the table (with some non-trivial adjustments based on where you live), and that’s your salary. Period.

While in theory you could be denied a step increase, there are tremendous barriers in place to make sure that doesn’t happen. I suppose out of two and a half million Federal employees, somebody somewhere gets denied a step increase every once in a while, but in over 16 years of government work I’ve never heard of it.

This means that it’s easy to argue that federal salaries are “frozen” when they really aren’t. I’m guessing that a “freeze” would mean the OPM salary table would be held constant for one year. But we would still get step increases. Even though it would mean less of an increase than we were accustomed to, in the language of Washington that still counts as a “cut”. Compared to some employees in the private sector who might actually make less money from year to year, or who could lose their jobs through no fault of their own, I think that’s really insulting.

Don’t get me wrong, I could always use more money. I have two kids in college; my tuition payments are two and a half times my mortgage. Clearly I’m insane; I should be living in a much bigger house and sending my kids to cheaper schools.

But so be it. It’s a personal decision, and if my cash flow gets further pinched it’s my responsibility to deal with it.

But I think I speak for many federal employees when I say that if our salaries do get “frozen”, whatever that means, it would mean a lot more if it started a larger, much more substantive national conversation. Something that attempted to build consensus on cutting entitlements and spending in a substantive, across-the-board way. Something that truly held out realistic hopes for restoring fiscal sanity and long-term prosperity to America.

After all, we wouldn’t work for our country if we wanted anything less.


Dr. Fagin is a Research Associate at the Independence Institute; his column is published every other Thursday. Dr. Fagin’s views are his alone. Readers may contact him at barry@faginfamily.net.

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