An 8.7 Percent Pay Cut for Six-Figure Earners, Subjective Measures of Financial Well-Being and More

More than 300,000 federal employees earned six-figure salaries in 2014, according to a recently released partial database of pay information, and at least one lawmaker seems to believe those employees are doing a bit too well.

Rep. Tom Rice, R-S.C., has introduced a bill (H.R. 1137) that would cut the basic pay of civil servants and members of Congress making more than $100,000 a year by 8.7 percent. The reduction would also apply to the president. It would take effect almost immediately after the bill was signed into law for federal employees, and at the beginning of a new term for lawmakers and the president.

The reduction wouldn't necessarily be a one-time deal. After the initial cut, pay for six-figure salaried employees would be adjusted regularly to reflect percentage changes in real median household income in the United States, as calculated by the Census Bureau. High-earners would have to hope that the median household income – after it’s adjusted for inflation -- starts going up. 

Rice’s proposed cuts would be severe enough that the National Federation of Federal Employees called the legislation “one of the most aggressively anti-federal employee bills introduced in recent history.” The union argued that federal employees are already earning less than their private sector counterparts, citing an often disputed figure that feds make 35 percent less than private sector peers with similar jobs.

“There is no defensible reason to further expand the pay disparity between federal and private sector employees,” NFFE President William Dougan stated.  

The union also noted that the bill would affect federal employees such as doctors at the Veterans Affairs Department, who might seem highly paid but are still making much less than they could earn outside of government. The bill would exacerbate existing challenges recruiting talented medical staff at VA, Dougan said.

Luckily for NFFE, Rice’s bill doesn’t seem to be gaining much traction thus far (it had no cosponsors listed as of Wednesday morning), but a new Gallup poll might add fuel to the fire. The new survey finds that while the typical civil servant might not be swimming in money, she is more likely to be “thriving” financially than her peers in the U.S. workforce at large. 

According to the poll, 44 percent of the federal workforce maintains a financial well-being that is “strong and consistent,” 10 percentage points higher than the rest of the U.S. workforce. And just 17 percent of federal workers are “suffering” financially (or reporting low and inconsistent well-being), compared to 24 percent of all workers.

The poll doesn’t just measure salary levels or even total compensation; it also looks at more subjective measures of well-being, including “perceptions of standards of living, affordability of basic necessities and financial woes based on region of country, family size, cost of living, debt and various other factors.”

But it could still provide ammunition to those who believe federal employees are over-compensated for their work. On the flip side, the results may not ring true for employees who are just digging out from a recent pay freeze and could again face furlough threats if Congress doesn’t intervene to prevent the return of sequestration this fall.

Meanwhile, one group of federal employees made a little less financially secure during the government shutdown of October 2013 may win some extra spending money. About 1 million civil servants who worked without compensation while agencies were closed are eligible to join a lawsuit that seeks damages for the hardship caused by delayed paychecks. The suit argues that though the employees were eventually paid for the time they put in, the temporary lapse in salary made it more difficult for them to pay bills and meet other financial obligations on time.

Those who qualify to join the suit were notified by email on Monday by the Justice Department, with the exception of air traffic controllers, who will receive a letter in the mail. If the suit is successful, plaintiffs would get $7.25 -- the federal minimum wage -- times the number of hours worked between Oct. 1 and Oct. 5, the period in which paychecks were delayed. This amounts to $290 for employees who worked 8-hour days, plus any overtime they are due.

Eric Katz contributed to this report.