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Frozen salaries and revolving doors

By Dylan Matthews

I suppose it's to be expected that calls for federal employee wage freezes would become a key policy plank of deficit hawks and libertarians. It's an easy tack to take. Most voters don't suffer when the livelihoods of federal workers are threatened, and wage freezes allow slash-happy members of Congress to portray themselves as fighting the special interest of government employees' unions. There are some obvious problems with freeze proposals – not least when their advocates erroneously claim that federal employees make more than private-sector workers – but the idea is appealing enough to not go away.

What is amazing is that these proposals are, if anything, picking up steam after the BP oil spill. Report after report on the Minerals Management Service has detailed how a permeable border between work in the oil and gas industry and work in government allowed things like the faulty BP oil rig to slip through. Revolving-door situations like that have a number of causes, but a key one is that federal bureaucracies don't pay that much. Oil and gas companies, by contrast, do. The salary differential is a powerful motivator for civil servants to act in ways favorable to the companies they're regulating, so as to secure a higher-paying position in the future.

So it's somewhat shocking that deficit worries are causing lawmakers and pundits to want to exacerbate this problem by preventing regular increases in federal salaries. A pay freeze is a recipe for a corrupt regulatory state, and anyone who cares about preventing fiascos like the BP spill should reject it out of hand.

-- Dylan Matthews is a student at Harvard and a researcher at The Washington Post.

By Washington Post Editors  |  May 27, 2010; 11:08 AM ET
 
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Comments

Few have symathies for federal employee wage freezes and posiibly layoffs.

It's pretty much understood by all that federal workers, most unionized, get above market for the work done, above market benefits, early retirement defined benefit pensions and long paid vacations, and there's too many of 'em anyway.

In short, they are overpaid and no one cares if they take the hit. I certainly don't

Posted by: WrongfulDeath | May 27, 2010 12:09 PM | Report abuse

I'm not in favor of a pay freeze, and don't think it's the cause (or cure) of our deficits problem, but I'm also not sure the causation you suggest between salary and corruption is either provable or correct. After all, if low (or frozen) pay were the cause of corruption, we wouldn't have all this graft at the top: in business, on Wall Street, or even in the Senate, where the pay isn't all that bad (but the temptations manifold). The cozy relationship between the oil industry and the government bureaucracies that oversee it has been established for a long time, and I don't think it had as much to do with bureaucrat pay. It seems to have been more of a function of industry influence in general and lack of expertise in this somewhat arcane area by normal good government types. And after all, the bureaucrat who just got the hatchet had decent bona fides as an environmentalist it would seem.

Since everyone is talking about optics these days, however, a government pay freeze would not be so unwise in that regard. Most cities and states have had freezes, furloughs, layoffs and other tactics for budget reduction. Every academic I know (including the main breadwinner in my family) has been on salary freeze the last two years (and academics aren't that well paid either). I haven't seen it lead to corruption yet, though who knows when the bills mount up what will happen. People have felt actually LUCKY to have had to live with pay freezes these past few years, as opposed to the job loss that has afflicted so many. A little (temporary) empathy on the part of the government might be a political winner. Since the economy is said to be improving, it could be lifted after, say, the midterm elections. (Cynicism intentional.)

Posted by: JJenkins2 | May 27, 2010 12:10 PM | Report abuse

The cited WaPo opinion piece includes a handy link to a USA Today report (http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm?obref=obinsite) which explores the 80% of federal taxpayer-funded employees earning more than the counterparts (that is, taxpayers who pay them). That Orzag, a federal employee, would argue against a freeze of his own pay is not overly surprising.

Posted by: rmgregory | May 27, 2010 12:11 PM | Report abuse

There is an element of self-interest here. Taxpayers want someone else's ox to be gored and decades of GOP rhetoric during a period when private sector employees saw their pensions and health care severely undermined has made public employees a handy target. At the same time, regulated industries benefit handsomely from a lack of regulation and an ability to game and bribe regulators (at least in the short run), so they feed the "hate the feds" talk.

After 9/11 there was a brief period of respect for public employees like first responders, and when there is an emergency everyone demands a response from the public sector, even the Bobby Jindals and Rick Perrys. But as soon as things go back to "normal" it is back to cutting and public employees are a punching bag.

People who understand the contributions to our welfare that things like public health, education, an integrated infrastructure, a reliable and honest regulatory apparatus where there are risks (building codes to offshore drilling) and other kinds of public services in addition to the military need to make that case and stop being defensive. And public employees need to give a little in egregious cases like the inability to fire ineffective teachers and the gross distortion of resources in our prison system (at least in CA).

When properly run and with adequate morale and pay, public employees can usually get certain kinds of jobs done much better than a private company that is in it for profit. For-profit companies too often hire cheaper and less expoerienced labor and cut corners to protect top management's compensation, leading to substandard service. We need to recognize that there are areas where profit should not be an issue and the "market" does not work except as an adjunct, like health care, public safety and education, and recognize the need for regulation of the private sector in its appropriate spheres.

Posted by: Mimikatz | May 27, 2010 12:42 PM | Report abuse

Dylan,

Pay attention. Its not an ERROR. Orszag just tries to explain it away by claiming that Federal employees are more tenured. Like that's automatically a good thing.


Is tenure a good thing if the employee's in the MMA?

It is an irrefutable fact.

Orszag can try to use clever ploys to divert attention from the truth but the fact is that 8 million employees were laid off in the private sector. Millions more were not given a standard pay raise that government's unionized employees get automatically.


While I also don't know I'd expect the Federal government's gold plated benefits are not factored into the statistical equation which would cause further separation from the public and private sector.


Its like what's going on in NY state. The governor is trying to balance the budget by requiring furloughs. The unions are obviously fighting it. Fine they don't like it, FIRE them.

Posted by: visionbrkr | May 27, 2010 12:46 PM | Report abuse

Both my parents were federal employees (NASA) during the Gingrich gov't shutdown. My brother worked in the the court system. I may soon work for an agency too. There are some benefits regarding pensions, retirement ages, well-defined working hours, some automatic pay raises, job security, etc. but in all of our cases, a higher salary is NOT one of them. Everyone one of us could make (or has made) way more in the private sector. My brother could make 3 to 5 times as much being a non-gov't lawyer, but his shorter gov't workday allows him more time with his family and outside work activities. Its a trade off. Plus, for all of us, be it the space program or working on capital punishment cases, there is a sense of civic duty and national pride. Very few people work for the gov't for the money and most could make more if they didn't, but life is not all about money. In reality the lower pay is what keeps a lot of great talent from NOT working for the government.

Posted by: nylund | May 27, 2010 12:50 PM | Report abuse

Mimi,

I've gotta say it really bugs me that people lump all Federal employees into categories like that to justify themselves.


Comparing first responders to a government bureaucrat that sits there and watches porn all day long at the SEC is like comparing the CEO of Exxon to a secretary at a law firm.

Posted by: visionbrkr | May 27, 2010 12:53 PM | Report abuse

While the primaries were in full swing, I noted that one of the biggest un-commented on issues that would face either the Demo candidate was draining the fetid swamp the Bush Admin had made of the federal bureaucracy. It's no suprise all these issues are coming out now considering it can take years to change a culture in the public sector. Clinton and Gore had the benefit of inheriting a bureaucracy from a predecesor who actually valued and promoted public service.

Issues at the MMA? Gasp, it's almost like the same exact issues that have been going on since before 2003. Thankfully, we actually have an administation willing to deal with the issues and make changes.

Posted by: Jaycal | May 27, 2010 12:55 PM | Report abuse

So what is wrong in having 'pay freeze' for Federal Employees? Employees in Private Sector have endured pay cuts and layoffs so this is nothing a big deal.

About revolving door - that is bull sh*t. That cannot be a reason to continue salary increases. Dylan be careful of what you intend. The solution for 'revolving door' is simple - once served in Fed Government (even for a day); you should not be allowed to work for related industries for next 2 years. How about that? Are you worried that you will not get good employees for Fed job? That means you do not have any idea about nature of our 'unemployment'. Don't you read European news? By making Fed positions as fat pigs (those are not that bad in USA compared to Europe); you essentially invite the financial calamity.

So bottom line - it is least what Congress can do to freeze the pay of Fed employees. It needs to go beyond and also enact 'revolving door' by prohibiting private sector industry job after Fed work.

Posted by: umesh409 | May 27, 2010 1:03 PM | Report abuse

"The unions are obviously fighting it. Fine they don't like it, FIRE them."

visonbkr, you're right, unions are behind everything evil in the economy now. To protest against this, I suggest never taking a vacation again... ever, because it would be bad to promote these kinds of union-sponsored employment activities.

And seriously, you're comparing first responders to... the CEO of a major oil company responsible for one of the worlds largest environmental disasers? Lets put on our thinking cap, shall we? A payroll clerk is just one of those goddamn bureaucrats until you don't get your paycheck, that secretary is the same until that legal brief isn't filed, the accountant is a bean-counter until your company goes bankrupt. I have the feeling your modestly self-employed and pretend you're going to become the master of the universe when your great idea pans out, until then, woe betide to all those in the great unwashed.

Posted by: Jaycal | May 27, 2010 1:04 PM | Report abuse

Jaycal,

please show me where i said unions are behind everything evil in the economy?

FYI, I run my own small business so when I take a vacation clients need to get a hold of me they do. I get ahead through hard work, not a gold plated pension.

You also need to go back and re-read my post. I'm not comparing a first responder to the CEO of a company (oil or otherwise). I said I'm sick and tired of the MimiKatz's of the world using first responders as their "shield" to justify bureaucrats abuses. END OF STORY.


I have the feeling your modestly self-employed and pretend you're going to become the master of the universe when your great idea pans out, until then, woe betide to all those in the great unwashed.

Posted by: Jaycal | May 27, 2010 1:04 PM | Report abuse


Seriously?


Posted by: visionbrkr | May 27, 2010 1:31 PM | Report abuse

Since all these government employees are so grossly underpaid and could make far more in the private sector, according to our dem friends, we should fire, say, 60% of them. This would then create a giant increase in economic output since they would all get paid so much more, increasing tax revenue and ending the recession. Then hire all the unemployed college grads to replace them at half the salary (beats working at Starbucks) and everyone's happy! Seems like we would actually be doing them a big favor by terminating them since they are so woefully underpaid.

Posted by: sgaliger | May 27, 2010 1:33 PM | Report abuse

Will these same Congress-persons extend this freeze to their salaries? If the Federal Civil Service and Retiree's don't deserve a pay increase then neither do any of the others in the Federal Government, and that specially includes the Executive branch as well as Congress and the Military. If you are going to be fiscally austere, be consistently austere, don't discriminate.

Posted by: weaverhv | May 27, 2010 1:59 PM | Report abuse

weaverhv,

I believe they're already done that for the last couple of years but you're right, they should.

but hey what do i know, i'm just modestly self-employed right with delusions of grandeur right Jaycal?

Posted by: visionbrkr | May 27, 2010 2:05 PM | Report abuse

Dude, welcome to the real world where people take pay cuts to keep their jobs. I know people who haven't had a raise in 5 years!

Posted by: obrier2 | May 27, 2010 3:44 PM | Report abuse

Dylan is completely wrong about federal salaries, and it's funny he would link to Peter Orszag's dishonest piece about it. Orszag addresses only the salary gap, which is about 8K, much of which is explained by the level of education (though I'd like to see him justify that with some evidence that these more educated people actually produce more to warrant the income, but I'll grant the salary gap for the sake of argument). The real problem is the gap in benefits, which is $31K per year. Orszag didn't even attempt to address that, because he knew there was no defense of it.

So no Dylan, there is nothing erroneous about the statement that federal employees are paid substantially more than private sector employees even after adjusting for education levels. It is a fact.

More questions here: http://econlog.econlib.org/archives/2010/03/two_questions_f.html

Posted by: ab_13 | May 27, 2010 4:37 PM | Report abuse

mgregory (and several others) - That USA Today article is absolutely riddled with error, as Orzag's article and others have pointed out. Contrary to the conventional wisdom, government employees don't make more than their private sector counterparts. Think of an actual federal employee. Got one in mind? Now, make sure you're actually talking about a federal employee, not a contractor. (If not, pick again.) Now got find that person's salary. Not find someone in an equivalent job in the private sector. Don't compare BoP correctional officer and mall cops, but actual equivalents. Where, pray tell, are these overpaid federal workers? Are they national park rangers? FBI agents? Department of Agriculture analysts? Secretaries?

As for benefits, federal employees do generally fare better than the average American worker. But before you continue to complain about the lavish benefits feds supposedly get, figure out what those are. Defined pensions? Most feds (who started with the government in the past couple of decades) don't get pensions. They get the same sort of 401K-style benefits that your average white collar worker gets. Health benefits? Yep, the feds get them. And their employer pays about 80% -- better than most Walmart employees, but on par with the private sector average.

There are undoubtedly good things about being a federal employee, as compared to the private sector. Higher pay isn't generally one of those things.

Posted by: pmp888 | May 28, 2010 12:58 AM | Report abuse

Wow...another piece full of lies from Matthews... This guy is so partisan he can't see facts.

"Most voters don't suffer when the livelihoods of federal workers are threatened,"
A salary freeze doesn't threaten your livelihood. Especially if you are a Krugman-style deflationist.

Why the heck do government employees need unions? It's frankly an insane concept, akin to a contractor getting a no-bid monopoly on supplying postal workers, for example.

Government turnover is not that high.

The *real* problem with government salaries is that they are on a *union* style GS scale, where years experience is valued over ability to do the job. Unlike the real world, there is no opportunity for people to achieve high salaries through high performance. It's too *equal*, missing the wage disparities that high tax lovers decry, but which make it possible to win the war for talent.

Posted by: staticvars | May 28, 2010 8:57 AM | Report abuse

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