Pay raise: Not if or when, but how much!

If reading or hearing the news has become more depressing each year, there is good news for the federal family. Finally.

This year, many of the old demons that haunted them simply won’t be around. Even better, the question isn’t whether there will be a January pay raise, but rather how much that 2022 hike will be. The only question — unless the nation is plunged into a recession or another national emergency — is how much the increase will be. President Biden has proposed 2.7%, whereas some congressional Democrats say they won’t settle for less than 3.2%. Either way, that is good news for workers who in recent times were lucky to get 1%. And who suffered through several years without a pay raise proposed by a Democratic administration during the Great Recession.

While the difference between the two figures isn’t huge at first sight, it is over the career-long haul. Just that slight difference compounded over time would be huge. Lifetime annuities are based on the employees length of service, and their high-salary average over a three year period. Bigger raises, even if by fractions, over time are always better. In this case, size really does matter. That is especially true for the future retirement benefits of the vast majority of feds who are under the Federal Employees Retirement System (FERS). Unlike the earlier Civil Service Retirement System (CSRS), which gives retirees full inflation protection for life, FERS has a diet cost of living adjustment (COLA) feature that over periods when inflation is 2% or higher can and will dramatically reduce their benefits, even as living costs rise dramatically.

Last year, the Trump administration was busy whipping into line agencies and departments it thought weren’t doing their missions, weren’t following orders and were delaying or sabotaging legitimate orders from the commander-in-chief. It also began shrinking or eliminating teleworking programs and taking actions against unions, ranging from evicting local union officers from rent-free government space to canceling previously approved labor-management contracts. The Trump team felt that workers in many agencies were incompetent, disloyal and/or lazy because 100 year old civil service rules (a rebellion against the spoils system) made most civil servants fire-retardant, if not fire proof. It proposed new probationary rules and a streamlined system to fire “incompetents” easier and faster. It also wanted a new schedule of managers who would serve at-will jobs. Meaning they could be let go easier and faster.

Because it was an election year, Republicans in the House didn’t push for any major reforms that would trim future costs by reducing benefits of current and future retirees. Some of them would have changed the formula used to determine annuities by basing them on the employees highest 5 year average salary. The government now uses a high-3 system (length of service and pay) to determine lifetime annuities. There were also efforts to require feds to contribute more to their FERS annuity program and give retirees less generous protection from inflation.

So what else is coming up? What about the future of work-at-home programs? Before the pandemic, the Trump administration was dialing them down. Now a majority of feds in many agencies have had 12-to-14 months of working from home. How about proposals to beef up the staff at the IRS and other agencies that have been intentionally downsized in the past? What about those round up the usual suspects proposals to cut current retirement benefits and reduce future monthly annuities? So what are these threats? How serious are they and do they still have a political fan base?

Let’s ask an expert like Greg Stanford of the Federal Managers Association (FMA). He watches Capitol Hill for FMA and has been to — and survived — numerous political rodeos. Greg will be my guest on today’s Your Turn episode at 10 AM (ET). Catch it streaming here or on the radio at 1500 AM in the D.C. area. The show will also be archived on our home page so you can catch it later, listen again or refer it to a friend. If you have questions for Greg, send them to me at mcausey@federalnewsnetwork.com before showtime.

Nearly Useless Factoid

By Alazar Moges

In February 1922, President Warren Harding had a radio, then the biggest emerging technology, installed in the White House. Almost two years later, Harding’s predecessor Calvin Coolidge made history as the first commander-in-chief to broadcast from the White House.

Source: America’s Library (Library of Congress)

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THRIFT SAVINGS PLAN TICKER

Jun 18, 2021 Close Change YTD*
L Income 22.8950 -0.0718 2.88%
L 2025 11.7475 -0.0782 5.61%
L 2030 41.3301 -0.3582 7.07%
L 2035 12.3983 -0.1179 7.71%
L 2040 46.8639 -0.4865 8.36%
L 2045 12.8274 -0.1425 8.91%
L 2050 28.0756 -0.3333 9.49%
L 2055 13.7453 -0.2025 11.70%
L 2060 13.7453 -0.2024 11.70%
L 2065 13.7452 -0.2024 11.69%
G Fund 16.6073 0.0007 0.53%
F Fund 20.8808 0.0657 -2.22%
C Fund 62.4507 -0.8275 12.61%
S Fund 82.8816 -1.0758 11.60%
I Fund 38.5980 -0.6987 10.58%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.