Republican presidential candidate Mitt Romney yesterday said the path to saving a half-trillion each year lies with slashing federal jobs and pay, merging agencies, and cracking down on improper payments.
Romney’s proposals largely reiterated planks in the platform the GOP adopted last month, and other proposals Romney and other Republicans have made in recent years. Romney, speaking to the Hispanic Chamber of Commerce in Los Angeles, said he wants to save $500 billion a year by:
- Cutting the federal workforce by 10 percent through attrition;
- Combining agencies and departments to reduce overhead;
- Stopping roughly $115 billion in improper payments made annually by government programs;
- And bringing government compensation in line with the private sector.
The issue of government compensation and whether feds are overcompensated when compared to private sector workers is a tricky one, and largely depends on which study you look at. The government’s own studies find federal employees are greatly underpaid, but other studies (including one by the Congressional Budget Office) have found that feds receive more, especially when benefits are factored in.
There’s been a slew of reports issued over the last three years comparing federal employees’ pay and benefits to private sector workers, and they’ve all come to some radically differing conclusions. Which one is right?
Everyone, and no one, according to a new report from the Government Accountability Office posted online Monday.
GAO spent the last year digging into six reports on federal pay, and concluded that they “varied because they used different approaches, methods and data.” For example:
- The Congressional Budget Office, American Enterprise Institute, and Heritage Foundation all used a so-called “human capital approach” to compare federal and private data. This means they took into account personal attributes (such as education and job experience), demographic attributes (like race and gender), and other factors such as occupation, locality, and firm size. All three of these studies found feds were paid anywhere from 2 percent to 22 percent higher than private sector employees.
- The President’s Pay Agent and the Project on Government Oversight used a “job-to-job” approach that, like the human capital approach, takes occupation and job level into account. They did not factor in personal attributes. The Pay Agent concluded feds are paid 24 percent lower than nonfederal workers (including state and local employees) and POGO found feds are paid 20 percent higher.
- The Cato Institute conducted a “trend analysis” that did not control for any attributes and looked only at broader pay trends over time. Cato found feds’ pay is 58 percent higher than private sector employees pay.
Unsurprisingly, the authors of each study told GAO that their method was the most accurate way to compare pay. For example, the researchers who used the human capital approach said their method can best measure whether the government is overpaying or underpaying its employees, compared to what they would earn if they quit their federal jobs and looked for work in the private sector. But even the human capital researchers conceded that their method shouldn’t be used to set an individual’s rate of pay, since demographic attributes such as race and gender aren’t work related. (Just imagine the lawsuits if the government started paying certain employees less because other members of their race also earned less.)
GAO did not say that any of the studies were incorrect or faulty. But it did conclude that because they are so different, “comparing their results to help inform pay decisions is potentially problematic.” GAO also said that “given the different approaches of the selected studies, their findings should not be taken in isolation as the answer to how federal pay and total compensation compares to other sectors.”
Long story short, GAO’s conclusions don’t leave us any closer to settling the nagging pay gap question.
GAO also reiterated the Pay Agent’s “serious concerns” about the current method for setting pay under the General Schedule, which requires a single, across-the-board adjustment for all employees in each locality. This means that everybody — accountants, clerks, engineers, etc. — gets the same raise, even if the market for clerks grew softer that year while engineers became harder to find. The Pay Agent has called for the government to re-examine the method it uses to determine the federal-private pay gap.
And it notes that while President Obama called on Congress last September to create a commission to reform federal compensation and other personnel matters, “such a commission has not yet been established.”
Republican presidential nominee Mitt Romney’s comment about “unfair” federal pay and benefits has raised the hackles of the two largest federal unions. The National Treasury Employees Union slammed Romney yesterday for going after middle-class federal workers. And today, American Federation of Government Employees President John Gage let loose with an even more cutting response:
You know what’s really unfair? The specter of having a new boss who thinks so little about the work that you do that he can’t bother getting his facts straight before making the ridiculous and patently false claim that federal workers are “getting better pay and benefits than the taxpayers they serve.”
Gage flat-out rejected Romney’s allegation that feds receive drastically higher pay and benefits than private-sector employees, and cited “decades of research by the federal Bureau of Labor Statistics” that shows feds consistently earn much smaller salaries.
What Gage said is true, but may not tell the whole story. The Federal Salary Council, using BLS data, last reported in November that federal pay fell even further behind private-sector pay last year, and concluded that feds now earn 26.3 percent less than their private-sector counterparts. But some federal pay experts have their doubts about the council’s methodology. (Even Office of Personnel Management Director John Berry has said the government’s pay gap numbers have a credibility problem.)
And the nonpartisan Congressional Budget Office came to very different conclusions earlier this year — partly by throwing health, retirement and other benefits in the mix, which the salary council does not. CBO found federal employees are compensated, on average, 16 percent higher than private-sector workers. (It’s also worth noting that Gage and other union officials heavily criticized CBO’s study when it was released.)
Now that Mitt Romney has all but locked up the GOP presidential nomination, he’s turning his focus to the general election against President Obama. And if his comments last night are any indication, your pay and benefits are going to be a hot topic between now and November:
I have a very different vision for America, and of our future. [...] This America is fundamentally fair. We will stop the unfairness of urban children being denied access to the good schools of their choice; we will stop the unfairness of politicians giving taxpayer money to their friends’ businesses; we will stop the unfairness of requiring union workers to contribute to politicians not of their choosing; we will stop the unfairness of government workers getting better pay and benefits than the taxpayers they serve; and we will stop the unfairness of one generation passing larger and larger debts on to the next. [emphasis added]
This isn’t the first time Romney has taken aim at federal employees. Last August, he said the government has too many feds who are paid too much, and in November he proposed cutting 10 percent of the federal workforce through attrition to save $4 billion.
National Treasury Employees Union President Colleen Kelley blasted Romney’s comments:
Every day, federal workers — from law enforcement officers to food inspectors to doctors to scientists in virtually every discipline, and many others — perform a variety of tasks vital to ordinary people throughout our country. Every federal employee knows well there is a direct connection between the efforts he or she makes, day in and day out, and the quality of life for the public they serve.
Kelley also reiterated that federal employees are in the midst of a two-year pay scale freeze that is expected to save $60 billion over a decade. Also, Congress has also passed pension cuts for new and future feds that will cost them $15 billion.
Office of Personnel Management Director John Berry yesterday weighed in on the Congressional Budget Office study that found federal employees are compensated 16 percent higher than private sector employees. Long story short, Berry has his doubts and wants to see more from CBO on how they derived their figures.
Berry’s primary concern is that they may not have taken the complexity of jobs into account. For example, he said:
Let’s take a job — forklift operator. You’ve got a forklift operator in the private sector, a forklift operator in the public sector. Both have a high school diploma. Private sector forklift operator is moving furniture and boxes. Public sector forklift operator is taking nuclear-tipped torpedoes and loading them into a very tight area on a multibillion-dollar nuclear submarine, where one wrong move could have very dire implications.
Would you pay both people the same? No. So it underscores the difficulty when one looks and says, high school degree here, high school degree here, why is this one getting paid more? My answer to that would be, complexity of the work has got to be considered. [...] To me, unless you look at the complexity of the job, it becomes almost irrelevant.
Berry also said that a Veterans Affairs Department nurse may be treating much more complicated war wounds than a nurse in a private-sector hospital, which would justify higher pay.
He cautioned that OPM hasn’t had a chance to sit down with CBO and take a closer look at their methodology, and said they may have accounted for his concerns. But his gut reaction is that the human capital model CBO appears to have used “is certainly not going to help us to design a pay system.”
Yesterday’s Congressional Budget Office report on federal employee compensation is already renewing the debate over the federal-vs.-private sector pay gap. The report — which concluded federal employees are compensated 16 percent higher than private sector workers — prompted the conservative Heritage Foundation and American Enterprise Institute and the libertarian Cato Institute to take victory laps.
Heritage’s Jason Richwine and James Sherk quibbled with CBO’s methodology (CBO’s findings generally tracked with Heritage’s conclusions that feds receive higher pay and benefits than the private sector, though CBO said the difference was much slimmer). But overall, they view the report as vindication and used it to swipe at Office of Personnel Management Director John Berry, federal unions, and other left-leaning organizations who criticized Heritage’s assertions. Said Richwine and Sherk:
Heritage’s prior critics, however, must now either redirect their same harsh invective at the CBO or — much better — acknowledge the validity of our conclusions.
The American Federation of Government Employees is choosing the former. In a statement released last night, AFGE National President John Gage blasted the study as “pointless,” “absurd,” “academic and irrelevant.” Gage said:
The chances of an extended pay freeze just went up even more. Politico reports today that Senate Republicans want to extend the current two-year pay freeze by one or two more years to cover the costs of a payroll tax cut.
President Obama is pushing Congress hard to renew the payroll tax cut, and Democrats want to increase taxes on the wealthy to pay for it. A bill proposed by Senate Democrats would impose a 3.25 percent tax on annual income above $1 million to cover its roughly $115 billion price tag.
But Republicans have consistently rejected any proposal that raises taxes for the rich, and the payroll tax debate is no exception. Politico said that Senate Minority Leader Mitch McConnell, R-Ken., told reporters yesterday that his conference is open to extending the payroll tax holiday, but that his party would pay for it differently.
Senate Republicans reportedly held a closed-door meeting yesterday where they coalesced around the pay freeze extension plan, along with possibly means-testing Medicare and Social Security benefits. Politico quoted an unnamed Republican senator who said that the gulf between federal and private sector pay has widened over the years — in feds’ favor — as a reason for extending the pay freeze.
The current payroll tax holiday is due to expire Dec. 31, and if it is not renewed, the average household could see taxes increase by about $1,500.
Republican presidential candidate Mitt Romney today called for cutting the federal workforce by 10 percent as part of his plan to reduce the federal deficit.
Romney said the reduction of roughly 210,000 federal employees through attrition would save about $4 billion. Under Romney’s plan, agencies would only be able to hire one new employee for every two who leave. That’s less strict than the workforce reduction bill the House Oversight and Government Reform Committee approved yesterday, which would only allow one new employee for every three who leave.
Romney also called for cutting federal employee compensation to bring it in line with the private sector, which he said would save $47 billion. He said federal compensation is 30 to 40 percent higher than private-sector compensation when benefits are factored in. “This must be corrected,” he said. The federal government, on the other hand, today said that federal salaries fell further behind private-sector salaries this year, largely due to the pay freeze.
“The American people are increasingly working to support the government,” Romney said, according to the Washington Post. “It ought to be the other way around.”
Virginia Democratic Reps. Gerry Connolly and Jim Moran have had it with their colleagues on Capitol Hill using federal employees as “a political punching bag.” Today, they sent lawmakers a letter that aims to refute what they called “myths” about the federal workforce:
- Myth: Most federal employees live in or near Washington.
Fact: 85 percent of the federal workforce does not live in this region. Texas has more federal employees than Maryland, and Alaska has more federal employees per capita than Virginia.
- Myth: Federal employees earn far more than private sector employees, on average $120,000 per year.
Fact: Federal employees earn 22-24 percent less than private sector employees in comparable jobs, according to the Bureau of Labor Statistics, which conducts the most in-depth study of pay. The widely-cited $120,000 figure inaccurately counts future pension payments, which include employee annuity contributions, as wages.
- Myth: Most federal employees work in agencies related to education, regulation or welfare.
Fact: 63 percent of federal employees work for agencies whose primary purpose is national security. The smallest executive branch departments are Education and Housing and Urban Development.
- Myth: The federal government has grown larger than ever before.
Fact: The federal government is the smallest it has been in the last 60 years, relative to the U.S. population and the size of our economy. The number of federal civilian employees per 1,000 Americans has shrunk steadily from 13.2/1,000 in 1962 to 8.4/1,000 today.
- Myth: It is nearly impossible to fire a federal employee.
Fact: 11,668 federal employees were fired last year.
The federal employee advocacy group Federally Employed Women released a statement lauding the lawmakers, who count thousands of federal employees among their constituents. “The misunderstanding of the federal workforce, including pay, location and size among others, has reached fever pitch and it is seriously feeding the anti-federal worker emotion on Capitol Hill as well as beyond the Beltway,” FEW representative Janet Kopenhaver said. “Hopefully this member-to-member letter will educate legislators and their staffs about how wrong these myths are in reality.”
Do their claims hold water? Largely, yes, although its worth noting that several economists and pay experts — not just at the Heritage Foundation — have questioned the thoroughness of the BLS studies Connolly and Moran cite as gospel.
As for the 11,668 firings in 2010, that works out to half a percent of the overall 2.1 million federal workforce. (You can decide for yourself if that’s too little or just right.) But earlier this week, Office of Personnel Management Director John Berry reiterated his desire to improve the government’s performance management and ratings system, which he compared to Lake Wobegone — “where everyone is above average.”
House Democratic Whip Steny Hoyer yesterday delivered a blunt criticism of those who say federal employees are “overpaid, overbenefited and underworked:”
That’s bunk. That is bunk. That’s not a legitimate debate.
Hoyer, speaking to representatives of the National Active and Retired Federal Employees Association at their conference in Arlington, said he’s “never seen such a broad antipathy directed at public employees — federal, state and local — as I see today.”
Hoyer acknowledged that there are some slackers in the federal workforce — “you’ve worked with some” — who should be weeded out. But he said federal employees and retirees need to speak up so other citizens and lawmakers understand what services they provide and how vital the bulk of feds are.
Also at the conference, Rep. Gerry Connolly, D-Va., said the government needs to produce more detailed information — broken out job-by-job — on the pay gap between federal employees and their private-sector counterparts.