Will federal pay freeze rear its head again?

Monday - 2/4/2013, 7:49pm EST

Andrew Biggs, resident scholar, American Enterprise Insitute

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With the House postponing a vote on extending the federal pay freeze, feds are back on course to get a slight pay increase in March — for the first time in two years.

But Andrew Biggs, a resident scholar at the conservative American Enterprise Institute and an expert on public-sector compensation, says that the pressing budget issues the government faces means the issue of federal pay probably isn't going anywhere.

Last month, Rep. Ron DeSantis (R-Fla.), introduced a bill that would have blocked the 0.5 percent pay raise for federal employees mandated by President Barack Obama. Amid the larger effort to increase the debt limit, House leadership tabled DeSantis' proposal.

But Biggs said even if the DeSantis bill remains sidelined, he wouldn't be surprised if a pay freeze extension emerges as part of a broader deficit deal between the White House and House Republicans.

"There are a lot of other issues going on," he said in an interview on Federal News Radio's In Depth with Francis Rose show. "President Obama didn't agree to a pay freeze for federal employees because he wanted to do it. He did it as a negotiating chip in a much broader discussion of budget options."

Pay debate revisited

DeSantis' bill — like nearly all legislative proposals dealing with the federal pay freeze — reignited the longstanding debate about how federal pay stacks up to private-sector salaries.

In October, the Federal Salary Council reported that federal employees earned, on average, 34 percent less than their private-sector counterparts.

But AEI has sought to rebut claims that federal workers are underpaid. In a June 2011 analysis prepared by Biggs, the conservative think tank found federal workers on average earned 14 percent more than private-sector employees.

The nonpartisan Congressional Budget Office, in a report last January, found federal employees earned about 2 percent more in wages compared to those in the private sector.

"So I think there's consensus among economists, at least, the people who are really looking at these issues that certainly at the very least federal employees are not underpaid," Biggs said.

However, the Government Accountability Office last July said nearly every study measuring public vs. private pay used different methodologies, making it difficult, if not impossible, to compare them.

Fair share or more to sacrifice?

Biggs said determining whether feds are overpaid or underpaid helps determine how to "share the pain" when making hard budget decisions.

"You don't want to see this happen to federal employees, but at the same time it's a function of the larger budget problems and the larger weak economy that we have right now," he said.

At the same time, private-sector workers have also seen layoffs and pay cuts, Biggs said.

Federal-employee unions maintain federal employees have already paid their fair share toward deficit reduction. They estimate the two-year pay freeze has netted the government $88 billion in savings, while a separate measure requiring newly hired feds to contribute more toward their pensions is expected to save the government $15 billion.

"A more than two-year pay freeze, constant threats of government shutdowns and furloughs, working with fewer resources because of budget cuts-these are things that federal employees live with every day. ... No other group has been singled out this way," Colleen Kelley, president of the National Treasury Employees Union wrote in a recent letter to lawmakers urging a "no" vote on DeSantis bill.

Biggs said he understands the unions are doing their jobs by representing federal employees but that he doesn't believe feds have suffered larger pay cuts than private-sector workers, who were hit particularly hard in the early days of the recession.

"I don't think you can make a strong argument that federal employees have been singled out and treated worse," Biggs said, citing low unemployment among federal workers and federal health and retiree benefits.

"A lot of private-sector workers would be very envious of that," he said.

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