President Obama just announced a partial two-year pay freeze for civilian federal workers.
Under the President’s plan, federal employees will not receive cost-of-living increases in their pay in 2011 and 2012. However, most federal employees will still receive seniority-based pay increases over the next two years.
The President’s decision is an important symbolic step. President Obama has brought federal pay closer to market rates—which is progress, considering that many liberals insist that federal workers do not get paid enough. However, a partial pay freeze does not fix the underlying problems distorting federal compensation.
As The Heritage Foundation has reported, the federal pay system serves taxpayers poorly. It gives the average federal employee 30–40 percent greater total compensation (wages and benefits) than a comparable private sector worker. However, not all federal employees receive premium pay. The federal pay system does little to recognize or reward performance. As a result, the federal government manages to both overpay underperforming workers and underpay the most skilled federal employees.
A partial pay freeze does nothing to address these problems. It will still leave the typical federal employee earning substantially more than he or she would in the private sector. Neither will it differentiate between those who deserve a pay cut and those who do not.
The broken federal pay system needs a complete overhaul. Congress should replace the General Schedule and its automatic promotions with a pay-for-performance system tied to market rates. Federal benefits should be brought in line with private sector norms. The federal retirement age should be raised from 56 to the Social Security retirement age. A partial pay freeze does none of these things.
The President deserves credit for partially freezing federal pay. Obama’s decision will save taxpayers $2 billion next year, but fundamental reform would save $47 billion. This is only a small first step.
