The latest mug for the cameras campaign revolves around Federal employees and the Congressional Budget Office report indicating that Federal pay and benefits are higher than the public sector. The problem is that the hot air bags in DC, on TV, and writing political columns and blogs like to gloss over two troubling things. First, Congressional Republicans are touting the study as justification to extend the freeze on Federal pay for an additional two years and to continue a hiring freeze to reduce the size of the Federal payroll. There are some serious problems with this "made for TV" idea. Many agencies are commanded by Congress to carry out a lot of functions and they are running short of people to do that work. Businesses and private citizens are getting the benefit of longer and longer waits to get needed functions carried out. This moves us back into the realm where the politically connected can use pressure to jump the line making things even more unfair. That means delays for veterans getting services promised to them when they enlisted or when they were drafted. Federal retirees aren't getting a pass, they are waiting months to get OPM to calculate their retirement benefits and have to live their golden retirement time on as little as 1/6th of what is owed them until they wind their way through the backlog. Social Security backlogs are growing so that hard-working citizens don't get the benefits they paid taxes for and are now due. The other problem with this fraud solution is that the Federal workforce isn't like most of the public sector. Fully one-third of Federal employees are professionals with advanced degrees. From the doctor treating veterans at the VA, to the lawyers prosecuting drug kingpins, to scientist trying to determine if the latest shipment of toys from China are toxic and will cause brain damage in your child, the Federal work force is heavy in highly educated professionals and all legitimate studies of Federal pay, including this most recent CBO report indicate that professional pay and benefits remain below the private sector. It is simply dishonest to call for Federal pay to come into line with the private sector and then pursue a strategy that pulls one-third of the workforce even further behind the private sector. There is a second issue that is far more troubling for the long-term future of the country that everyone misses or refuses to see. When the general pay scale (called the GS or GS scale) was adopted in 1949 it was designed to put Federal employees roughly on par with the private sector. Pay was lower but with the benefits of the old Civil Service retirement system and health benefits accounted for Federal employees were placed on par or at least almost up to par to the private sector. Until the start of our current financial crisis, Congress would receive information about the rate of inflation and would approve a cost-of-living increase. The increase would generally be a bit less than the rate of inflation. If inflation were 5%, employees would receive about 3%. If it were 3% then the cost-of-living adjustment would be around 1.2%. The other private vs public difference has been that Congress has decreed that the government will pay roughly 78% of an employee's health premium. As health insurance costs have soared the government has continued paying the same ratio of the premiums. On the other side, Congress has phased out the old Civil Service Retirement plan for the Federal Employees Retirement System which offers a much smaller benefit. For years Congress tried to help employees almost keep pace with the rising cost of living. Today we should be in a situation where Federal pay is out-of-line with private sector pay by lagging the general economy. That has only happened in the professional sector. Our economy has failed. If you have a high school diploma or less, you make 36% less than a Federal employee and all the Federal employee has received is raises that are around the rate of inflation. If you have a bachelor's degree then your take home pay in the private sector and Federal government are basically identical. The difference is that the Federal employee pays less for a wide array of health insurance choices that generally offer better coverage and the Federal employee has a defined benefit retirement plan that will pay 33% of the employee's average high three salary if he or she works for 30 years and has a deferred compensation package they may particpate in. The real problem is that unless you have an advanced degree in the private sector you've lost pace with inflation and the growth of the economy. What makes this even more striking is that as late as 1994 Congress was working to get the GS schedule in line with the private sector. Not because Federal pay was too high but because it was too low. The adjustments authorized have never been funded more than 50%. The lack of funds mean that the raises have been half what was needed at the time to catch-up. In less than a decade we've gone from Federal employees trailing the private sector so badly that retaining employees was difficult to non-professionals trying to flock to the Federal government. How bad is the problem in pay? Comparing GS 9, which is a good entry point for a recent college grad in 1995 to 2012 might help. In 1995 that entry level pay was $29,405 today it is $47,448. Adjusted for general inflation the Federal employee has increased their spending power by $4,000 in 17 years or an average $235 a year and because of health insurance premium increases averaging double the rate of inflation, the Federal employee entering straight from college has less spending power today than one entering the workforce in 1995. That means the private sector worker has fallen even more. How do we maintain an economy when the vast majority of Americans have less spending power today than 17 years ago? The problem isn't that Congress has gone crazy giving away the store to Federal employees, the problem is that the private sector wages are falling rapidly in spending power. The latest political grandstanding is designed to distract Americans into resenting Federal employees so they won't notice they are growing poorer. |