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« Live at the Bean | Main | Creation myth »

Nov 29, 2010

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Michele Forrest

Federal employee retirement is based on an average of the employee's three highest consecutive years of earnings. For most people, that's their last three years of service. If you're a federal employee around retirement age, and your president just announced that he's planning to freeze your salary for the next two years, what do you suppose you might do? Maybe... retire now? Obama's federal wage freeze may also result in some job openings. ;)

Grant

This is a novel poker strategy only known to the best players: drop your ante and bet directly into the opponents' stack, and then show them your cards. Totally psyches them out.

Billy The Blogging Poet

Many in the private sector have seen wages drop and/or disappear altogether-- anyone on the Federal payroll should be hoping they don't face the same. To those in government sector jobs who might have a problem with a pay freeze: You'd better hope the private sector recovers before there's no money left to pay your wages.

justcorbly

Michele is correct that a freeze might encourage some retirements. However, anyone who suspects they can get promoted -- and get more money -- in the near-term will probably hang on.

That said, I went through a number of freezes and never saw any of them have an impact on my colleagues' retirement plans. Freeze or no, f you have a mortgage to pay and kids in college, you're not gonna retire.

Andrew Brod

A little perspective: It's not just the private sector that has seen payrolls shrink. Many in the government sector have also seen their jobs disappear.

As of October there were 0.6% fewer government employees than when the recession began in December 2007. Mostly this is due to the 1.1% decline in non-federal jobs (which outnumber federal jobs by about 7-to-1). Federal-government employment increased 3.2% during this time, for an average rate of 1.1% per year. That's not a strong rate of growth, but it's growth. In contrast, private-sector payrolls have fallen 6.4% since December 2007.

Andrew Brod

More importantly (perspective-wise), when one corrects for geography and type of work done, federal pay is about 22% lower than comparable private-sector pay.

John

As seen from another man's eyes: here

Andrew Brod

From John's link: "The average federal civilian worker now earns twice as much in wages and benefits as the average worker in the U.S. private sector."

That would be true if one were satisfied comparing apples to oranges.

Grant

Why aren't Cato Institute flacks sharing our pain?

Ishmael

What would we do without statistics? They are so beautifully malleable!
That being said, I've met more than one federal employee who admits in confidence that his/her pay and benefits are nothing short of a miracle. They can thank the unions for that, but most workers aren't going to leave the table when they're full but are content to gorge themselves to the detriment of the taxpayers. Not only that, but federal jobs are seen as spoils for both parties, so don't think that Republicans enjoy cutting wages or benefits either.
But is privatizing the answer? Not necessarily. Government employment has lifted the prospects of women and minorities because it is law bound to do so. Private corporations and small business can get around the rules and in fact do so with impunity - except now it is more ageism than racism.
What we need is more transparancy in the public sector and more enforcement of EEOC laws int he private sector.

Andrew Brod

I don't think the issue is whether federal jobs aren't nice. The numbers I cited above show that they're obviously more secure than jobs in state/local government and the private sector. Job security is valuable to many people, and it's one reason why Ishmael's friends might speak favorably about their jobs. And federal benefits are certainly generous.

But the fact remains that when you make the appropriate corrections so that we're comparing apples to apples, federal employees make less than their private-sector counterparts, even when you factor in benefits. This doesn't imply that federal workers should necessarily be paid more. Federal jobs may be so rewarding and/or secure that people are happy to take them. Pay isn't everything.

Andrew Brod

The more important issue is whether the pay freeze will do any good. As a stimulative measure, decreasing federal spending right now isn't exactly smart. (Yes, I know Tea Partiers disagree with this, but there it is.)

On the other hand, removing the top few dollars from federal employees' wallets is probably not going to significantly reduce the stimulative impact of federal spending. If the government were to take the $5 billion it saves on this and channel it into unemployment benefits or something that's been demonstrated to be highly stimulative, it might end up being very good policy.

But if the $5 billion is just held back to reduce the deficit, then meh.

John

Andrew; I take it you are an employee of government?

Andrew Brod

Not the federal government.

But the identity of neither my employer nor yours changes the facts.

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