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December 11, 2009

Obama's America...Pay Raises For Federal Employees, Federally Imposed Pay Caps For Banks

We are living in some very strange times.

Consider these two stories.

First, it's a great time to work for the federal government.

Federal workers are enjoying an extraordinary boom time — in pay and hiring — during a recession that has cost 7.3 million jobs in the private sector.

The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.

The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules.

Meanwhile, the so-called "Pay Czar" is busy deciding how much mid-level employees should be making at banks.

The nation’s “pay czar” is at it again Friday, and this time, midlevel executives at bailed-out firms are getting a pay cut.

Fewer than 10 of the 450 employees will be allowed to earn more than $500,000 per year, according to a source familiar with the plan, which covers six firms that received federal bailout funds.

...Negotiations over the stringent pay measures may be one reason why several banks have been eager in recent days to pay back the government and free themselves from Feinberg’s authority. Bank of America sent the federal government a check for $45 billion this week, completing its withdrawal from the TARP program. And Citigroup is in negotiations with government officials over how it will be allowed to exit as well.

I don't love the federal pay caps for TARP funded companies but I get the argument that if you are taking The Man's money, you are going to play by his rules.

The reality however is that the in overall numbers (50 or so employees at what? A dozen companies?) the federal pay scale is far more expensive and damaging to the economy.

How about we take Mr. Feinberg’s considerable talents and put them to the task of reworking the federal pay scale?


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posted by DrewM. at 11:22 AM

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