Obama announced he intends to freeze the salaries of federal employees for the next two years. Of course this excludes the bloated military but we won’t go there. The move is a derivative of the Deficit Panel’s recommendation to freeze salaries for 3 years.
Critics have complained many federal employees are overpaid anyway. Representatives from federal worker unions argue otherwise. They even point out that some of the $5 billion in savings wouldn’t have made it to the employees anyway since they don’t see all the raises. I might suggest that the American Federation of Government Employees reduce their dues a smidgen since the employees have to cut back now too. Current union members pay about $15 a month be a part of the AFGE. I suspect they won’t be cutting back, and in fact might ask for more to represent their employees in more intense lobbying efforts. Yep, your taxes pay government employees who pay unions to lobby the government. It sounds worse than it is though.
Republicans are greeting this announcement with a lukewarm reception. I know I’m surprised too.
But is this just a move to preempt more harsh recommendation from a new Republican Congress? I don’t know. Obama froze White House salaries when he took over. Since then the government has borrowed heavily and increased spending significantly. Republicans would like to reduce the federal workforce significantly, a workforce that has not felt the recession nearly as hard as everyone else. Many state employees have had salaries frozen for a while. Many in the private sector have dealt with layoffs, and some have elected for across the board pay-cuts to save jobs. The only people still protected were federal employees, and it is time for them to take a hit.
Obama has probably made this announcement now to gain some rapport with the Republicans, but I don’t think it will help much unless he plans on doing much, much more. The Republicans are energized and have the backing of many vocal citizens. I like this move, but it’s just scratching the surface. There’s still a lot of pain to be felt for the next decade if the government ever hopes to get control of this budget.
If you’re a federal employee, I’m sorry you won’t be getting a raise. You can vote with your feet by leaving the public sector. If enough leave then the government will have to raise pay to retain talent. Or you can increase your union dues and lobby Congress harder. Just remember these aren’t profits we’re talking about. A big portion of your paycheck comes from money borrowed from China, and another portion from the paycheck of your friends and family.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
