Expert: Federal pay—and long-term trends on public employee compensation—in spotlight

The White House has proposed a zero percent pay raise for civilian federal employees in the coming year, while most federal employee unions and their allies in Congress are proposing an effective 3.1 percent increase. For the moment, a bill calling for the three-plus percent rise is advancing in the House—but whether or not this proposal will become the law of the land is not certain. Yet, this year’s annual debate over the federal pay raise comes in a long-term trend—as unions and other advocates of federal employees point out—of low- to no- pay raises over the years. Academic observers, human resource experts and employee unions have argued that over time, the trend has been unfair and on a practical level degrades the quality of our public-sector workforce. But what is the longer-term outlook for public sector pay—and federal pay, specifically? And what are some of the global forces that could affect that outlook?

Q & A with Peter W. Philips

What’s your take on public employee compensation at the federal level, at this point in time? Philips: I can give you my take on what’s happening in public employee compensation at the federal level as a trend—with an analogy to what’s been happening here in the academic world, here at the state employee level. I can use my university as an analogy—the University of Utah. Basically, we went several years with no raise. Then our raises have come in below inflation. It’s really become a kind of routine process, one of what I would call “bloodless wage cuts”—that is, raises that are there, but on average below inflation.

Your analogy at the state level seems about right for what is occurring at the federal employee level, yes—but why do you think this is happening?

Philips: Well, it’s rooted in the wider economic and political situation. Economically, for many years, in this country we have seen a long expansion, yes, but it’s been a slow expansion. Slow growth is an important factor in the overall picture. Because at the same time as you have slow growth, we see that you have tax cuts. In fact, you see, the slow growth is actually the source of the tax cuts—in the sense that the slow growth has created the political incentive for politicians to offset the negative effects of slow growth on take home income by offering—and ultimately passing—tax cuts.

Doesn’t this situation—in effect, governments enacting raises that don’t keep up with inflation, and stumbling into the future with austere tax cuts to stay politically viable—end up being a race to the bottom?

Philips: It can be, yes. Again, you have to look at the wider economic picture. There are tremendous global pressures on the U.S. labor market, and these are tending to pull down all but a small segment of the U.S. labor market. That privileged segment includes tech, bio-tech, and generally some other more technological areas, which are doing far better compared to the rest of the economy. Government is certainly mostly not that. So, we are left with what? Overall growth—but slow growth, slow growth politically stimulating tax cuts that reduce the financing of government activity, which in turn leads—over time, effectively—to wage cuts of government employees. And those wage cuts—so that they aren’t perceived to upset the apple cart—come in the middle of the night, surreptitiously, in the form of below-inflation raises or wage freezes. And I see this at many levels of government. I see it here, at my university, over these many years now. Just as you are seeing a similar trend in the compensation of federal employees.

View the June 10 issue of FEND  for the full interview.

 

Reader comments

Wed, Jun 19, 2019

when you join congress or senate you are a millionaire from ripping off individuals; taking money under the table any way possible and you become one of the elite who is out of touch with reality. Where do you have a job that you do absolutely nothing for 50 weeks out of a year, get a bloated salary and benefits package. One only hopes that there is term limits and a reduction in total compensation and benefits to these elected morons.

Tue, Jun 18, 2019

It's all part of the BIG plan privatize government. It may take longer, but it will work in the long haul and they know it.

Tue, Jun 18, 2019

Agree with the readers comment, if you are ready and able to retire do so. There is life after the bs you had to put up with from the Clinton, Bush jr, Obama and now this make America great again administration. All the democrats that say they respect federal employees is hot air and gastrointestinal noise.

Mon, Jun 17, 2019

To all elected out of touch officials you are all zeros to the American tax payers. You do nothing but bicker while having high salaries and perverse benefits. For the amount of work accomplished you all flatlined to the bottom rung. AOC you want a large pay raise why not do some real work and grow up. Pelosi, Schumer, McConnel and others please leave at the end of your terms and make America great again.

Sat, Jun 15, 2019

I give up...after 41 years, I'm retiring. Over the last several years with sequestration and whatever voodoo reigns now, has caused the Federal employee to lose 24-28% in spending power. Add to that, shut-downs and furloughs (like the one where I lost about $3000, but was not allowed to benefit from the unemployment insurance payments the Government made over the last four decades thanks to a "sweetheart deal" with DC...

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Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

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