Will Freezing Federal Workers’ Pay Make A Difference?

by Stuart Shapiro

I have very mixed feelings about President Obama’s announcement today that he is freezing federal wages for two years.

“The hard truth is that getting this deficit under control is going to require some broad sacrifice and that sacrifice must be shared by employees of the federal government,” Mr. Obama said

It obviously will have almost no impact on the deficit or debt, so it is largely symbolic politics.  Is the cost worth the gain in symbolism?

I used to be one of those federal workers and I still know many people who are.  They are nearly uniformly hard-working people who took their jobs because they love their country and want to make it a better place.  Also, the idea that you can compare average federal salaries to average private sector pay and conclude that government workers are overpaid is idiotic (once you control for education and profession, the salaries are nearly identical).

On the other hand, federal workers do get compensated in the form of benefits and job security in ways that private sector employees do not.  And I have no problem in the idea that shared sacrifice should include some cutback in salaries that can be described as comfortable.  I just wish that all this shared sacrifice was accompanied by sacrifice by the truly fortunate, those with incomes over $250K/year who may end up getting their tax cuts extended.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.