Early this month, while the country was watching the Iran deal, the abrupt resignation of the New York Attorney General, and everything Mueller, the recently installed director of the federal government’s Office of Personnel Management (OPM) quietly submitted four legislative proposals to Congress. These proposals would reduce government spending on federal retirement benefits by eliminating “annuity supplements,” increasing the number of years of pay used to calculate pension payments from three to five, increasing employee contributions to the Federal Employee Retirement System, and reducing or eliminating cost-of-living adjustments.
These proposals face a very uncertain future in Congress. They would most likely pass the House of Representatives, for two reasons. The first is that most of the National Capital Region, where the overwhelming majority of civil service employees live, is largely represented by Democrats. Of the 2,087,747 civilian employees of the cabinet and independent agencies reported by the OPM last year, 371,710 — or 17.8 percent — lived in the District of Columbia, Maryland, and Virginia. Most Republican Congressmen simply have nothing to lose by voting to cut Federal employee pensions.
The second, far more damaging reason, is that most people around the country simply don’t understand what federal employees do. The average American’s view of government employees is formed three places: city hall, the DMV, and the IRS. Most people simply don’t interact with the government at any level unless they need a permit, need to renew their driver’s license and car registration, or need pay their taxes. None of these is a pleasant experience.
For many Americans, cutting annuity supplements, in which federal retirees not old enough to collect Social Security get a higher pension check until they turn 62 years old, is not a bad thing. For most Americans, the idea of not working before turning 62 is inconceivable.
Despite their prospects in the House, I don’t see these proposals clearing 60 votes in the Senate. Republicans hold just a one-seat majority, meaning nothing this divisive is getting through, even in an election year with many red-state Democrats like Sen. Joe Manchin of West Virginia and Sen. Heidi Heitkamp of North Dakota up for re-election. Heitkamp and Manchin were two of four Democrats to cross the aisle and vote in favor of Gina Haspel to become CIA director last week.
Pensions are the difference
Compensation is tricky to discern. A 2010 study by the conservative Heritage Foundation claimed, “Salaries and benefits—for identical jobs—are 30 percent to 40 percent higher in the federal government than in the private sector.” That same year, OPM claimed that federal workers made 24 percent less than their civilian counterparts.
Pensions likely a large part of the discrepancy. Most civilians who earn a pension these days, including federal employees, are covered by unions. The American Federation of Government Employees alone represents 700,000 federal and D.C. city government workers. For everyone else, living after retirement is dependent on Social Security, 401(k) or similar retirement plans, and other personal savings.
The Senate confirmed the new OPM director, Jeff T.H. Pon, in March. He was a fairly solid choice. For the five years before his nomination last September, he was the chief human resources and strategy officer for the Society for Human Resource Management, SHRM (pronounced “sherm”). Pon ran HR for the organization that certifies people to tune other organization’s HR departments.
He’s also not new to government. He spend five years in the George W. Bush administration, first as deputy director for eGovernment in OPM, then as chief human capital officer for the Department of Energy. This doesn’t make him right, but it does mean that he is eminently qualified for the position, and understands these issues fairly well.
Every day in D.C., I see the same discussion played out: contractors want to be “govvies” because of the stability (poorly performing federal employees can be fired, but usually only after failing to complete a “Performance Improvement Plan”), while civil servants want to be contractors for the (often marginally) higher paycheck.
Stability and long-term compensation like pension plans are just two factors to consider when deciding which career path to follow. Just remember that no matter what you decide, nothing is ever set in stone.
