I took a pretty significant pay cut to accept a federal job in the first place. I left federal employment at the top of the GS-15 scale with a few years of reserves, no debt, a number of useful investments, and a growing small business. On a personal level, a government pay freeze by itself doesn’t have much affect on me, but I started preparing years ago.
A paycheck is becoming a less attractive source of income in general. It’s important to be compensated for time spent serving the public and others, but relying entirely on a W2 (earned income) or a government sponsored retirement is not ideal at this point in our history – particularly for the 46 and younger crowd (as the retirement age creeps up through 67 toward what many believe will be 72) . Pain associated with relying on a W2 will only increase as the tax burden increases – as indicated in a recent CBO report – and as inflation kicks in.
Any pay increase that is not, at a minimum, indexed to inflation results in a net loss of income for the employee. The effect is compounded when the tax rate goes up. W2 employees will be bringing home less, but will be asked to do more.
This latest pay freeze isn’t the beginning or the end of the story. David Walker, the former Head of the GAO and Comptroller General of the United States, spent a lot of time trying to educate folks through the Fiscal Wake-up Tour. About the same time, Congress enacted statute to ‘force’ the government to get smarter about its own investment activity – particularly around “business” or “office” technology investments – an area known to be expensive as a result of duplication of effort, lack of universal standards, and large “tail” expenses incurred by “interfaces” and after-the-fact security and interoperability concerns.
They passed 10USC2222 (attached) and 10USC186. Both were title 10 statutes that went into full effect in October of 2005 and applied only to the Department of Defense. The Senate later proposed a bill to modify section 11317 of title 40 – which basically would take the original title 10 statute (10USC2222) and apply it to the rest of the government (See S.920).
A pay freeze, in my opinion, should spark action from the Federal workforce to hunt aggressively for cost saving measures. Seemingly small corporate actions like publishing what we’re investing in, requiring standards during design, and conducting good due diligence (required by the statutory instruments I referenced above); enable individual action like building real business cases, checking to see if anyone else is doing what you want to do, picking up the phone to connect with peers in other agencies, and following up to ensure investment promises made are promises kept. These seemingly small personal actions, when added up across the government create a culture of cooperation and responsible fiscal conservatism that amount to huge savings down the road.
Our fiscal boat has holes in it. We can either accept these pay freezes passively, or we can use them as a call to action – to do what we can to make ourselves and the government less dependent on public resources. Every individual action counts.