President Obama has made a move towards austerity and belt-tightening this week, by declaring a two year long pay freeze for all federal workers. But does freezing federal employees’ pay make a difference budget-wise, or is it really more of a symbolic gesture? Washington Post notes:
Bashing federal workers as overpaid and underemployed is a favorite political sport. This broad depiction is neither fair nor accurate, and going after the federal workforce is more of a symbolic move than a real answer to deficit reduction. Slashing the number of federal employees risks leaving government without enough workers to do the job. It could end up costing more as tasks are outsourced to the private sector. Meantime, comparisons between average federal and private-sector pay can be tricky. Federal workers earned an average $123,000 in 2009, compared with $61,000 for private-sector employees, but this gap does not reflect differences in the composition of the two workforces; the federal workforce is heavily white-collar. The Federal Salary Council, a government entity that studies private- and public-sector pay in comparable jobs, pegs the differential at 24 percent – in the other direction, with public employees underpaid in this analysis. The reality is probably more complex than either assessment. Federally employed lawyers and doctors could probably do better in the private sector. Clerical and blue-collar workers tend to make more in federal government jobs.
As a symbolic “we’re all in this together” move, it could prove popular with some, as long as they don’t delve too closely into the real costs. Ezra Klein writes:
There’s no doubt that this decision polls well. And it may indeed forestall much more damaging cuts to the federal workforce down the line (it is a shorter pay freeze than what the Simpson-Bowles report recommended, and it’s neither a hiring freeze, like many Republicans want, nor a pay cut, as Mitch Daniels has suggested). But Obama just affirmed two Republican arguments that his White House believes to be factually wrong: First, that government workers are overpaid, and second, that deficit reduction should start immediately. And the fact remains that his administration’s initiatives require a talented and motivated federal workforce if they’re to succeed, and now they’re that much less likely to get it.
Put it this way: If you’re an able regulator in the health care or financial field, you’ve got a lot of other job opportunities, all of which pay you much more than you’re making right now. You may have resisted those offers because the pay difference wasn’t that big, or because you believe in public service. But if the pay difference gets bigger, and your president seems to be giving in to the politicians who denigrate your work and usefulness rather than defending you, how much longer will you resist for?
And even the President’s own party is concerned about the proposal. Via the Wall Street Journal:
“By focusing exclusively on federal employees, the administration runs the risk of reinforcing the myth, pushed by some for politically convenient but cynical reasons, that America suffers from a federal government comprised of unproductive and overpaid civil servants,” [Maryland Democratic Congressman Chris] Van Hollen said. “Nothing could be further from the truth.”
He goes on to point out that the federal workforce last year wasn’t as big as it was in 1968 and cites Bureau of Labor Statistics figures that federal workers make 24% less than their private-sector counterparts.
“I agree with the president that we must have a serious national debate about how to reduce the deficit and tackle the national debt,” Mr. Van Hollen said. “But rather than taking this kind of piecemeal approach, I would prefer to address our budget challenges in a thorough, comprehensive way.”
Meanwhile, Republicans are still pushing for an extension of taxcuts for the wealthiest Americans. Someday maybe the belt-tightening might get more evenly distributed.
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