20 percent pay cut in the cards?

Monday - 1/28/2013, 2:00am EST

Hoping for a buyout this year? Would you gladly take early or regular retirement immediately if offered a before-deductions payment of $25,000. If the answer is "yes," then good luck with that.

The odds of you being hit with a pay cut, of up to 20 percent, are greater than your chances of a buyout.

During the early years of the current recession, it was not unusual for private-sector workers to take temporary pay cuts (of a few months to a year) ranging from 5 to 20 percent. People continued to work their regular five-day shifts, but were paid less. Even unionized groups opted for the temporary pay cut rather than layoffs. Now, temporary pay cuts may be coming to the federal workforce.

Federal agencies are tight for money and these may turn out to be the good-old-days! Things are likely to get tighter before they get better. Even if politicians don't drive the government over the fiscal cliff, force it to sequester itself or continue to keep punting on their fiscal chores, things are going to get tougher in the opinion of most fed-watchers.

Buyouts will never again hit 1990s totals, when tens of thousands of people were paid to leave and agencies consolidated or contracted out functions the Clinton administration deemed "overhead".

In recent years, buyouts have been carefully targeted. They have been limited to specific jobs, grades and even geographic areas.

The only widescale use of buyouts in the past couple of years has been in the rapidly downsizing U.S. Postal Service. But even there the payouts have been much less than those available to workers at other federal agencies. The 2011-2012 time period was a good one for buyouts outside of the USPS. But time and money are not on your side this year. Two reasons:

  • Buyouts are most cost-effective for federal agencies if people take them and depart early in the fiscal year (which begins Oct. 1). Waiting until mid-way in the fiscal year — like March or April — means a greater cost to the government in salary and then retirement benefits.

  • Even if Congress fails to force agencies to cut jobs or programs or demands deeper spending cuts, many are already programmed into agency operating plans which, in most cases, are based on stopgap continuing resolutions, which are themselves a continuation of earlier CRs that were extended.
More likely than buyouts are partial or total bans on hiring, further reductions in travel and training, furloughs and, as a last resort, limited layoffs.

Predicting the fiscal future is tough to impossible. Given the original timetables set by Congress and the White House we should, by now, have gone over the fiscal cliff, prepared for a debt-ceiling-triggered shutdown and sequestration in a matter of weeks. And the House scheduled, then cancelled, a vote on a continuation of the federal pay freeze. None of this has happened. Some or all of it could still happen.

Meantime, while the executive branch waits to see how and when the legislative branch of government will get its act in order, agencies are doing what they can to do more with less. This includes everything from freezing hiring to planning for 22 days of furloughs (one day per week in most cases) to cut costs. While a furlough is better than a layoff, it would still mean a 20 percent pay cut for the average fed.


NEARLY USELESS FACTOID

Compiled by Jack Moore

The tongue of the red-bellied woodpecker is so long that it extends at least three times the length of the bird's bill and wraps around its head when retracted .

(Source: Today I Found Out)


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