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December 28, 2011 9:23 AM Driving Federal Government Employees Into Retirement

By Keith Humphreys

My family and I went to the VA hospital for Christmas services, during which the kindly chaplain said goodbye to the veterans to whom he had been ministering. Like a record number of federal government employees, he has decided to retire this year.


Because the federal workforce is older than the general population, a certain number of retirements are to be expected. Yet according to the actuaries at the federal Office of Personal Management, workforce age isn’t enough to account for the surge in federal retirements. It’s not hard to see what other factors are driving federal government employees to the exits.


Federal employees have received no cost-of-living increases for two years running, and a freeze of one to three more years is possible. Federal pensions are also on the Washington chopping block. Add to that the increasing demonization of civil servants and red tape within the government, and it’s easy to see why many feds are calling it quits.

Cui Bono?

Unambiguous Losers: States. A wave of federal employee retirements hurts states in two ways. When a federal employee moves from a salary to a federal pension supplemented by social security payments, his or her contribution to state tax revenue drops (most states exempt social security from income tax). Also, the loss of federally funded and provided services increases burden on state-provided services. For example, when VA medical centers lose staff, the demand for care at state Medicaid funded clinics increases.

Both Winners and Losers: Federal employees and federal taxpayers. Many federal employees will miss some aspects of their jobs, but they will escape the increasingly constrained federal workplace and have more time to pursue other activities that bring them fulfillment in life. Federal taxpayers win financially in the sense that the budget appropriation for federal payroll will shrink. However, most of the federal employees moving prematurely into retirement will draw more on other federal programs as a result, converting some of the “cost savings” into mere cost shifting. Further, taxpayers who rely on federally-provided services will get slower and lower quality service as agencies are shorn of their most experienced and knowledgeable employees.

Unambiguous Winners: Government haters. Government employee morale will sink further as pay and benefits decline. The most talented employees, who return value to the taxpayer well in excess of their salaries, will pursue other careers. Sapped of quality employees, federal agencies will provide fewer services and do so in a more inept manner, thereby stoking more popular and political rage at the government.

[Cross-posted at The Reality-Based Community]

Keith Humphreys is a professor of psychiatry and behavioral medicine at the Stanford University School of Medicine.

Comments

  • Jimo on December 28, 2011 3:29 PM:

    And yet bizarrely, federal hiring continues to turn away millions of educated, qualified applicants.

    For example, I tried to help a relative who wanted to make a career transition from dealing with commercial real estate and procurement. Virtually every job listing at USAJOBS was clear: this job requires specialized experience. This experience consisted of (a) working with government contracting for (b) a year minimum.

    Granted, government contracting is complex and bound up in generations of rules designed to overcome the long history of fraud on the government. Still, this person both had an extensive educational background well-suited to this role and considerable private sector experience. The bottom line was, even considering the 'culture shock' of adapting to a unique world of rules, this person not only would have learned quite quickly but would have been a first-class long-term employee.

    But government hiring in effect doesn't allow hiring of such a person even while the government complains that it needs more workers. Go figure.

  • KH on December 29, 2011 1:28 AM:

    Wages are frozen at the state and local levels too. State employees in my state have had a wage freeze for 3.5 years and have been told that the freeze is indefinite. There in essence has a pay drop in that public workers are being required to put more (they were putting 6.8 percent in and that is slated to increase) into the retirement system and pay more for health care. They also took away the the sick leave in one city for public employees. There is a hiring freeze in place as well.

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  • Stephen Spencer on December 29, 2011 11:12 AM:

    We have to cut spending or we will go bankrupt--we can't tax our way out of this and continue to expand spending.

    The best way of doing that is to eliminate programs and agencies: but every one of them has a constituency--which is how it got created in the first place. It is not clear that we will EVER eliminate even a single program until AFTER we are bankrupt and have no choice (since vote buying with tax dollars cannot continue to expand).

    That leaves across the board cuts: which guarantees that EVERY agency and function will be crippled. The "beauty" of this approach is that once the American people turn their attention elsewhere, the entire scope of Federal control, vote buying, and intrusion can be restored. Again, until total bankruptcy.

  • guy on December 29, 2011 2:03 PM:

    The entire federal civilian payroll is less than 15% of the annual outlay. We could eliminate *every* federal civilian and still have a deficit of a trillion dollars. That leaves only SSI, Medicare/Medicaid and defense to cut. If you further cut all of the defense budget of $650B you still have a deficit of $350B.

    Folks, either the economy grows at a rate of over 8% annually or we MUST look at cutting (not reducing rate of growth) social programs. Demonizing federal employees is only distracting the public from the real issue.

  • Norm from GA on December 29, 2011 3:34 PM:

    Jimo, you are right about over qualifying, but you should remember two things...(1)in times of high unemployment, the government, as would many employers, add hurdles because it can. Why train someone if there is undoubtedly someone out there looking who can fit directly into the spot right off the street? (2) You assume that there is someone in place who can teach him/her the ropes. There probably isn't. Supervisors are often woefully ignorant of what their people do, or how it is done; if there has been cutbacks, coworkers are too busy (or paranoid) to offer much help; and the person replaced is already out, collecting his/her pension. I am truly sorry for your relative, and wish him/her the best of luck in the new year.

  • Linda from MT on December 29, 2011 4:55 PM:

    Cutting federal spending and increase taxes is needed. When 40 percent of the working age population pay zero federal income tax, for most that includes Social Security and Medicare as well. Everyone needs to start contributing rather than seeing how many people can just take, even if just a little. We cannot cut enough Federal spending to take care of the deficit and still function!

  • Contracting type on December 29, 2011 5:38 PM:

    Jimo, norm hit on some of the problems but not all. Due to DAWIA those entering contracting in the defense agencies must take a series of classes and they generally enter the program as a GS 7. Most with private enterprise experience think they should start at a higher level, but in the eyes of the govt they are inexperienced. Tell him/her to apply for intern programs and the odds of getting hired will increase. I had to take a cut in pay over 20 years ago to enter this field, and work my way up to the level I have achieved. It wouldn't be fair if they just hire people and let them jump over others who have more closely aligned experience.(in the agency they work for). Don't forget, the veterans are also applying for these jobs (captains,majors,and colonels that have retired and want to double dip)

  • bill wagner on December 29, 2011 8:45 PM:

    One must understand that when Clinton was in office he was collecting more money faster then the government was growing. Some of reason why we collect more revenues then the government was growing was due to Newt and the fact our economy was growing at faster rate of spending.
    Basically Clinton would not cut taxes and wanted to grow the governmet and spend more towards federal programs. Although, Clinton did cut the Capital Gains tax rate. Newt wanted to cut taxes but instead he didn't allow government to grow nor did he allow increase spending on federal programs.
    Clinton and Newt were at odds with one another and that was the best outcome for the country. So during the time Clinton and Newt were in office together you cut the federal deficit and grew a surplus.
    Now we have a President who continues to spend more then any other President in History. Raising the taxes is not the solution to our problems. We can't solve our countries problems by raising taxes.
    So if there are any Americans that thinks raising taxes will cut the federal deficit and grow a surplus with the current Administration then they really don't deserve to vote in 2012 election.
    With this President if he raises the taxes you will have more spending on federal programs and out control deficits. We need to have a balance approach by cutting and stop the spending just like a typically American household. This is what worked for Clinton and Newt.

  • lazyfed on December 29, 2011 9:27 PM:

    Guess the author is like most CS unable to do math or utilize logic. A CS retirement hardly costs a local govt 1 dime since they are immediately back filled and the locality now has even more revenue flowing in.
    The real losers are the taxpayers that are funding 95% of CS retirement

  • gitmogrunt on December 30, 2011 1:30 PM:

    Civil Servants pay their own pensions, just like anyone in the corporate world. There is a small match for 401's from the employer, just like in the private sector. So quit waisting your time and hate on government workers, and target those who want to do America harm, like the Democrats next door.

  • ml on December 30, 2011 2:02 PM:

    Wow, it's finally becoming apparent by all the lazyfed postings.. lazyfed is a new fed, a young fed, a fed who has no purpose and is jealous of old timer feds and their benefits. Lazyfed is on FERS or probably no benefits because of a student status or temp. Lazyfed needs to get a life outside of federal govt. and stop harrassing everyone in the government because no one pays much attention to lazyfeds postings anymore as they have no value.

  • Michel on December 30, 2011 3:04 PM:

    I just retired last month after 35 years, 4 months and 18 days of Federal Service. 4 Years enlistment in the Coast Guard, and 31+ in the CIA. There was a bit hiring bubble in the 80's and many folks my age are at the point of retirement. This year saw a mass exodus. I do not believe it was a result of being 'pushed out', but rather the normal attrition of the 80's bubble.

  • Chuck on December 30, 2011 5:18 PM:

    Not sure where you are getting your facts. Are we sure folks are leaving in droves. I don't see that happening here in Florida. As for double dippers. I am one. As an officer retiree I was given no preference for hiring. I did have to wait a rediculous 6 months to know I got the job I applied for. Most civilian applicants think the hiring process is quick. The VA process is rediculously slow. That, is something that MUST be changed, but has not in the past 3 years that I have worked for the VA as a supervisor.

  • Heathrow medical on December 31, 2011 4:03 AM:

    Thanks for the post.
    It was really helpful to solve my confusion.

    Occupational Medicine

  • at guy and lazyfed on January 01, 2012 6:31 PM:

    My retirement day is soon, just around the corner, and it's been well earned. Can't wait to see how the remaining haters love the crap they get from their peers on the outside. Would love to have been around CS when all the retirees were immediately back-filled--it doesn't happen here. Go ahead and do more with less.