Where the CBO report on federal pay went wrong
By Colleen M. Kelley,
Colleen M. Kelley is president of the National Treasury Employees Union, which represents 150,000 workers in 31 government agencies.
As a longtime member of the Federal Salary Council, which studies and makes recommendations to the executive branch on federal pay, I take issue with some of the methodology and conclusions in this week’s Congressional Budget Office report comparing federal employee compensation to that in the private sector.
The CBO concluded that the most highly educated and highly paid federal employees are underpaid by more than 20 percent compared with employees with similar “characteristics” in the private sector. Those with college degrees — which the bulk of the federal workforce has — are about on par with their private-sector counterparts; those with less than a college degree, the lowest-paid federal employees, are overpaid by about 20 percent, it found, and have more generous benefits than do their private-sector counterparts.
First, the CBO’s expertise is really in crunching numbers and applying the arcane rules of congressional budget scoring. In this report, it compared characteristics of the federal and private-sector workforces, rather than comparing jobs done in each sector. The latter is the approach of the Bureau of Labor Statistics, which has consistently found a pay gap in favor of the private sector. The latest BLS report shows that gap to be an average of 26 percent.
Many have focused on the report’s comparisons of benefits. But the CBO admits these are “more uncertain than its estimates of wages.”
Rep. Paul Ryan (R-Wis.) said that the report shows “government bureaucrats in Washington continue to enjoy significant advantages over those whose tax dollars finance their compensation.” This seems to be an attempt to rally support for his efforts to slash pay for all federal employees.
But the employees that the report claims may be overcompensated are hardly those whom people would think of as “government bureaucrats in Washington.” No, these “bureaucrats” are among the lowest-paid federal employees, doing unglamorous but critical work around the country. They include border-security personnel, customer service representatives and food safety workers. And the main reason they come out ahead of their private-sector counterparts in the CBO report is because the federal government, as any responsible business should, provides basic benefits such as paid sick leave and health coverage.
The logical policy implications of the CBO conclusions would be to provide significant raises to the highest-paid federal employees, which would amount to $30,000 to $50,000 for annual salaries of $150,000 to $200,000. The union I lead represents some very highly educated and skilled attorneys, physicians and nuclear scientists in this pay range; we would support, but do not expect, such increases.
The federal pay system aims to find a balance between offering a fair and competitive wage, a secure retirement and a satisfying work environment for those who believe in public service. Especially for the most educated, highly skilled and highly compensated federal employees, the importance of the mission, the challenge of the work and the commitment to public service provide non-monetary incentives.
It is clear that the public and its representatives in Congress do not support compensating even the most educated and skilled employees at the level they could attain in the private sector. Nor would these employees ever see the kinds of monetary and non-monetary perks their counterparts in the private sector receive, such as paid sabbaticals, 12 weeks of paid maternity leave, bonuses, stock options, on-site spas and more.
On the other hand, the report’s conclusions would also suggest severely cutting the compensation of the lowest-paid federal workers, with the focus on slashing basic benefits. Here is why that would be wrong: The federal government, as one of the nation’s largest employers, must set a standard of basic fairness. Contrary to portrayals of “generous” federal benefits, federal employees do not receive paid dental or vision coverage or paid parental leave, nor do they get rich off their pensions. The typical lifetime federal employee will have an annuity from the defined benefit of approximately $1,000 per month. The government’s 401(k)-like fund, the Thrift Savings Plan, may provide around $400 per month if the average employee is able to contribute 5 percent of his or her salary for 30 years. While many private-sector entities have taken to eliminating or slashing health insurance and retirement benefits, especially for low-paid employees, our leaders should not support a race to the bottom for working Americans. Rather, they should seek out ways to increase economic and retirement security for those who may never be able to retire.
This report veers from the middle path that allows the government to attract and retain the best civil service workforce while keeping both the top and bottom compensation levels reasonable and fair. If Congress were to implement legislation based on the report’s findings, the resulting bills would not call for across-the-board pay freezes or benefit cuts, as many have suggested. They would call for eliminating health coverage and retirement benefits for the lowest-paid federal workers while increasing salaries for the highest-paid employees to more than $200,000 per year. Would Congress really pass such legislation?