Tuesday, November 30, 2010

Pay Freeze Sends Wrong Message

President Obama announced a two year pay freeze for federal employees. This move would reduce the federal deficit by $60 billion over ten years. However, be careful of numbers when speaking of federal policies because everything is on such a huge scale. For example the $60 billion pales beside the fact that stopping the two wars and allowing the Bush tax cuts to expire would reduce the deficit by $7 trillion over the same amount of time.

Economists and political operatives are characterizing the move by Obama as symbolic, but symbolic of what? Symbolic of a pattern of always asking working people to sacrifice and share the burden, while avoiding the tough battles with the wealthy and powerful?

Make no mistake, federal employees are overwhelmingly working class, just like state employees and educators. Federal employees make 20% less than their private sector colleagues doing comparable jobs. Grade 1, Step 1 on the federal pay schedule is $17,803 per year. That sounds awfully close to Step 1 for a para-professional educator in Delaware who makes $17,228 per year.

Freezing the pay of federal employees will not create one new job. It will not cause one business to rehire one laid off employee. In fact, when coupled with another year of state and local public employee cuts (this sector will lose another 250,000 jobs this year) the impact will be more slowing of an already faltering recovery.

Again, if this is symbolism, it is sending the wrong message. The pay cut enables enemies of public services and public servants to continue to spin a tale about over-paid bureaucrats delivering unneeded and intrusive public services. When in fact public servants educate our kids, catch the bad guys, make water safe to drink and bridges safe to cross, cut the check for your grandmother's Social Security, treat the wounded soldier, take the abused child to safety, and perform a thousand other services necessary to provide the infrastructure for a complex and profitable society.


  1. I often feel a bit like Dr. Evil in the second Austin Powers movie. Dr. E suggests a ransom of,... (gasp) one-million-dollars, only to be rebuked by everyone else in the room who points out that a lot has changed since he was first kryogenically preserved, and $1M is NOTHING by current standards. I have never been able to get my head around these HUGE sums, so $6B still sounds like an amazing savings to a rube like me. However, I may not truly comprehend $7TR, but I sure as heck know that it is tons more money than billions.

  2. Yes, the other piece of this issue which I did not go into is the effect of removing the $6B from the economy. Wages of middle class people tend to re-enter the economy very quickly at the local level (grocery store, rent, etc). This is why cutting wages of public employees causes more damage than raising taxes on the upper bracket.