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Fed Pay Freeze Thaws But Challenges Remain in Fight for Fairness

Here’s some good news for the federal family to start the New Year: at long last, the 3-year pay freeze has started to thaw!

For the first time in over 36 months – or more than 1,000 days — hard-working and loyal federal employees will receive a scant 1% pay raise in Fiscal Year 2014.

As the Washington Post reports:

  • “President Obama issued an executive order two days before Christmas to implement the change at the start of the new year, following up on a plan he laid out in his 2014 budget proposal and in an August letter to lawmakers.”

While something is certainly better than nothing 1% is far from fair.

Fighting for Fair Pay

Unfortunately, a 1% pay hike is not nearly enough to show a minimal level of respect and gratitude to the federal family, not to mention correcting the persistent problem of fundamental fairness for federal salaries.

Lest America forget that millions of feds — accounting for middle class working families nationwide — have been forced to face the following for the past three years:

  • A limp-to-lackluster national economy,
  • Weeks of unpaid mandatory furloughs,
  • Sequestration (indiscriminate budget cuts across-the-board gov-wide), and
  • Cuts in benefits and jumps in health care premiums, etc.

As Maryland Sen. Barbara Mikulski, the longest serving woman in Senate history, said in a statement:

  • “This long-overdue modest pay raise for federal-government employees is a good step in recognizing the value of federal workers. They have been the targets of unending attacks. They’ve been furloughed, laid off and locked out through no fault of their own.I believe federal employees should never be scapegoats in fights over deficit reduction.”

Public-Private Sector Pay Gap

Then there’s the wholly separate issue of whether feds are paid on par with their private sector counterparts for doing the same or similar work.

As I previously wrote here in November 2012, federal salary is more about principles than pay:

  • “Feds don’t work in government to get rich. It’s not about pay, but principles. First and foremost, the principle of dedicated public service to America.”
  • “Yet public recognition and respect for feds has been in short supply. Rather than being viewed positively by the public, feds are often vilified by politicians, the news media and private industry — all of which drives negative public perceptions of government.”

I also noted that white collar feds are paid a whopping 35% less than their private sector equivalents, according to comprehensive data and recommendations by the Federal Salary Council.

And while no fed expects anything near that figure, the universal concept of basic pay fairness cannot be ignored.

As Colleen Kelley, president of the National Treasury Employees Union (NTEU), recently stated: “It is time to get the federal pay process working as it should.”

Looking Ahead to FY 2015

Let’s hope that the current pay thaw is merely the start of the beginning, rather than the beginning of the end, to retroactively melt the 3-year cumulative pay freeze via future pay hikes.

To accomplish this goal, I recommend the following:

  • President Obama should ask Congress for a 5% federal pay increase in his forthcoming FY 2015 budget request, and
  • Federal employee unions, other stakeholders and friends of feds in Congress should push hard for a minimum 5% pay hike for the next fiscal year (which begins October 2014), and
  • If a 5% federal pay increase is not possible then bargain down to a least 3%.

Fighting for fair pay to the federal family is the least that can be done to help feds dig out from the financially harmful 3-year pay freeze and furloughs.

Is basic pay fairness too much to ask for federal civil servants who dedicate their careers and lives to America?

Let’s hope not.

DBG
* All views and opinions are those of the author only

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Profile Photo Dale M. Posthumus

Boy, you want to start a whirlwind!

First, Let’s start by agreeing that all of us — Federal, state, and local govt and private sector employees — have suffered from a lackluster economy, unpaid furloughs/lay-offs, budget cuts, and cuts in benefits or increased costs for their benefits. We all can cite areas in which one group may have had it a little worse. Maybe if we accept that we are all in this together, we might have a little less negative attitudes from both sides.

Second, let’s also agree that people in the private sector also support the health and welfare of the country and our fellow citizens. The path may be different, but the goal is the same. I come from agriculture. Farmers are very proud they are so productive that they feed not only the US, but our country is the largest exporter of food to the world. Again, let’s get away from “them” vs. “us”.

Third, I do not believe the Federal Salary Council’s report is particularly accurate. They themselves note the problems with the data they use, but I don’t know why they do not seek to improve/use better data. BTW, the 35% is across all positions, all regions. FSC demonstrated it varies considerably. There are other studies, including that of the CBO, that do, IMHO, a better job of comparing Federal and private compensation (salary + benefits). CBO says only Feds in professional positions, especially at higher grades, are paid less than their private sector counterparts. But this is often the problem of the pay-cap (which I have already said should be removed).

Fourth, fairness is not just salary/wages. It must include, as much as possible, all the positives and negatives of work. That is why CBO added benefits. An important point about benefits is that Federal benefits are relatively unifrom across agencies and grades, by law. Private sector benefits range from much worse to much better than Fed benefits. Many who commented in another thread on the FSC’s report said one reason they joined the Federal Govt was job stability. How we measure that is still a problem, but it must be considered.

Finally, I do not believe the solution to any pay deficit that may exist should be solved by an across-the-board pay raise. That is just as wasteful as across-the-board budget/salary cuts. I believe it is time to undertake major reform of the Federal civil service system. Among other things, managers need more flexibility to reward good work and discourage poor performance. Employees need more opportunities to explore informal and formal training. It needs to be much easier to move in and out of Federal service. There must be greater budget flexibility, including ending the “use-it-or-lose-it” waste.

There is little to argue about the value of Federal employees, IMO. I have noted before the Washington Post article several months ago that indicated the general public has a relatively positive view of govt employees, vs. what we hear in the press. Govt employees can do a lot to beat back the negative opinion against them by simply doing their jobs to the best of their abilities, especially when they deal/work with others who seek their services and help.

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Profile Photo David Dean

David:

If you want competent employees, you have to pay them for their knowledge and ability. You have to have a merit system. Why should I work hard, then have to do the work on someone else’s work because for what ever reason they are not there. I have done that many times. If an employees is on a long term absences from the work site, more than five work days, hire an temp. Require employees to conduct activities, other than work on their free time.

In sofar as I can see the GS system especialy needs an overhaul. Determine what an employee’s labor is worth, pay them, and keep their pay current with COLAS. Stop using federal employees for whipping boys.

If a federal employee is not competent and is not performing the employees job fire that person, and hire someone who perform the duties.

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Profile Photo David B. Grinberg

Thank you Dale and David for sharing your always insightful analysis and wisdom. You both raise several excellent points, including:

  • The current GS pay scale/system is in desperate need of reform,
  • Feds should receive pay raises based on their performance and accomplishments, and
  • Poorly performing feds should be disciplined and then terminated, as appropriate.

Again, many thanks for weighing in on this timely topic — and all the best to both of you in the year ahead.

DBG

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Profile Photo David B. Grinberg

Interesting reader comment in the Washington Post’s “Federal Eye” about the 1% pay raise. I believe this view is representative of what many other feds think (scroll down to comments after article).

A reader identified as “McCarthy911” writes at 12:02 pm:

  • “The 1% pay “raise” is a slap in the face. When you factor in the increase in health insurance, someone at the highest level of the GS scale can expect to take home less than $20 extra per pay period once tax is factored in. As these are people who also likely missed step increases in one or more of the years under the pay freeze, it means that take home pay will be equal to or lower than take home pay in previous years. With this so called “raise” I will come close to being back to what my take home pay was 2 years ago.”

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Profile Photo Dale M. Posthumus

I understand McCarthy911’s frustration, part of which I attribute to an antiquated, dysfunctional civil service system. But, his/her position is much better than thousands, maybe even millions in the private sector who lost 100% of their income for month’s at a time. I know this won’t make him any happier, but this get’s back to why I believe in pay for performance (in both public and private sectors), as opposed to an across-the-board pay raise that rewards bad workers and leaves good workers like McCarthy911 angry.

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Profile Photo Dr. Phuong Le Callaway, PhD

It is time to restore annual salary increase to US Federal employees. Freezing employee salary increase impacts employee morale and public service. When employees’ salary increase is frozen, the message they receive is that their contributions and work performance are not appreciated. That is the wrong message. Federal employees want to be recognized for the work they do and by giving them an annual increase, they will go the extra mile and that extra mile will translate to higher productivity and savings. While UK employers have received a salary increase of 3% in the last 2 years and are planning to maintain an average 3% salary increase in 2014 for the third year running, according to a report from professional services firm Towers Watson, US Federal employees did not receive any salary increase in the last 2 years and in 2014, only 1% increase has been approved. How can one explain this disparity? It is very insulting! Federal employees should not be penalized for the overall budget crisis. Let’s give US Federal employees a raise consistent with what the UK employees have received on an annual basis. The Federal workforce can be leaner through attrition and buy-out programs and through restructuring of supervisory and employee ratio and fully implementation of telework to reduce operating costs which ultimately will translate to huge savings. Freezing employee salary increase is bad as it will tell potential candidates that US employers are not a good place to work. Let’s cut compensation expenses through attrition and increase the supervisory and employee ratio but not by freezing employee annual salary increase. Let’s cut wasteful and discretionary spending but make a guaranteed minimum annual salary increase of 3% for 2015 and beyond. Let’s show appreciation for US Federal employees through this monetary personnel action!

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Profile Photo Dale M. Posthumus

I understand your frustration. But, shouldn’t Federal employees share somewhat with all Americans in the pain of the economic downturn, just as they should share in economic good times? Federal employees faced pay freezes, furloughs, high premium participation, and more. So did many in the private sector, plus millions who lost their jobs.

I agree we need to do much more to demonstrate our respect for Federal employees and reward good work. But, I do not believe guaranteed pay increases is the better way to encourage productivity and morale in the Federal Govt. The 130-year-old US civil service system must be modernized to meet the needs of a more mobile, technologically savvy, higher educated citizenry. It needs a system where it is easier to hire good people and compensate them competitively, where it is easier for people to move in and out of government service to the benefit of both public and private sectors, and where people can be let go easier, closer to “at will”. Towers Watson also notes the need for EVP (Employee Value Proposition), a focus on total rewards, not just salary. They note nearly 25% of organizations give bonuses even when employees haven’t met the standards and 20% give equal bonuses regardless of performance. Three-percent pay raises across the board is similar – good, bad, and mediocre employees get the same increase. That does not boost morale. I saw that when I worked in the Federal Govt. Gurus of work-place performance such as Towers Watson state rewarding good work and rewarding exceptional work even more are among the best ways to boost morale, productivity, and solutions.

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Profile Photo David B. Grinberg

Dale, while I agree with you about the need for major civil service reform, I also think Phuong makes numerous excellent points. In fact, I believe her comments are likely representative of the views of countless thousands of feds — who rightfully feel we’ve gotten the shaft from Congress for far too long and strictly for political reasons.

Let’s remember that during the worst of the Great Recession and economic downturn it was public sector jobs that added at least some fuel to an economy in free fall.

Feds helped the private sector to tread water through government and consumer spending until the listless economic tide incrementally began to turn. The New York Times alluded to this in a 2012 editorial stating:

  • “Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill.”

  • “They are also critical for private-sector job growth in two fundamental ways. First, the government gets its supplies from private-sector companies…Second, government spending on supplies and salaries reverberates strongly through the economy, increasing demand and with it, employment.”

  • That means the economy suffers when government cuts back.” (bold added for emphasis)

And how were feds thanked for this?

By Congress punishing us via sequester, furloughs and a continuing pay freeze. Thus, in essence, gov threw the private sector a lifeline by helping them dig out out of the economic downturn — and we were rewarded by being dug in by Congress for partisan political purposes.

That’s another way to look at it, although you may disagree.

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Profile Photo Dale M. Posthumus

David, before I go further, would you first respond to my initial question in my response to Dr. Callawy — shouldn’t Federal employees share somewhat with all Americans in the pain of the economic downturn, just as they should share in economic good times? I will then respond to your other points.

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Profile Photo David B. Grinberg

Yes, Dale, I do agree with your point that all Americans should sacrifice during economic downturns.

However, I also strongly believe that federal fiscal austerity, generally, buttressed by the sequester, furloughs and persistent pay freezes have accounted for feds paying their fair share (and then some).

There’s also the question of who should sacrifice the most? The super rich or middle class and indigent Americans struggling to make ends meet?

But that’s another debate for another time.

Thank you again, Dale, for your potent points and valuable contributions to this important discussion — all of which are very much appreciated.

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Profile Photo Dale M. Posthumus

In the downturn, at its peak, 15M Americans were out of work – 100% of their income. Roughly 10M of those were because of the recession. Some income was regained through unemployment and other state and Federal benefits, but I would guess that no one gets back to anywhere near what they had made, employed. Millions of other private sector employees faced reduced wages and benefits. If the 2-3 year pay freeze and 1-2 week furloughs were not Fed employees’ appropriate contribution to bearing the pain, than what is? Dr. Calaway’s point is that this should have never happened and Federal employees should be guaranteed at least an annual 3% pay increase.

I think nearly all people in this country will agree on “who” should pay more. The question is “how much?”. The wealthy pay more taxes (according to IRS, top 1% pay 15x more than the bottom 50%) but is it enough? Does the middle class pay too much (BTW, one is in the top 10% if your adjusted gross annual income is just $116,000)? Should the working or non-working poor pay something? I believe the IRS figure is that 40% of Americans pay no Federal income taxes.

I will try to write on the rest of your points over the weekend. I leave by saying the NYT doesn’t know economics very well and it is demonstrated in these statements. I will read the editoral this weekend to make sure I understand NYT’s full argument.

David, I appreciate your ability to keep an even keel, even when defending a position you hold very strongly. Too many people let their emotions override, which doesn’t encourage give-and-take and solutions (one of Congress’ problems). I have found GovLoop participants to be almost entirely ones who can keep the discussion and debate on track, even when they may be passionate.

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Profile Photo Dr. Phuong Le Callaway, PhD

I do agree that we need to share the economy downturn with all Americans; therefore, I suggested that agencies cut other wasteful and discretionary spending. I also suggested that in order to fund salary increase, agencies can make the workforce smaller and cost less by fully implementing telework program to reduce operating expenses and by increasing the supervisory and employee ratio to cut the unneccessry bureaucratic level and through attrition and buy-out programs if feasible. We need to look at both the short term and long term. Yes, with a determined budgetary level, one must cut something in order to fund something. I do think that freezing employee annual salary increase off and on will impact employee morale and satisfaction which will impact public service while agencies can offset the salary increase by cutting or reducing other discretionary spending and by restructuring and streamlining the workforce. A balance act needs to work out so that employees and organization mission will not be impacted while searching for ways to cut costs and balance the budget and for achieving a leaner and high performance workforce!

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Profile Photo Dale M. Posthumus

Dr. Callaway, I must apologize for not recognizing in my previous posts that you offered solutions to the problem you raised. Although I don’t agree with guaranteeing annual, across-the-board salary increases, I do agree that there are solutions that should consider the balance of employee morale/fair treatment, agency mission, and budget. I also agree with your suggestions to make govt more efficient/productive.

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