A hiring freeze meant to save money is costing three agencies more than it saves

A government-wide hiring freeze intended to reduce payroll has produced the opposite result at three of the departments that have reviewed it internally, according to documents described to MNC News by officials at each.

The mechanism is not complicated. A frozen position still has work attached to it. Where the work is statutory — claims processing, inspections, benefit determinations — it cannot simply stop, so it is covered by contractors or by overtime, both of which cost more per hour than the vacancy saves.

The exemption tax

The second cost is administrative. Every position an agency wants to fill requires an exemption request, prepared, justified and routed for approval. At one department, HR staff estimate that assembling and tracking exemptions now consumes about a fifth of the office’s capacity — capacity that would otherwise be spent hiring.

The queue has its own effect. Managers who expect a four-month exemption process stop requesting positions they genuinely need, which shows up in the data as reduced demand rather than as unmet need.

We are paying an agency full of people to write memos explaining why we should be allowed to hire the people who would do the work.— An HR director at one of the departments reviewed

Where it shows

Vacancy rates in field offices at the three departments have reached 19 percent, against about 7 percent before the freeze. Two of the three reported measurable service effects: longer determination times in one, a reduced inspection rate in the other.

• Agencies reviewed internally: three
• Net effect: two spent more on contract and overtime cover than they saved in salary
• Administrative load: about 20% of one agency’s HR capacity on exemptions
• Field vacancy rate: 19%, up from about 7% before the freeze

Officials at the third department said their review found genuine savings, largely because the frozen positions were in headquarters functions where work could be deferred rather than in statutory field roles. That difference — headquarters versus field — was the single strongest predictor of whether the freeze saved money.