The downside of working for Uncle Sam

Good News: Having a good, steady government job has always been a nice thing to have. Unlike the private sector, nobody got laid off during the Great Recession.

During the two-year period when some companies cut employees pay by as much as 25 percent, government workers got raises of 2.5 percent in 2008, 2.9 percent in 2009 and 1.5 percent in 2010. That was followed by a three-year pay freeze but eligible workers still got within grades raises (worth about 3 percent) on schedule.

During the belt-tightening that took place in the recession, many private sector 401(k) plans got hammered. Not just by the stock market, but also by major employers who — if they offered any matching contributions to employee accounts — stopped doing it. And in most cases those matching contributions have never come back.

Failure to make a “profit,” in a federal agency is not a problem. Most don’t. They provide services rather than generate money. But that formula doesn’t work in the private sector as long-time employees of Sears and Kmart are apparently about to find out.

Many private sector companies have eliminated long-time pension plans. Gone. Period. Employees who stick with them for a career will have to finance their own retirement via Social Security, their own contributions to a 401(k) plan and savings.

By some estimates, only one-third of working Americans will have enough money to retire when it comes time.

Not So Good News: While usually sheltered from much of the economic bad news, there is also a definite downside to being a government employee in 2017. Each new administration presents its challenges and, especially in the first year, has the federal workforce in a state of confusion.

One of President Bill Clinton’s first orders was to cancel a federal pay raise based on a formula approved by former President George H.W. Bush and a Democrat-controlled Congress. The Obama administration gave government the “gift” of sequestration, which hit agencies hard before and could again. The gift that keeps on giving.

President Donald J. Trump has sent a budget outline to Congress that may — or may not — require federal agencies to offer buyouts and early retirements to long-time workers. If they don’t make the offers, or if not enough people take them, the next step could be reductions-in-force.

RIFs are messy because they don’t get at the higher paid workers. Under the fed’s last-hired-first-fired system, people with seniority can bump newcomers out of their job, while retaining the higher pay level of their old job and grade.

If buyouts are offered, most agencies are now limited to the 1990s model of VSIP (voluntary separation incentive payment) of $20,000 before deductions.

The Defense Department alone has authority to give buyouts (before deductions) of up to $40,000. Whether it will, and whether other agencies get the same authority, goes into the nobody-knows category.

If Defense offers $40,000 buyouts while other agencies — the IRS, Interior, Homeland Security, EPA, HUD and other agencies — stick with $20,000, it’s likely there won’t be many, if any, takers. People will wait (maybe a long time) for a better offer.

Feds may — or may not — get a pay raise in 2018. And if they get it, it may be 1.9 percent. Or maybe less. Who knows?

Other than those few bumps in the road, feds can count their blessings.

But maybe only on a week-by-week basis.

Nearly Useless Factoid

By Michael O’Connell

German immigrant Ferdinand Schumacher became America’s first commercial oatmeal manufacturer, when he established the German Mills American Oatmeal Company in the back room of this Akron, Ohio store in 1854.

Source: Wikipedia

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