Obama Adopts Cato Pay Proposal

The Obama administration is supporting a two‐​year freeze on federal pay. I haven’t seen the details yet, but this appears to be a good start at getting excessive government pay under control.


I’ve been calling for a pay freeze since an op‐​ed in the Washington Post in 2006. Since then, average federal pay has continued to soar far above average private pay, which has finally prompted policymakers to take note. 


The Obama proposal would apparently save $28 billion over five years. Hopefully, that will be the first of many budget savings that the administration and Republicans in Congress can work on together in coming months. I’ve described other ways to tackle the government’s overspending problem here.


The next step to reform federal worker compensation should be to pare back overly generous benefit packages — for example, by eliminating defined‐​benefit pension plans, which come on top of the defined‐​contribution pensions that federal workers enjoy.


Another step would be to call in an outside human resources firm to audit the federal pay methodology, particularly the mysterious formula used to calculate the federal “pay gap,” which purports to show that federal workers are grossly underpaid.


See this essay on overpaid federal workers for details on reforming federal pay.