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Federal pay equity: Are we asking the wrong question?

Jun. 2, 2013 - 01:59PM   |  
By DAVID FRICK   |   Comments

The debate over federal pay hinges on one commonly accepted premise: The pay of a federal employee and an employee of a commercial entity doing highly similar work should be highly similar. Pundits on all sides rely on surveys, statistical analyses, opinions and anecdotal horror stories to “prove” that feds are paid too much or too little or whatever “fact” they need to prove to support their agenda of the day, but they never challenge the premise itself. Should the engineer and the accountant working for the federal government make the same as their counterparts working for XYZ Co.? If you ask me, the answer is clear: maybe, maybe not.

The argument that the work is equivalent and therefore the pay should be equivalent fails on its face. Federal employees perform inherently governmental functions, those so linked to the public interest that they must be performed by government employees; commercial employees do not. The federal government, in Office of Management and Budget Circular A-76, recognizes only two categories of work: inherently governmental functions and commercial services. “The longstanding policy of the federal government has been to rely on the private sector for needed commercial services,” the circular says. The government enters into contracts with industry to perform these services, and the salaries of these contractor employees are set by the free market. On the other side, federal employees make decisions that directly affect the public good. Of course, not every fed makes critical public decisions every day, but whether it is only once a day, once a month, once a year or once in a career, the fed has responsibilities to the public that a typical civilian employee does not. The federal work environment is not necessarily more or less complex, just different.

I will concede that the day-to-day duties of a civil engineer working for the Army Corps of Engineers may be similar to those of his private-sector counterpart, but similar is not the same. The fed is measured against the amorphous public good; the private-sector employee is measured against the bottom line. We therefore have two people with somewhat dissimilar jobs being evaluated against two different benchmarks as they pursue two different goals, yet we expect pay parity across the board.

The free market is the proper mechanism to set the compensation for the engineer in industry, but jumping to that same conclusion for the fed is simply naive. The public good is not directly affected by the free market. A temporary increase in the demand for COBOL and FORTRAN programmers may result in a huge pay premium for those with the skill, as was the case in 1999 and 2000, but this market anomaly did not and cannot affect public policy.

Politicians and pundits make the absurd argument that the government can and must recruit the best and brightest, all the while arguing that market pay parity is absolutely necessary in the interest of fairness. In a free market, the best demand the most. In government, the answer is more complex. Some, who have a strong sense of public service, may accept lower pay than they could demand elsewhere, but making that assumption for the entire federal workforce is short-sighted. The most glaring example of differing motivations is demonstrated in the pay of the president. At $400,000 per year, the president would have ranked 496 on the Forbes list of America’s Highest Paid Chief Executives for 2012, yet the president is the highest-paid federal employee. Many presidential appointees leave lucrative employment to enter public service. I cannot even speculate on how many decline to be considered for financial reasons, and I concede that many use public service as a springboard for more lucrative post-public service employment, but I also assert that pay parity is seldom the discriminating factor in accepting a presidential nomination.

I am not suggesting that the pay system for all federal employees should result in total compensation that is higher than, equal to or lower than that of comparable private-sector employees. I am suggesting that the comparison should never be made. The federal government is not a profit-oriented organization. The federal government is a bureaucracy designed to be so inefficient that no dictator can make it work. This structural inefficiency is essential to liberty. The pay of bureaucrats must not be subject to the whims of politicians, fleeting public sentiment or even the free market. If Congress chooses to raise or even lower the pay of federal employees, it must do so for one reason only — to perpetuate a bureaucracy that fosters the public good. Whether comparable job seekers in private industry can demand different salaries is immaterial.

David Frick is a Defense Department employee. The opinions contained in this work are his and do not reflect those of the Defense Department.

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