House proposes cutting diplomatic pay

Federal employees living in DC are awarded a 24% “locality pay” increase to offset the costs of living there. This is a pretty significant chunk of change that foreign service officers give up when the serve overseas. Even with the hardship bonuses associated with living in the developing world, diplomats overseas were still making less than their colleagues working in D.C., a huge disincentive for overseas work. The Obama administration implemented a plan to rectify this by way of “Overseas Comparability Pay”. In 2010, an 8% adjustment was introduced, followed by another 8% in 2011, with a third and final 8% set to be introduced in 2012, bring the total of the OCP to 24%, the same as it is when posted in D.C. This is not a salary increase or a pay raise, as the base salaries are not affected (in fact are currently frozen, just as everyone else’s). It offsets the pay cut that diplomats take when they move overseas.

Thomas Reed of New York introduced a bill that passed the House that will cut OCP and as a result, cut diplomatic salaries. This is portrayed as eliminating pay raises for the foreign service. If it passes the Senate, all Foreign Service officers will see an immediate 16% cut to their salaries, unless they get posted to DC where they will still receive the 24% locality pay increase. If this goes through, diplomats working in Libya, for example, are going to be making less than they would if they’d gotten posted in D.C.

This legislation is proposed to save $140,000,000.00 this year and $427,000,000.00 through 2013.

The cancellation of OCP was also proposed by the President’s debt reduction committee, so it isn’t as if this is some Republican agenda being unsheathed here. The Foreign Service is still highly competitive and the OCP increases aren’t seen to be necessary in order to help with recruitment. The problem is that OCP isn’t designed to help with recruitment, its designed to eliminate incentives to work in DC as much as possible. OCP and locality pay factor into pensions as well whereas hardship pay doesn’t, further exacerbating this incentive to serve stateside as much as possible.

I’m not bothered by the elimination of the OCP as much as I am by the rationale of it. Reed has characterized this as if State Department employees are getting raises while the rest of the country is getting pay cuts. All federal employees wages are frozen, include the Foreign Service. Foreign Service officers work either in DC or overseas, but if they work in DC they get a 24% locality pay “bonus”, just like every single other federal employee in DC. The Overseas Compatibility Pay scheme makes sense to me in that it equalizes the income of Foreign Service officers and removes incentives/disincentives regarding posting in this regard. Pretty reasonable to me.

If this was a straight up salary increase, I’d have no problems with its elimination. Foreign Service officers are unique in that they work both overseas and in DC at various points in the careers. OCP isn’t a pay raise for them but this legislation is a pay cut. Not sure it’s the best way to deal with the budget issues, especially considering the value the US diplomatic corp provides. As the changes in Africa, Europe, and Asia that we’ve seen over the last few weeks and months continue to reverberate, any reduction in our diplomatic capacity is a bad thing.

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