By Drew Hamilton
White Sands Missile Range employees won’t be seeing annual pay raises for the next two years due to a freeze on federal employee pay raises.
In an effort to reduce government spending, a pay freeze covering most government employees, that will freeze the raises given every year for the next two years, has been enacted. The law, which President Obama signed Dec. 22, states the freeze will be in effect until 2013 and limits pay to its 2010 levels. Typically, federal employees receive an annual raise of about 1.5 percent to help compensate for economic effects like inflation.
According to a memo from John Berry, Director of the Office of Personnel Management, the freeze will affect around 2 million employees, including general schedule employees, employees still under the National Security Personnel System, as well as executive level employees. The freeze holds both base pay and locality adjustments for all these employees at their 2010 levels. Additionally, a Presidential memorandum also states that individual agencies should follow the intent of the freeze and forgo similar types of broad pay increases that agencies have direct discretion over.
Active duty members of the Army, Navy, Air Force, Marines, Coast Guard, National Oceanic and Atmospheric Administration, and Public Health service and the US Postal Service and Regulatory Commission are not affected by this freeze. It is not yet known what the effect of the pay freeze will be on the salaries of non-appropriated fund employees.
While base and locality pay is frozen under this law, other kinds of raises are not affected. Performance awards and bonuses, including NSPS performance payouts, are still authorized as usual. Promotions and step increases are also still authorized by the law. Locations like Hawaii and Alaska will see a balancing of locality pay and allowances as these locations' cost of living allowances are governed under a separate law than the standard locality pay found in the continental US.
While pay freezes of this kind have happened before, it’s unusual for them to last as long as the current freeze is expected to last. “Reagan did it once and Clinton tried to… but this is the first time since I’ve been working for the government that it’s been for more than one year, and I’ve been working for the government for 34 years,” said Patti Svitak, Director of WSMR’s Civilian Personnel Advisory Center.
For most employees, the freeze, while not welcomed, isn’t expected to be harmful. “We’re talking about around 1 percent for a lot of people,” said Dan Hicks, White Sands Missile Range Chief of Staff.
Individuals that are close to or already qualify for retirement, and who may not be eligible for a step increase, may want to consider the effect of the pay freeze on their retirement. Since retirement benefits are calculated using the average of an employee’s three highest salaries, which normally occur close to the end of an individual’s federal career, the pay freeze may cause a plateau in pay. Any increase in a retiring employee’s annuity being based on a potentially static high three average salaries that is, the annuity would be based on a percentage of the static high three average salary depending on the number of years of service the retiring employee has. “If there is a pay freeze in effect for two years, and an individual is two years out from retirement, their pay is frozen at the level it was in 2010. So they have their 2010, 2011, and 2012 salaries as their high three average salary. Even with the small annual increases that we were getting before, it would have given a slight increase to whatever the annuity was that the individual could expect to receive based on a higher high three average salary,” Svitak said. As a result some employees who are currently eligible for retirement may now reconsider their retirement plans. “That really would be a sad outcome of (the freeze),” Svitak said, referring to the potential loss of retirement eligible employees that might have wanted to continue working at WSMR.