In holding pay increases for federal workers to 4.8 percent for the fiscal year beginning Oct. 1 -- an increase roughly one third what workers would be entitled to under the existing federal compensation formula -- President Reagan has once again underscore his determination to make those tough changes necessary to hold down inflation.
The issue is not what it seems at first glance, namely, "holding down" federal pay. Few persons would begrudge the right of federal workers to a salary comparable to that paid for work of a similar nature in the private sector. But there is a legitimate question as to whether the current comparability formula, enacted in 1970, may not "overcompensate" federal employees. President Reagan says that is the case and is proposing changes in the 1970 formula. Should Mr. Reagan's position be looked upon as unreasonable? Well, consider his company. President Carter came to basically the same conclusion an tried to hold the 1980 federal pay raise to about 5 percent. But given election pressures Mr. Carter reversed his stance and approved a surprise 9.1 percent pay hike.
There is a more important issue here, one that should take precedence in any discussion of wages. That is that the federal government, which has been a major part of the "inflation problem" because of its spending policies, overregulation, and massive deficits (as well as questionable productivity compared to the private sector), must take the lead in setting the proper example if there is ever to be any meaningful attack on inflation. One obvious way is by doing just what the President has done -- showing restraint on wages. Using the 1970 federal formula would have meant a 15.1 percent hike rather than the 4.8 percent proposed by Mr. Reagan. Yet how many Americans this year will get a 15.1 percent pay increase?
Mr. Reagan has also shown a regard for distinctions by seeking higher pay for military personnel, who are generally recognized as being underpaid. Assuming Congress approves, the military will get an increase of about 14.3 percent.
To return to comparability, Mr. Reagan, like Mr. Carter before him, would change the current 1970 formula to embrance total compensation including fringe benefits, which in the case of government workers almost invariably outweigh those granted in the private sector. It should also not be overlooked that federal employment has certain intangible benefits not found in private employment, including, in most cases, tenure. If there is a category of federal employees who truly do warrant compensatory help at this time, it is senior officials who often are underpaid compared to the private sector.
Either house of Congress could rejct Mr. Reagan's 4.8 percent wage hike. But since Congress has already agreed to the percentage as part of its budget reconciliation process, that is unlikely. Considering that some of Mr. Reagan's advisers were recommending nom pay increase for federal employees this year, a position that would likely have been politically popular with the general public , Mr. Reagan has come forth with a fair and responsible plan.