Adding Up the White House Pay Freeze

The Washington Post reckons that Barack Obama has saved the nation about $443,000 by freezing the salaries of any staffers on six-figure salaries. But the real number is surely much less than that -- and could be as low as $17,000.

The reason is the unknowable counterfactual: How much more would staffers be making if it weren't for the pay freeze? The Post bases its estimate on the average cost-of-living and merit increase over the past five years, which works out at 2.8%. But the cost of living didn't go up last year: CPI was only 0.1%. And you can't really get a merit increase on a brand-new job.

If salaries rose only in line with inflation, then, the 120 staffers making more than $100,000 a year -- who between them make about $17 million annually -- would have seen their pay rise only about $17,000 between them. Which is a savings, but not much of one.

On the other hand, if you gave them all a 2.8% raise, by my calculations that would come to $478,000. So I'm not sure where the $443,000 number comes from.

Comments

[Nom de plume:]

It's all about change, right? Can't you see it? Yeah baby...

Jan 24 07:58 AM

[Paul Price:]

It's a good thing to declare a wage freeze as it sets the tone for all overpaid union government workers.

Civil service is now among the paid total compensation jobs in all of America when you consider wages, benefits and pensions. Almost no private sector employees earn what government workers now get paid.

This will eventually bankrupt the nation.

Jan 24 08:28 AM

[adcva:]

Just a side note about your CPI stat. That was the December 2007 to December 2008 change. When we say we've experienced x% inflation since 1993 (or whatever), it isn't from the index value in December 1993 to the most recent monthly index value. The BLS averages the monthly index values for any given year, resulting in the year's index value. Comparing the 2008 index value to the 2007 index value, the rate of inflation was 3.8%.

Jan 24 09:03 AM

[IRONMAN1958...:]

now if OBAMA CAN FREEZE THE BONUSES OF THE FREAKIN OVERPAID CEO'S AND GIVE THAT MONEY TO THE WORKERS WHO MADE THE COMPANYS WHAT THEY ARE TODAY....THEN WE ARE DOING SOMETHING!!!!!!!!!!!!!...

Jan 24 09:34 AM

[Tom Wright:]

Well, that was about the most irrelevant article I have ever seen posted here. But remember, Rush said Obama probably raised their salaries substantially before he froze them although Rush admitted he could not prove that but of course when has he had to prove anything he spews over the airwaves.

Jan 24 09:50 AM

[A. Corinne:]

Thanks Felix for posting this number. I hadn't read what the number actually was...only headlines here in London advertising his amazing pay freeze.

Paul Rice - Nice comment. Of course, considering the the 17 million spent on inauguration ceremonies, half a mil is a drop in the bucket.

Jan 24 10:29 AM

[shootpar2001:]

Question?
What if true deflation sets in?
Would not a pay freeze actually cost us more money?

Can I cause an arguement here?
Who cares? I am looking for results, positive results will trump any
nominal pay increase/decrease.

Jan 24 10:50 AM

[PhotonJohn:]

Well the pay increases for the government workers just went into effect on January 4th. Congress passed this last year about September if I remember right. The number, 3.8% average. Some regions got more, some less due to an all too often arbitrary local pay. How many of you got a 3.8% pay increase? I would be willing to bet the average American that did not get laid off didn't get near that much. Maybe Congress was trying to catch some of the real inflation and not the CPI numbers. Of course that was before this temporary deflation before the mother of all inflation.

Jan 24 11:27 AM

[Rob Viglione:]

Paul, you're absolutely right. Public employees earn compensation far out of line with market factors. Their unions-at the local, state, and federal levels-have hijacked our country and are robbing the private sector. This cannot go on, as evidenced by California's pending bankruptcy. My prediction is that 2009 will witness a wave of municipal bankruptcies. Of course the federal government will bail them all out, but the result will only bring us all closer to the abyss.


On Jan 24 08:28 AM Paul Price wrote:

> It's a good thing to declare a wage freeze as it sets the tone for
> all overpaid union government workers.
>
> Civil service is now among the paid total compensation jobs in all
> of America when you consider wages, benefits and pensions. Almost
> no private sector employees earn what government workers now get
> paid.
>
> This will eventually bankrupt the nation.

Jan 24 02:16 PM

[notsosmart:]

i remember when carter turned off the white house lights.LOL

Jan 24 02:39 PM

[kmne68:]

Silly symbolism pure and simple.

Jan 24 02:49 PM

[john s. gordon:]

ironman - right on.
> jack

Jan 24 05:00 PM

[marketwatchr:]

Congress accepted increases.....they have a do as I say - not do as I do attitude. Where is the LEADERSHIP from that group??

Jan 24 05:38 PM

[PROXIMO:]

Most published estimates of the costs of inauguration events were $150 million.


On Jan 24 10:29 AM A. Corinne wrote:

> Thanks Felix for posting this number. I hadn't read what the number
> actually was...only headlines here in London advertising his amazing
> pay freeze.
>
> Paul Rice - Nice comment. Of course, considering the the 17 million
> spent on inauguration ceremonies, half a mil is a drop in the bucket.

Jan 25 05:13 PM

[katec:]

Now, what did George Bush spend on this inauguration ceremonies? Let us get real and shut-up! We just had an inauguration for our President and I do not care what was spent. Was it not wonderful that Michele did not choose a dress from an upscale designer!?!?!? Let us not forget what the RNC spent on the Palin family. Get over it!!!

Furthermore, the best thing for the Gitmo prisoners would be to incarcerate them in our prisons...they would be taken care of!!

Plus, a strong statement would be for the congress to not accept any pay increases!!

Jan 26 10:56 AM