Obama’s Federal Pay Freeze That Wasn’t

No one seems happy with President Obama’s announcement that he plans to freeze pay rates of the federal work force. The right claims that federal workers are significantly overpaid and wants pay rates to be slashed, not frozen. The left claims that federal workers are underpaid and need the cost of living raises. Note that President Obama doesn’t seem to have the authority to freeze federal pay without the approval of Congress, and that congressional pay scales are not being frozen.

What doesn’t seem to be getting much attention is that many government employees will still be getting raises under this “pay freeze.” They won’t be getting “double” raises, meaning that the overall average government pay-scale, which is tied to the cost of living, won’t be increasing, though many employees will continue to move up pay grades and earn more money.

Like many things the government is in charge of, the pay scales they use are complicated. A significant portion of the federal workforce (though not all) uses what is called the General Scale. The GS is a chart with “Steps” and “Grades.” The Grades are roughly based off of your level of experience and education while the steps are based off of seniority. Here is a chart of the current general scale. An explanation of the Grades is here. An employee with a bachelor’s degree will often start between GS 5 and 7, while an employee with a Master’s degree (or a few years of experience at a lower level) will start around GS 7 to 9.

Take, for example, this job as an economist with the Department of the Treasury here in Washington. It begins as a Grade-9 and you cannot advance past Grade-9 at this particular position. The initial pay scale ranges from $51,630 to $67,114 — not including federal benefits which are typically much more generous than the private sector.

Presumably a new federal employee begins around Step 1 or Step 2, though its certainly possible that some could begin at a higher step. For steps 1-4, you are automatically moved up each step after 1 year of “satisfactory” service. Given the government’s definition of satisfactory, its safe to say that these are almost always received. Steps 5 through 7 take two years each, while Steps 7 through 10 take 3 years each.

So, for a newly hired GS-9, this is what his or her pay scale looks like in a worst case scenario over 10 years:

Year 1, Step 1: $51,630

Year 2, Step 2: $53,350 (3.3% raise)

Year 3, Step 3: $55,070 (3.2% raise)

Year 4, Step 4: $56,791 (3.1% raise)

Year 5, Step 4: $56,791 (no raise)

Year 6, Step 5: $58,511 (3.0% raise)

Year 7, Step 5: $58,511 (no raise)

Year 8, Step 6: $60,232 (2.9% raise)

Year 9, Step 6: $60,232 (no raise)

Year 10, Step 7: $61,952 (2.8% raise)

I say worst case scenario for a number of reasons:

  1. There is a snowball’s chance in hell that the federal pay-scale will remain flat for 10 years. It isn’t even clear that there will be enough votes for him to freeze it during a recession. Here is a historical (1998-2006) record of GS9 Step1 annual pay increases for the Washington, D.C. area. The average increase from 1998-2006 is 4.1 percent. This means that on years that a federal employee moved up a step the average raise would be approximately 7 percent, while years that didn’t involve a “raise” would still see a 4 percent raise.
  2. A number of years at the GS-9 level makes one eligible for higher grade positions elsewhere.
  3. Many jobs that begin at lower grades (GS 5-8) allow for employees to move up grades and steps simultaneously.

I’m confident that a number of private sector workers would be more than satisfied with these annual raises. To conclude: when is a pay freeze not a pay freeze? When a huge portion of federal employees will still be getting annual raises.

Image credit: afl cio’s flickr photostream.