Cut federal pay to help reduce the deficit?

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The federal government is borrowing too much and costs too much to run. If it were a private company, it would have cut employee salaries a long time ago to make ends meet, say two economists in a column for Forbes magazine.

And that’s what the federal government needs to do to show it’s serious about fiscal responsibility and reducing the deficit, write economists Robert Stein and Brian Wesbury.

If private companies operated like the federal government, creditors and analysts would have serious concerns about the companies’ fiscal health and reconsider doing business with them, they write. And with unemployment hovering at 10 percent, the remaining employed workforce — many of whom have dealt with pay cuts, furloughs and pay freezes — shouldn’t keep giving their income to provide for pay raises for federal employees, they write.

The pay increase in his budget would actually be the smallest in 20 years. But total compensation per federal worker — cash earnings plus fringe benefits — now averages twice that of the private sector. So cutting cash earnings by 10 percent across the board seems not only reasonable, but justified.

A 10 percent cut would save $15 billion a year, not a lot when compared to the $14 trillion deficit, they write. But “with today’s interest rates, the present value of all future outlay savings would total roughly $750 billion,” they calculate.

What say you? Debates over federal pay can often get heated, so let’s have a vigorous debate — but keep it civil.

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26 Comments

  1. First, I think we have seen that most companies have not simply followed Forbes’ advice of cutting salaries across the board. Instead, many companies have terminated large portions of their front-line workforce while still paying huge bonuses to their executives.

    Second, if the government were run like a business, we would be allowed to charge a fair rate for our services and turn a profit, which would in turn fund our employees.

    But finally, I agree that pay cuts or caps may be in order, but for the top earning government employees. The majority of us are still earning less than our private sector counterparts, even with benefits considered. If you truly examine the numbers rather than aggregates and averages, you will see that the majority of the money is being issued to the minority at the top and not to the workers in the field. As it has been said before, please consider using a scalpel to make budget cuts and not a hacksaw!

  2. This is a no-brainer! WHY hasn’t the federal government ordered an across-the-board FURLOUGH of all government workers, (except the public safety “essential” workers) to a 4 day (80%) workweek equivalent?

    This would yield close to a 15-20% reduction in labor costs, again exempting those “public safety positions” which would require more in-depth research before trimming.

    Most interesting is thanks to a paralyzing snowstorm, District area government was closed for almost a week and noone in the citizenry seemed to notice any difference!

    Second are the benefits: medical care, paid leave, holidays, travel and training, relocation expenses when they CHOOSE to transfer – all of this at taxpayers’ expense it is very unfair!

    And let’s not stop with federal employees. Let’s put the “servant” back into public servant. REDUCE Congress’ pay to stipends/per diems only. Let’s see how many really want to SERVE when all they will be compensated is room and board during their tenure. Maybe they will actually accomplish something during their first term so they don’t have to be reelected for 20 years. Eliminate Congressional pensions and provide them all with medical care and/or hospital care at the public hospitals!

    When I was the CEO of a firm, coming in after the previous CEO left a huge operating deficit, I addressed all the employees PERSONALLY and showed them the options of losing positions OR everyone sharing equally in the cutbacks by furloughing to a 4 day workweek until the deficit was closed.

    The employees sided with an across-theboard furlough because they all felt EQUALLY part of the solution. There was enough flexibility for some to take a full day off per week, while others chose less hours every day for family-personal reasons. Since no particular individual was lost, all skills were still available and no re-hiring or training was required to stay operating.

    The budget gap was closed AHEAD OF SCHEDULE and the following fiscal year, revenues were healthy enough to restore original salaries as well as a year-end bonus across-the-board.

    LEADERSHIP is required to get that kind of willing sacrifice and teamwork.

    I know several professional and executive workers in the government sector and for the life of me I can’t figure out what they actually DO. Oh sure, they keep BUSY, but most of their time is spent on non-productive tasks that make that sitcom, “The Office” look like a serious corporation!

    Trainings and committee meetings absorb the majority of their time and I am not seeing any tangible product or service yielded. Where is the public sector’s report card? Schools and teachers are regularly picked on for non-performance, but what about all those federal government agencies’ employees?

    So many of these departments serve no (visible to the public) useful purpose anymore but they remain. If the federal agencies were independently audited like all the private sectors it would be a first step in the right directin to show their worth and value to the citizens.

  3. I agree with cutting wages but, for example, my son is a nurse and was earning $60,000 in Arizona. He decided to work for DOD because he wanted to be involved in helping wounded soldiers. Now he’s earning under $45,000. He lives in Germany and works in trauma. He does get housing paid but everything is so much more expensive. If they cut his pay he won’t be able to pay his 75,000 in student loans, which he incurred getting his BS in nursing. So, it’s a dilemma. He would have to go back into private nursing. And why would people in professions that are in demand take a pay cut if they could go back into the private sector? A 10% unemployment rate means that 90% of people who want a job are still employed. I’m worried that the government will have an even greater problem attracting good people. Have you taken a look at government websites for example? Most agencies have sites that are clumsy and don’t even work properly; that’s because talented IT people wont’ work for government pay.

  4. To be fair about cutting pay and lively hood, it would make sense that we start with the politicians that listen to lobbyist suggesting pay cuts. We’ll see how far it goes then.

    Then again, I would submit that a 10% pay cut would be a drop in the bucket to a lot of these legislators. Especially the ones who are hostile to the everyday line worker.

  5. sandy dorsey on

    I would think that ALL of the Senators, the President, and all other politicians would be included in this major federal pay cut idea..As well as the bosses/supervisors…
    besides all the lil folks…THE more money you make federally (pay wise) the more money they should take back…
    (excluding charities as well all know those that donate to charities get 98 percent of it back via taxes….

  6. Sure we should cut federal salaries. After all, we all!! make so much money, do’t we? If it was not for locality pay in a lot of areas, the pay would be much less!!!!!!!!!!

  7. Devon LeCointe on

    So, since everyone is ready to cut federal pay, are they also going to cut the pay of the members of congress who are probably making double what I make in a year to help with the deficit?

  8. The facility that I work at has a Summer Hire Program that they could cut and save the government lots of money. There are 25 positions that they will fill for the summer. It takes at least 3-4 weeks to get them in place and then we end up passing them around because no one has any work for them to do, or time to train them. I have noticed though, that most of the last names of the summer hires have the same last name as the department heads that work here. It’s just a chance for these people to get their childrens’ foot in the door so they can get hired on permanent. I would much rather see this program cut than see dedicated federal employees pay cut.

  9. LoJo was wrong when he wrote: “Second are the benefits: medical care, paid leave, holidays, travel and training, relocation expenses when they CHOOSE to transfer – all of this at taxpayers’ expense it is very unfair!”

    As a USDA employee, I know that relocation expenses are only sometimes paid for certain people and rarely do employees have the option to CHOOSE to transfer. Also, “travel and training” isn’t a benefit, it is required for some people.

  10. I’m a fiscal conservative who believes we need to put a stop to all this excessive government spending. If federal employees made more than their counterparts in the private sector, one could make the argument of reigning in federal salaries. However, the reports are very misleading. The average federal salary figure is highly skewed because the federal government has contracted out the majority of its lowest paying workforce over the past several years. Contract salaries are not included in the average federal salary. Most federal employment positions require significant specialized experience while private sector jobs include a significant unskilled and entry level workforce. Consequently, today’s average federal worker is much older and more experienced than the average private sector worker. The reality remains that salaries for similar positions are typically lower in the federal government compared to the private sector. I can tell you from experience, as a Department of Defense manager, that we’re still having trouble in this economy finding applicants willing to take the low paying salaries the government is offering compared to what the private sector can pay them for similar positions requiring similar experience. I’m not saying that exceptions to this scenario don’t exist, but a cookie-cutter approach such as an across the board salary cut is not the solution. This approach would backfire in that the government would not be able to hire the talented workforce required to make the government work better for taxpayers.
    The real solutions are straight-forward. We need to stop pushing all this senseless legislation that’s increasing our debt and crippling our economy. We need to target programs that don’t work and eliminate them without interference from partisan politicians.

  11. Like a lot of Americans, I live within my means. Right now, just barely. Please don’t cut my salary. But I have an idea- cancel bonuses. No one in the public sector should expect a bonus. We agreed to accept an honest day’s wage for an honest day’s work when we signed on with Uncle Sam. I never expected anything besides the salary I agreed to work for, and other feds shouldn’t count on bonuses, either. I was appalled to find out that workers at the VA are demoted or fired if they can’t “make the numbers” on benefits claims processed, but their MANAGERS make tens of thousands of dollars in bonuses if their employees do manage to make the numbers. Even if the claims are processed incorrectly, its all about the numbers, not the quality. So the workers are pushing claims off their desk, sometimes done WRONG, so they won’t be demoted or fired, just so their big boss will get a huge BONUS for the lousy work product. Cut out bonuses altogether, save a bundle, maybe it will improve product quality to boot. Leave our agreed-on salary alone.

  12. We need to remember that the government is involved overall in projects that the private sector cannot because it is not profitable but is deemed necessary by the public. Basic biomedical research for example, most of which is funded by NIH has lead to many advances in medicine. Think of all of the technologies that developed from basic research at NASA. I can go on forever on this one. You are comparing apples to oranges. I agree with earlier posts that talk about cutting programs that don’t work but cutting programs that pay salaries, under those of the private sector, whose sole purpose is for the public good is in my opinion, ludicrous. It is hard enough attracting top talent, start making pay cuts and you can say goodbye to any risk taking and innovation in the sciences.

  13. concerned fed on

    I am a fed. Relatively new to the workforce (graduated in 2007 with a degree in physics). I am not sure how many of the readers have an idea of how difficult it is to live in the DC area on the salary of a GS-5-9. My father was an uneducated man who has worked at a grocery store and at 26 he had a beautiful home and two kids. I am forced into communal living with strangers from craigslist because of being underpaid in a very high cost of living area of the United States. 3 of my roommates are Feds in different sectors of government as well.

    My point here is that the federal workforce is very underpaid (for your average general scale employee) when compared to their counterpart in the private sector and generations of the past. I have multiple peers who graduated with me and are making 40-70% more than I am currently. Cut my wages? I am already performing highly specialized tasks at a very underpaid rate. Honestly, if I had to take a pay cut I would leave the federal workforce for the private sector, or just get a job bar tending, I made A LOT more money doing that. I am willing to bet that many of us young, educated and highly skilled federal employees would do the same.

  14. Make it fair on

    Sure I will take a cut as long as it is done across the board! Cut everyone by 10%, the President, Vice President, Congress, Military personnel, contract workers (the biggest earners of federal money). Let’s not stop there, cut the Social Security payment by 10% as well – I bet that won’t fly but those that exhausted what they paid in are on a Federal payment, like it or not. And finally let’s cut all other payments by 10%, like foreign aid, unemployement, welfare payments, medical grants, pell grants and other special programs.

    That should make everyone angry, is that what we were looking for?

  15. Cut federal pay and benefit, say I.

    Far too many federal employees loaf at home 2 to 3 days a week on the public’s dime. This outrage is called flexiplace, and the federal unions love it.

  16. If my federal pay is cut by 10 percent or any percent-then every taxpayer should also do their part by paying the same percentage increase in income taxes. Federal workers always get the bad press when things are going poorly economically.

    Many of the same criers are the ones who wouldn’t touch a federal job when times were good. They knew that they could make more money in the private sector.

    Since you say we do so little work for too high a paycheck you should have gotten on board. Now you can go have some rotten cheese with your WHINE!

  17. Federal employees get bad press because your services are not “sold” to us, but rather forced. I think IBM or Microsoft would love the government model: They’ll provide software and services for “free” all while coercively garnishing wages of employers and employees to cover their not-for-profit “expenses.” We “whine” because almost no one would pay for your service voluntarily. The rest of us, who aren’t colluding with government, have to provide a service or product that people actually are willing to pay for.

    I work in the technical sector and their is little to no pay difference. If you figure in the benefits, then the government employees are well ahead. The reason why I and others chose not to take the jobs (I was offered a job with the NSA after contracting through a private company) was because of the work environment. The NSA was/is a good agency to work for, but I’ve also seen other agencies like the DOL and SSA, which are a complete joke.

    In fact, I rarely hear others use salary as the main reason not to take a fed job. Its generally because there is no competition, little incentive to provide a good product (most of that is done by the contractors) and those that do work are unfairly burdened by the unmotivated majority.

    The problem is lack of accountability and competition. Certain agencies should just be dismantled and the remaining should be severely cut, with contractors being some of the first to go. Those that remain should compete for high-paying jobs, with no guaranteed pensions or union protections.

  18. Yeah, i work for the fed and see lots of waste that could be cut without the salary being the first thing. People in the private sector are more interested in seeing government workers suffer with this idea more than the actual benefit it will create. There are lots of slugs in the federal workforce that should never been hired in the first place and it makes me mad because I have worked hard my entire career and have always had the slugs work dumped on me because the bosses knew it would get done if I did it. In the mean time, the slug workers surf the net all day and make excuses. A lot of it has to do with EEO and the fact that the managers are afraid to do anything because of the extra work it will cause them and create lawsuits from EEO repercussions.

    Anyway, cutting the debt is going to cost a LOT more than just federal salaries and doing that without a lot of thought and analysis is a mistake. Most of what we see now is just political knee jerking designed to get votes.

  19. Flexiplace? I just read this comment Harry wrote:

    “Cut federal pay and benefit, say I.

    Far too many federal employees loaf at home 2 to 3 days a week on the public’s dime. This outrage is called flexiplace, and the federal unions love it.”

    Not sure what that is, but it appears it would be much cheaper on the taxpayer as a solution to allow people to work from home (save on office space, etc.) , but sure enough, no matter what the government did for a solution people like this Harry guy would never be satisfied and still find a way to point a finger at the federal employee until there weren’t any left.

  20. Not everyone that works for the Federal Government makes a huge salary, cutting every salary would hardly be fair. Its going to hurt a lot of Federal Employees that barely make it now. My dad is a federal employee and he makes $36,000.00 a year thats barely above poverty. If they want to make these cuts try cutting congress, and the presidents’ salaries. Just because someone works for the Federal Government does not mean they are raking in the big bucks.
    There might be some Federal employees that sit around doing nothing all day, but there are also a lot of them that work their tails off. You cannot lump all federal employees into one group.

  21. Harry needs to get his facts straight there are just as many lazy and worthless people that work in the private sector. There are a lot of hard working people working for the Federal Government my dad and my husband included.

  22. I have been a federal employee for the federal government for 10 years. I have read many comments here. First, I agree we need to reduce the size of the federal government. I was placed under an initiative to pay for performance which I thought was a good idea. After the democrats too office I was then placed back into the GS pay plan which I think is outdated. Its true deadwood employees are very difficult to fire and that should change. I have worked in the private sector too and know what it is like. Currently myself and my boss are striving for more accountability in our office by tracking each individual’s time and projects. The goal is to have all person’s 75% billable on projects that are assoicated with a budget. In each project a person is given x number of hours and not any more. Each day all of us turn in our time sheets to show specifically what our time was spent on. This provides much more accountability which is more like the private sector. My salary has been frozen for the next three years of which I have no complaint. I am also willing to take some reduction in benefits. If I can sacrifice to help then so be it. The problem is there are many social programs the governement has in place that need to be reduced or ended. We now have an entitlement society that does not know how to work…and or have self respect by carrying his or her own weight. Its time we all tightened our belts and lived with what we have. The winds of change are upon us. I am thankful for what I have. I also know that because of the serious financial problems the US government has…my job is not guaranteed anymore like a governement job used to be. I am a taxpayer as well and try to do what I can. We do need more accountability and stucture to give the taxpayers what they pay for.

    Sincerely

    A federal worker

  23. We do not make a load of money like people think. I work for the Department of Veteran Affairs (VA) and i make 22851! Does that sound like alot to you? And you want to take 15 percent from that? Sounds crazy!

  24. A few have already said this, but the answer is not to cut all federal employee’s salaries. The answer is to cut CONGRESSMEN’S and the PRESIDENT’S salaries. I would even go so far as to eliminate some positions entirely. These people are meant to be PUBLIC SERVANTS. Their reward should consist of a sense of accomplishment in helping their countrymen. They should not be getting rich on taxpayer money.

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