The two-year freeze would apply to all civilian Federal employees, including those working at the Department of Defense, but would not affect military personnel. It would not affect bonuses or step increases for Federal employees. The White House claims it will save $2 billion for the remainder of FY 2011, $28 billion over the next five years, and more than $60 billion over the next 10 years.
Before the pay freeze can be implemented, Congress must approve it. The likelihood of Congressional approval seems promising; some Congressional leaders have already expressed support. Congress voted in April 2010 to freeze their pay, with the House and Senate opting to forgo an automatic $1,600 annual cost-of-living increase. House members and senators now are paid $174,000 a year; their last pay increase was $4,700 a year at beginning of 2009.
However, a couple of unions are already bitching about it. AFL-CIO president Richard Trumka complained that it undermines the jobs we already have instead of investing in creation of new jobs, while John Gage, president of the American Federation of Government Employees (AFGE), called the decision "a slap at working people" and claims that the White House is using Federal workers as scapegoats for the nation's deficit problems.
The debate over Federal pay vs. private sector equivalent pay has re-surfaced once again. A commenter to the ADN story claimed that Federal employees are underpaid vs. the private sector, noting that a Federal IT employee making $60,000 per year could earn a six-figure salary in the private sector. However, a USA Today survey published March 8th, 2010 indicated that Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations. Overall, Federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.
Even if Federal pay was less, the difference is made up by increased job security and guaranteed step increases. It is difficult enough to fire a Federal employee period; it's almost impossible if the Federal employee is a member of a "protected" class. Federal employees trade windfall compensation for increased job security.
The nest question is, will Alaska follow Obama's example? Recently, the Alaska State Officers Compensation Commission released a proposal to grant a 40 percent pay raise to the governor and a 35 percent raise to the lieutenant governor. The justifications offered in the full proposal are to raise the governor's salary above those of his commissioners, and to make the governor's salary more competitive with those in other states. The first justification is O.K.; the second justification unacceptable. If we're going to ask Federal employees to accept a pay freeze, we should ask state employees to also accept a freeze. At the very least, raise the governor's salary only to $150,000 instead of $175,000. Those of us who live in Anchorage should also express support for Mayor Dan Sullivan's call for a wage freeze for city employees.