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  • Still Not the Time to Raise Federal Pay

    AFP Photo/Jewel SamadJEWEL SAMAD/AFP/Getty Images

    AFP Photo/Jewel SamadJEWEL SAMAD/AFP/Getty Images

    President Obama has announced a 1 percent across-the-board federal pay increase in 2014. This comes on top of federal employees’ already scheduled seniority-based raises. Unless Congress intervenes, the gap between federal and private pay will rise even higher next year.

    President Obama suspended the uniform federal pay increases in 2011 and 2012. Congress extended that suspension in 2013. The press mistakenly labeled this a pay “freeze,” but most federal employees continued to receive seniority-based raises, so the typical federal employee’s pay has risen since 2011.

    The facts show that most federal employees are paid more than if they worked the same job in the private sector:

    • The Heritage Foundation found that wages and benefits are 30 percent higher in the federal government than comparable jobs in the private sector;
    • The Congressional Budget Office found that the average federal worker receives 16 percent greater compensation (wages and benefits) than they would in the private-sector job market; and
    • The American Enterprise Institute found that, including the value of job security, the overall federal compensation premium stands at 61 percent.

    Supporters of higher pay argue that federal workers have higher skills and therefore should earn more—but these studies cited above already control for skill and education. For a comparison of the three studies, and for some frequently asked questions about them, click here.

    The President wrote, “Civilian federal employees have already made significant sacrifices as a result of a three-year pay freeze.” With all of these studies showing that federal employees make at least one-sixth more than private-sector workers, it is hard to see what President Obama is referring to.

    In fairness, quite a few federal employees do make less than they would in the private sector. The federal government largely rewards time served instead of performance. So the contributions of many of the most productive federal workers go unrewarded. But the solution to this problem is replacing the General Schedule with performance-based pay. With debt soaring, Washington should not hand out indiscriminate raises.

    Posted in Capitol Hill, Economics [slideshow_deploy]

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