The graying and shrinking of the federal work force have major implications for the public, politicians and new and mid-career promotion-minded feds.

High retirement rates over the next couple of years present a quality-of-service issue for taxpayers. Will the new federal workers be better, or worse, at their jobs?

For some national politicians, who see the government as an election aid, the question is how to divide a shrinking job pie to get the most votes.

For federal workers left behind after downsizing, rightsizing, buyouts, etc., the question is whether to stick with Uncle Sam or join the fast-growing contractor army. By many estimates, contractors now outnumber federal employees 2 to 1.

A smaller federal establishment means that the days when ladder-climbing federal workers could wait for a supervisor to move up, move out or pass on are gone. Many future retirees won't be replaced. Often their duties will be divided among co-workers or farmed out to the private sector.

As the federal jobs are vacated, will they be filled by White House-backed "targeted" recruiting programs that don't require regular civil service procedures? The Clinton administration has used such outreach programs to increase the percentage of minorities (especially Hispanics) in government. Government data show that Hispanics are "underrepresented" in every federal agency except the Justice Department.

The Office of Personnel Management--the government's central personnel operation--is leading the way in minority-outreach programs, just as it led the downsizing and reinvention effort by eliminating about 40 percent of OPM's work force.

The programs, coupled with downsizing and buyout programs, have already changed hiring and promotion patterns in many federal agencies. In some agencies, 80 percent of the top-paid career executives are eligible to retire. About 40 percent of middle managers in many agencies could retire today. In some agencies, half the total work force is eligible to retire.

Most retirement-age federal workers are under the old Civil Service Retirement System, which allows departure--on unreduced and immediate annuity--as early as age 55. Many agencies will offer longtime employees buyouts (worth up to $25,000 before deductions) and the chance to take early retirement.

The Clinton administration has used the buyout tool successfully to persuade more than 130,000 older employees--mostly mid-level white males with veterans preference protection--to retire. That allowed the administration to hold on to its "diversity gains," increasing the percentage of women and minorities in federal agencies. Those gains would have been wiped out by seniority-based layoffs.

Many of the buyout takers and recent retirees were involved in human resources functions that gave employees a steady stream of advice about career advancement and retirement planning. Because of downsizing and buyouts, many of those offices have no institutional memory, and the offices' relatively new employees, who are under an entirely different retirement system, are not always up-to-speed on rules of the CSRS program that covers most of their customers.

Downsizing, buyouts, consolidations and contracting out have created a bonanza for firms that advise federal workers and would-be civil servants about getting or keeping a job, the benefits package and civil service personnel rules. Agencies are contracting out more of their services to outside experts to conduct seminars and in some cases to train human resources employees. The organizations include: the National Institute of Transition Planning (301-340-6163); Government Retirement Benefits Inc. (703-461-9100); LifeSpan Services (1-404-373-2548); and (for job advice) the Federal Research Service (703-281-1059).

Career Advice

At 9 a.m. tomorrow on WUST radio (1120 AM), Tammy Flanagan, a benefits expert with the National Institute of Transition Planning, will discuss career planning for federal workers, with special emphasis on what feds should be doing (and not doing) when they are within five years of retirement age.

Long-Term Care

Republicans and Democrats both want to set up a long-term care insurance program for federal civil service and military personnel, retirees and some family members. Both parties agree that the government should negotiate good group-rate premiums (which employees and retirees would pay in full) with insurance companies. But the politicians are still far apart on how many health plans should be allowed to participate in a federal long-term care insurance program, which could be two or three years away.

The USDA Graduate School is offering a two-part evening workshop Jan. 26 and Feb. 2 on what long-term care insurance is, who needs it and what it costs. The course will be taught by insurance expert Arthur Stein. Cost is $64. For details, call 202-314-3320.

Expand Your Portfolio?

In October, federal 401(k) investors will have two new investment options: an international stock index fund and a small-capitalization stock index fund. For a look at the indexes' track records, check the Federal Diary on Sunday.

Mike Causey's e-mail address is