The fiscal budget proposal for 2019 put out by the White House on February 10th had some unpleasant tidings for employees of the federal government. The Trump Administration’s suggestion of a pay freeze was one of the most worrisome. For those unfamiliar with the term, a pay freeze puts a stop to salary or wage increases for a specified period. The goal of a company, or in this case a government, implementing a freeze is to reduce costs and therefore increase profits or reduce a deficit and potentially pay off debt. Considering the United States’ typically has a massive budget deficit and is carrying massive long-term national debt it begs the question of how long the freeze will last. The problem for employees during a pay freeze is that while their pay remains stagnant, inflation does not. Combine that with the instability created by the indefinite time frame, and you have a recipe for a real headache.
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Pon is not the only voice publicly backing the freeze recently. The director of the Office of Management and Budget, Mick Mulvaney, also wants to put a stop to minimum incremental pay increases that currently happen automatically throughout a federal employee’s career. The idea is to bring the public workforce closer to the private sector regarding the style of their compensation. “The proposal is rooted in data we had from analysis of the way we paid federal workers, and it seemed to indicate that we over-pay at the lower levels and underpay at the upper levels,” Mulvaney said in testimony before one of the House Appropriations subcommittees. The idea is that the incremental increases make it difficult to reward good employees and motivate poor performers under the current “General Schedule” pay scale, a policy enacted by the Classification Act of 1949.
A significant problem for federal employees with the proposed pay freeze is that while Trump mentioned a one billion dollar fund for 2018 to be used across all federal agencies to reward strong employees, no money was provided in the omnibus spending package enacted this past March.
Mulvaney’s testimony did receive opposition from some Democratic members of the House Appropriations Committee. Sanford Bishop (D-Ga.) said, “It seems to me that what you do when you put the freeze there and remove step increases, you remove incentives to get people to work for the federal government who are highly skilled, who have hopes of a good career that will be remunerative to them. It makes it less competitive with the private sector.”
This is the crux of the argument. Pon, Mulvaney, and the Republican government that generally supports them see the problem as being a lack of incentives for people to do a good job and improve performance in areas of need. The Democratic opposition considers the lack of guaranteed compensation as dissuading potential talent who can find more lucrative opportunities in the private sector. Another issue for current employees is that the uncertainty makes it difficult for them to plan for their futures and could have adverse effects on plans already made without anticipation of a pay freeze.
