NCPA - National Center for Policy Analysis

Federal Pay Freeze Plan Wouldn't Stop Raises

December 8, 2010

President Obama spoke of the need for sacrifice last week when he announced a two-year pay freeze for federal employees.  But feds won't be too terribly deprived in 2011 and 2012.  Despite the freeze, some 1.1 million employees will receive more than $2.5 billion in raises during that period, according to the Federal Times.

  • Congress is expected to approve Obama's proposal, which cancels only cost-of-living adjustments for two years.
  • Regularly scheduled step increases for the 1.4 million General Schedule (GS) employees -- who make up two-thirds of the civilian work force -- will continue.
  • The size of those increases ranges from 2.6 percent to 3.3 percent and by law kick in every one, two or three years, depending on an employee's time in grade.

In addition to General Schedule employees receiving step increases, some of the government's roughly 187,000 wage-grade employees also will receive step increases.  And many employees will receive promotions, which also come with salary increases, Jeffrey Zients, the Office of Management and Budget's (OMB) deputy director for management, said last week.

Many senior employees won't get raises, but will receive bonuses for good performance, although OMB and the Office of Personnel Management (OPM) are telling agencies to cap bonuses at 2010 levels.  OPM said it does not yet have information on fiscal 2010 bonuses, but the Asbury Park Press of New Jersey reported in June that the government paid $408 million in bonuses to 359,400 people, an average $1,135 each, in fiscal 2009.

Obama's proposal was swiftly denounced by federal unions and employee groups, who cited data from the Bureau of Labor Statistics that suggest private-sector salaries grew last year faster than federal wages, says the Times.

Federal Times calculated the $2.5 billion cost of step increases using OPM data on the number of employees at each GS grade level and step, and the within-grade increases those employees will receive over the next two years by advancing to the next step.

Source: Stephen Losey, "Federal Pay Freeze Plan Wouldn't Stop Raises," Federal Times, December 6, 2010.

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