As the burden of our debt, deficit and entitlement obligations continues to grow, we can no longer afford to ignore the unrestrained growth of the federal workforce. While we are privileged to have some of the most educated, bright and hard-working people in America on the federal payroll, we do them no favors by overcompensating them relative to their private-sector counterparts or by making long-term promises we may be unable to keep.
Instead, the federal government should begin now to reduce the size and scope of the federal workforce to a more sustainable level. Furthermore, we must take steps to bring federal compensation in line with the private sector. The longer we wait to address these inequities, the more painful the inevitable remedy will be for federal employees.
Since January 2009, the Obama administration has added 144,700 new employees to a federal payroll that reached $433 billion in 2011. That net increase excludes postal employees, uniform military and census workers. While the Congressional Budget Office estimates that average salaries of federal workers are only about 2 percent higher than those for similar private-sector employees, average benefits exceed private sector levels by a whopping 48 percent. Even with adjustments for education level, work experience and occupation, the CBO found total compensation, including salary and benefits, was 16 percent higher for federal employees than for comparable private-sector positions.
Those numbers are borne out by much higher-than-average retention rates for federal employees. The Bureau of Labor Statistics reported in December 2011 that quit rates and layoff rates were three times higher in the private sector than in the federal workforce. While no one seeks high turnover, some turnover is necessary to maintain a healthy organization.
Bloated salary and benefit packages, in addition to draining scarce resources, may limit the growth and mobility of employees while reducing the inflow of young, energetic workers at the lower end of the salary scale. Instead, we have an aging workforce in which 459,016 people earned at least $100,000 in average base salary last year. These rates of growth are not sustainable on our current budget trajectory. Realigning federal compensation and reducing the workforce now is the least painful way to prepare for future budget realities.
Another relatively painless way to begin addressing the turnover problem is to fire federal employees who are delinquent on their federal tax obligations. In 2010, some 98,291 federal civilian employees refused to pay their federal income taxes. This small subset of employees owed approximately $1.034 billion in unpaid federal taxes — an amount that has increased nearly 72 percent since 2004. Most federal employees take their tax obligations seriously. But those who are unwilling to play by the rules should not be entitled to the privileges of federal employment.
Because previous governments have overspent and mismanaged the federal budget, we cannot escape the consequences of their reckless spending. However, we can minimize the impact of those consequences by acting quickly to avert more destructive consequences down the road. We owe it to our current federal workforce to act responsibly.
Given current budget projections, painful cuts in discretionary spending are inevitable. But we can and must do more with less. Just three years ago, we managed to run the entire federal government on a $400 billion annual payroll — 10 percent lower than in 2010. Cutting back to that level is an achievable and realistic goal.
Surprising to some, the U.S. Postal Service has actually been attempting to make these necessary changes over the past five years. It is taking important steps to right-size the workforce, consolidate assets and innovate its way to profitability.
The USPS ended its 2011 fiscal year with a net loss of $5.1 billion. Having lost 25 percent of its profitable first-class mail volume since 2001, USPS has seen a precipitous drop in revenue. In response, USPS has begun reducing the workforce — an expense that represents 80 percent of USPS costs.
USPS has 157,000 career employees eligible for immediate regular retirement and expects an additional 100,000 to become retirement-eligible by 2015. This creates a rare opportunity to right-size the aging postal workforce through retirements.
A similar approach could help shrink and rebalance the rest of the federal workforce. Furthermore, seniority-based incentives should be replaced by performance-based rewards to improve efficiency and maximize results. The one-size-fits-all pay system is outdated and ineffective. Many federal employees represent the cream of the crop in the American workforce. They should be rewarded based on their performance. But when new opportunities come their way, they should not be held back by a bloated salary and benefits package that cannot be duplicated in the real world. Finally, we must fire federal employees who are delinquent on their federal taxes.
With these measures in place, the American people can have greater confidence in the efficiency and effectiveness of our world-class federal workforce.
Jason Chaffetz represents the 3rd Congressional District of Utah.