Ho Ho Holding Down the Federal Government Employee Wages

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Expert Perspective from Grahall’s OmniMedia Editorial Board

The holiday season brings out the best in many people.  Traditionally, this is a time of giving and sharing.  But for Federal workers, they will unfortunately experience a different kind of sharing – the hardship felt by many Americans who are un- and under-employed.    Late last month, President Obama proposed a two-year wage freeze for some 2 million federal workers.  As Charles Riley wrote in his November 29, 2010 article for Money (Obama calls for federal wage freeze: President Obama’s proposal Monday to freeze federal worker pay would save $60 billion over 10 years):  ”The freeze… [is] an important step to help generate taxpayer support at a time when policymakers will need to make numerous difficult decisions about curbing the debt, one fiscal expert said.”

However, this proposal, impacting some 2 million workers, is just a drop in the bucket toward solving the debt crisis in America, achieving “… less than 1% of what’s ultimately needed.” So why bother? 

It’s politics of course!  As Grahall’s Joe Davidson says: “This is one of the first steps in conditioning the electorate to the fact that there is going to be a sharing of austerity across the board.”  This proposal is highly symbolic if not literally a solution to the debt crisis.  There is no question that if constituents are feeling frustrated over the lack of private sector job growth, they are also feeling angry over the so-called bloat in federal government.   So is there more bloat in government now than before? Or is the anger due more to private sector worker worries and job insecurity than to government growth?

That question proves somewhat difficult to answer.  As Ed O’Keefe writes for his Federal Eye column in the Washington Post, “Differing ways of measuring federal employment produce different counts…  The Eye’s method of tallying up the workers uses figures from George W. Bush’s administration that tallied the total number of Executive Branch employees — including U.S. Postal Service workers — and determined the number of federal workers per 1,000 Americans.”  The results of that tally show that under “41” we had 3.06 million executive branch civilian workers (12.8 per 1000 Americans) while estimates under Obama indicate that there are 2.65 million executive branch civilian workers (or 8.4 per 1000 Americans ). 

Statistics and facts like these might get in the way of the argument that government is growing. So let’s ignore these numbers for a minute and consider the troubles facing Federal workers.   Not only have their wages been frozen, but as Ashley Parker wrote in a December 5, 2010 article for the New York Times (For Federal Employees, a Feeling of Being Targets in the Budget Wars): “… as politicians intent on cutting the federal budget try to [put a dollar figure the difference government employees make in the community], career government employees are feeling besieged.”

Will government workers begin to look elsewhere for opportunities?  Perhaps they can look to the financial services industry where, according to the Huffington Post, “Goldman, Morgan Stanley, Citigroup, Bank of America and JPMorgan have set aside $89.54 billion to pay their employees. Bonuses on Wall Street are expected to increase up to 15 percent…”.

However, the advantages of government jobs are well outlined in Parker’s article quoting government employees who highlighted job security and flexibility as important perks of their jobs, even though these workers know they could make more money in the private sector.  Parker quotes John M. Palguta, vice president for policy at the Partnership for Public Service as saying “At the top, the government is not competitive at all; it pays much less… At the start of one’s career, it tends to pay below. In the middle, sometimes it’s about right. And for blue-collar and clerical jobs, the government is paying at market or above.”

The disparity might not be as great when Total Rewards are considered, including the value of defined benefits plans and the like.  But still the situation remains that, at a minimum, direct compensation for public employees is out of whack compared with that of private sector workers.

As Grahall’s Michael Graham says: “This pay arrangement for government employees is a recipe for failure.  And when you add job security and ‘entitlement promotions’, the public sector has become a perfect environment for underachievers.”  Successful companies in the private sector continually evaluate whether they have the right people in the right jobs at the right compensation. As we shared in a recent blog, most companies find that as little as 15% of jobs are mission critical to their success, though it can vary significantly by industry. The employees in these jobs are the company’s most important assets and should be rewarded accordingly, particularly the better performers.  Anything else is an ineffective allocation of resources and does a company disfavor.  Of course we know the government is not constrained by the same P&L concerns of the private sector, but we would suggest that taking a page or even a couple sentences from the private industry’s talent management manual would benefit all Americans by improving the talent of our federal workforce. 

Contact Grahall’s OmniMedia Edotorial board at edie.kingston@grahall.com

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