Economics

How much has the pay freeze affected federal employees?

12.12.12 Biggs Average Annual Salaries 2007-2012

In 2010, Congress passed and President Obama signed legislation instituting a two-year “pay freeze” for federal government employees. Public employees and their unions are protesting that the freeze should not be continued. “Our position is quite firmly that we are the only group of Americans that have [already] had to make any sacrifice whatsoever to deficit reduction,” said Jackie Simon, the public policy director at the American Federation of Government Employees. “You’ve got to look elsewhere for your cuts if you have to make them.”

That said, the freeze isn’t quite a solid as you may think. While annual across the board pay increases have been frozen, federal employees can still qualify for a number of different raises. So-called “step increases” based on longevity are all but automatic. In addition, employees can qualify for promotions that bring pay increases, as well as for annual bonuses based on performance.

So what does it all add up to? Using data from the March Current Population Survey, I tracked the growth of average annual salaries for private sector workers and federal, state and local government employees from 2007 – prior to the recession – through 2012, the latest data available. Federal and state government employees did the best, with over 15% cumulative growth in pay. Private sector and local government employees did less well; local government workers received 11.4% total pay increases, while for private sector workers average salaries increased by only 10.8% over that five year period.

Are federal salaries growing more slowly right now than private pay? Maybe so. But private sector workers took a hit early in the recession, 2008 and 2009, while federal pay continued to rise as scheduled. A slowdown in federal salary increases for the next several years combined (we hope) with a return to private sector wage growth, may help restore pay parity. In any case, the idea that federal employees have suffered disproportionately doesn’t seem to hold up very well.

One thought on “How much has the pay freeze affected federal employees?

  1. Your analysis is over-simplistic. A growth in % of the average pay of all employees does not equal the average % pay raise.
    I don’t see where you adjusted the growth in the average Fed salary for all the insourcing?? In 2007-2012, several billion dollars of contracts were insourced to Fed Service. These were almost exclusively high-paid scientists, engineers and management consultants.

    Also, the basic services- custodial, landscaping, secretarial, project management only exist on contracts. The labor mix has changed dramatically to become even more white collar and must be compared to a similar labor mix for any credible conclusions to be made.
    I also object to counting ‘promotions’ in the equation for pay raises UNLESS you have counted them in the private sector calculations as well. The annual bonuses are capped at 1% of all salaries..and so that is a nominal amount.

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