Tuesday, July 19, 2005

Federal employee pay raises to be based on merit

The Bush administration laid out a proposal to expand pay-for-performance pay systems now utilized in the Departments of Defense and Homeland Security across the federal bureaucracy. The reforms would require federal agencies to conduct meaningful analysis of employee’s performance and tie annual raises to the evaluation.

Under the proposed system, to be tailored to each agency, Congress would continue to authorize an average pay raise for all employees. Raises would also would vary by occupation, reflecting labor-market realities that workers in some jobs are harder to hire and retain than are others. The General Schedule, the decades-old 15-grade pay system, would be replaced by broad salary ranges known as pay bands, making it easier for federal managers to offer higher starting salaries to talented newcomers and to give employees pay raises without necessarily giving them a promotion.

The federal employee unions are opposed to the reform. Brian DeWyngaert, chief of staff to John Gage, president of the American Federation of Government Employees said:

The proposal "is meant to erode federal pay and future retirement security for middle-class federal workers over time. They have no data whatsoever to indicate that this will improve organizational performance."

He’s right. There is not data to indicate this will improve organizational performance. However, I bet the vast majority of Americans who are evaluated each year and have their annual raises and promotions tied to their evaluation are going to support the reforms. The union would be better off pursuing arguments that the influence of political appointees and efforts by the administration to reshape employee grievance procedures.

This is a good reform that will help to reform the bloated and inefficient federal bureaucracy.


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