December 14, 2010A significant percentage of federal managers expect their salaries to increase during the next two years despite a proposed pay freeze, and few are making plans to retire quickly or seek other jobs, according to a new survey from the Government Business Council.
President Obama on Nov. 29 proposed a pay freeze in 2011 and 2012 that would apply to all civilian workers, including Defense Department employees, but not to military personnel. House lawmakers on Dec. 8 passed a spending bill with that provision, while the Senate is working on its own version of the legislation.
Workers still will be eligible for certain increases despite the across-the-board freeze. Of the more than 1,500 federal executives surveyed by GBC, the research arm of Government Executive, 38 percent said it is somewhat or very likely they will receive a pay boost in the next two years through promotions, quality step increases or within-grade increases. Nearly 60 percent of Senior Executive Service respondents consider a pay increase very unlikely, however, compared to 48 percent of GS-12 and GS-13 employees.
Observers have expressed concern that a pay freeze could set off a retirement wave, robbing agencies of seasoned talent. Federal managers themselves foresee the same trend -- nearly half of those surveyed believed their co-workers would be more likely to retire if a pay freeze takes effect. Of the respondents eligible for retirement, however, only a third said the freeze would speed their exit from government, and nearly 20 percent said they would likely work longer than planned.
Some managers ready for retirement said their high-three salary, used to calculate annuity benefits, would be lower than expected due to the pay freeze, giving them little incentive to continue working in government. A few respondents said they planned to see how long the freeze would last before making any decisions, while many others said additional measures, such as changes to cost-of-living adjustments or a switch from high-three to high-five, would have a greater impact on their retirement date.
"If this gets coupled with any other attack on federal employees (i.e. switching to a high-five calculation for retirement, additional costs for health insurance, etc.), I will be looking at the next 'best date to retire,'" one manager wrote.
Sixty-two percent of respondents not eligible to retire said a pay freeze would have no impact on their consideration to leave government service, while a third said they would be more likely to seek a job in the private sector. Many federal managers said job security, proximity to retirement and years of investment in civil service would keep them in government.
Nearly one-third (31 percent) of managers surveyed said they somewhat or strongly agreed that a pay freeze is necessary, while 23 percent considered the measure fair. Eighty-eight percent of respondents said a pay freeze would decrease employee morale in their agency.
"The pay freeze is driving morale down," said one manager. "[The] government will lose the ones who have options. Those will be the high performers."
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December 14, 2010