Cut Government Salaries Now

With the 2011 federal budget the Obama administration is adding a two percent wage increase for civilian federal workers. It doesn’t sound like much but, at a time when the total compensation for the average federal worker is double the average of a private sector worker, any increase is too much. 

Here’s how Forbes describes the madness of the US government payroll:

“Imagine a company that dominates its field. It’s been No. 1 in its industry as long as anyone can remember. But lately it’s fallen on hard times. Revenue has dropped dramatically. The only thing keeping it afloat is record borrowing based on its stellar credit rating, earned many years ago.

“Meanwhile, independent analysts have shown that workers at this company earn higher than average wages. Moreover, the workers have skills that are not easily transferable.

“If this were an airline or an automaker, the solution would be a no-brainer: It would be time for a big pay cut. If the company didn’t cut pay, or increased it, creditors and investors would question the seriousness of management.”

Yet, with the above perfectly sound logic what we see is another pay increase. Forbes doesn’t claim that a payroll cut would sharply increase government savings — a 10 percent decrease would only save about $15 billion — but it would at least send the right message… that the nation’s leadership isn’t asleep at the wheel.  

The complete article is worth a look, and can be found in Forbes coverage of why we should cut pay for government workers.


Rocky Vega,
The Daily Reckoning

The Daily Reckoning