Furloughing government workers — if it comes to that — may save a ton of money.
But members of the House of Representatives who think their congressional districts are the polar opposite of Washington, D.C., should run the numbers before they start slashing the pay of “bloated bureaucrats” and contractors who make up a big portion of their voting-age workforce.
Furloughs in an operation as large, widespread and complex as the federal government would hit workers in just about every place you can think of. As a percentage of the population and workforce, Uncle Sam may be a bigger economic presence in Huntsville, Ala., Norman and Oklahoma City, Okla. , and Ogden, Utah than in metro Washington. When you throw in federal contractors (who would also be furloughed), the numbers quadruple.
If politicians fail to reach agreement and sequestration kicks in, some agencies, like Defense say they would have to tell nonemergency employees to stay home — without pay — one day per week. The furloughs (worst-case scenario) would run at least through Sept. 30, the end of the fiscal year. For people told to say home, that would represent a 20 percent pay cut, something a lot of people simply couldn’t handle.
The fact that Congress is talking about not getting paid if it doesn’t do its job (is that a retroactive promise?) is a bit of a joke. The Senate and House are increasingly becoming a millionaire’s club. Some politicians — or their spouses — have spent millions to get a low six-figure paying job.
For rank-and-file feds and probably a lot of career executives too, a furlough is no laughing matter.
For many feds, the potential pay cut is the clear and present danger. But for others, the long-range implications of a furlough are the problem. What would a furlough (producing a 20 percent pay cut) do to their future retirement benefits? Benefits are based on the employees’ length of service, his or her retirement system (FERS or CSRS) and the individual employees’ highest three-year average salary. Since the pay freeze was imposed, the high-three of many workers has been unchanged. Most, unless they got a longevity step pay increase (a WIG in government lingo) are earning whatever they were in 2011.
So what happens to the high-three if employees are furloughed and take even a temporary 20 percent pay cut? Good news, nothing!
Monday’s column was about the impact (or lack thereof) of furloughs on employees’ high-three. Benefits strategist John Elliott laid it out, with backup language and regulations from the Office of Personnel Management. But a number of people were concerned, even after the explanation. How could losing 20 percent of my salary for even a short-period time not impact my high-three, people wanted to know.
“…Unless a furlough lasts more than 6 months in a calendar year, there would be no adverse effect on one’s retirement (high-three) calculation. The same is true if an employee were on leave without pay for six months or less in a calendar year,” Elliott said.
So if you are sweating the impact of a furlough on your gross and take-home pay, welcome to the club. But if you are worrying about it reducing your future pension benefits, breathe easy!
It’s your lucky day! Today is “Laugh and Get Rich Day.” Not sure how it works or how you celebrate…but good luck with that!
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GOP sequester plan calls for reducing federal workforce Republicans on the House and Senate Armed Services Committees have proposed an alternative sequestration plan, which includes reducing the size of the federal workforce by 10 percent through attrition. The bill’s sponsors say the $85 billion they expect the cuts to save would go directly to helping avert sequestration cuts.