The looming squeeze on America’s civil servants

By on 15/06/2018
Gloomy thoughts: the president is mounting a push to cut spending and conditions in the federal civil service

Pushing forward a set of changes to remuneration, working practices and conditions, the Trump administration looks determined to shake up the federal civil service. Tamar Wilner identifies the key battles – and gathers forecasts on the likely outcomes

Last month, the US Office of Personnel Management (OPM) marked Public Service Recognition Week. And President Trump issued a proclamation, saying: “The contributions of these dedicated men and women strengthen our country and make a profound difference in the lives of all Americans.”

The official recognition left a bitter taste for some, as the civil service faces wide-ranging attacks from the executive. In its February budget proposal to Congress, the White House proposed a freeze on across-the-board civilian pay increases for 2019; combining sick and annual leave into one category; giving managers greater flexibility over hiring and firing; and a number of changes to the Federal Employees’ Retirement System (FERS) and Civil Service Retirement System (CSRS).

Then, in a May letter to House speaker Paul Ryan, Office of Personnel Management director Jeff Pon proposed legislative language for several of the most controversial changes to pension systems. And before the month was out, Trump signed three executive orders making it easier to fire federal employees, capping the time staff can spend on union business, and putting other curbs on union power.

Push back, push on

The executive orders have already met resistance. The National Treasury Employees Union has now filed a legal motion to stop two of the orders, whilst the American Federation of Government Employees has taken legal action against one order. And earlier this week, the Federal Times reported, 21 Republican members of the House wrote to Trump expressing concerns that the orders could “undo many of the long-standing principles protected by law,” adding that they “undermine existing labor laws and we ask that you rescind them.”

However, Trump’s direction of travel is clear. In a conference call with reporters, Pon said his vision for a government HR overhaul includes speeding up hiring and better aligning pay and benefits with the private sector’s. “We’ve been nibbling around the edges of civil service reform in the 1990s and 2000s… but I’m really looking at wholesale change,” Pon said, adding: “I’m really making sure that our staff here at OPM have a full court press [an all-out effort] in the next six to seven months.”

Ask the experts

Global Government Forum asked a range of people who represent the needs of civil servants and follow Congress closely to analyse the proposals. Which would be truly damaging, and which actually stand a chance of getting enacted? Would any actually make a positive difference for the civil service?

Our panel of experts included Jason Briefel, executive director, Senior Executives Association; Jessica Klement, staff vice president, advocacy, National Active and Retired Federal Employees Association; Tony Reardon, national president, National Treasury Employees Union; and Marc Goldwein, senior vice president and senior policy director, Committee for a Responsible Federal Budget.

In general, they said, there are four key proposals that US civil servants should keep their eyes on; here’s their take on the ideas and their prospects of enactment.

Cost-of-living adjustments

This legislative proposal, one of several made in the White House budget and subsequently proposed in a letter from OPM director Jeff Pon to Paul Ryan, calls for eliminating cost-of-living adjustments (COLAs) for both current and future retirees under the Federal Employees’ Retirement System (FERS), which covers federal civilian employees who started working since 1987. Pon further proposes cutting COLAs under FERS’s predecessor, the Civil Service Retirement System (CSRS), by 0.5 percentage points.

In the letter, Pon noted that private companies have reduced the retirement benefits offered to staff, and said the change would bring the federal government more in line with the private sector.

Klement says this is probably the proposal that concerns her membership the most. “That is not civil service reform. That is benefit cuts for the sake of benefit cuts,” she says. The individuals threatened with complete COLA elimination have a pension that averages less than US$1,000 a month, Klement says – less than the average social security benefit. She estimates the typical retiree would lose US$250,000 over 30 years.

“The current formula doesn’t even keep pace with inflation,” Klement says, noting that it doesn’t account for how seniors spend most of their money: healthcare, whose costs rise considerably faster than inflation.

Briefel says his organisation opposes changing retirement benefits for current federal employees or those already retired: “Our bottom line is federal workers, and in particular federal retirees, chose public service careers and built retirement planning around a certain understanding with their employer: the federal government.” But, he says, “it absolutely makes sense to consider whether the existing benefits package should be the package moving forward for new employees.”

In any case, Klement says, there are serious hurdles for the proposal to clear. This proposal, like almost all related to benefits, will need Congressional approval. It’s also an idea that NARFE and its ilk have helped defeat time again, popping up in presidential budgets year after year. And with Congress meeting for fewer days than normal this year, Klement says chances of passage are slim.

She warns, however, that Congress could tack such a cost-saving measure onto a bill that calls for major spending, such as a big infrastructure bill. She’s worried by the push from Pon, who said he’d like to implement a comprehensive civil service reform package before October – though in an election year, Klement still thinks passage of such a bill is unlikely.

Goldwein says of the collective COLA proposals: “That particular policy is probably more aggressive than the political system would be willing to live with in deficit reduction.” But he adds that less drastic portions of the proposal could get some traction.

Increased retirement contributions

Pon’s letter to Ryan also proposed increasing the amount that employees contribute towards FERS by one percentage point per year, until they reach 7.25% of basic pay. This would roughly double the contributions made by employees hired after 2012, but lead to a much bigger increase for most employees – who currently pay 0.8%.

This is an idea we’ve seen on Capitol Hill several times, and it could save the government considerable money – so it’s likely to get seriously considered on the Hill, Klement says.

Goldwein is more sanguine: “I don’t think there’s a coalition right now to support it,” he says. “There’s rarely demand for policies that are going to take away things from people, even if it’s the small group that’s federal retirees.”

And this proposal – like many others affecting federal employees – would be more likely to pass as part of a broader deficit reduction plan that didn’t just affect that group, Goldwein says.

In general, Briefel says of proposals that affect the pay and benefits of federal workers, “I’m not particularly losing any sleep, because we’ve seen these proposals before, and they don’t have enough support to become law. There’s a good cadre of House Republicans who have federal employees in their districts.”

Certainly, the 21 House Republicans’ letter issued in response to Trump’s executive orders reveals there is considerable unease amongst Republican legislators about measures that might prompt anger in the run-up to the autumn’s elections.

Pay freeze

The White House’s budget recommendation proposes a freeze on across-the-board pay increases for civilian employees. This freeze, unlike the benefits changes described above, doesn’t need Congressional approval. If the president proposes a pay freeze and Congress stays silent, then the president’s proposal goes through, Klement says.

And she is concerned that this could come to pass. Already, a House of Representatives subcommittee has passed an appropriations bill without a pay raise.

Klement says the first civil servant pay freeze started in 2011 and lasted three years. Before that, Congress-appropriated pay rises for federal employees were always a given. But the rules of the game have changed.

“We can almost certainly anticipate a pay freeze for 2019,” Klement says. “We’re working really hard with our coalition partners to try and return pay raises to regular order, which is inclusion in appropriations bills. But then you have to convince a Republican congress to support a pay raise for federal employees… I don’t think [the freeze is] a done deal, but it’s certainly an uphill battle” to block it.

Goldwein disagrees, however – noting that Congress has more money to work with than in some previous years. The budget deal struck in February raised the government’s cap on discretionary spending, set in 2011, by US$153bn for financial year 2019.

“As long as the appropriators are getting more money, they are probably going to give employees more pay,” he says. “The big question for pay freeze is what the cap will be for 2020.”

Goldwein says the appropriations process is going fairly smoothly for now; particularly compared to last year, when Congress’s log jam led to two shutdowns and a spending agreement was reached with only six months left in the fiscal year.

“That doesn’t mean they’re not going to miss deadlines, but my guess is it’s not going to be as late as it was last year,” Goldwein says.

But Klement expects to see the use of stop-gap measures called continuing resolutions, and more threats of government shut-downs. She says the House of Representatives has the willpower and consensus to move its appropriations bills before the autumn recess, but the bills will probably get stalled in the Senate and in the conference committees that have to align House and Senate bills.

“[Congress] aren’t here all of August, and then the fiscal year starts October 1,” Klement says. “I’m sure no one anticipates getting it done by October 1.”

Changes to pay determinations

Along with the pay freeze, the White House budget also called for cuts to the number of longevity-based pay rises and increases in performance-based pay. NTEU national president Tony Reardon warns that the pay system does not need a “major overhaul.”

“The existing General Schedule is already a pay-for-performance system, with the ability to reward good employees or remove poor performers. Just like in the private sector, rewarding employees for exceptional work is a key part of recruiting and retaining highly skilled professionals,” Reardon says.

However, Briefel argues that comprehensive pay modernisation is needed – though he resists the term “reform,” preferring “modernisation.”

“Modernisation means we’re just not up to modern standards, and not able to operate as efficiently as we like,” Briefel says.

For example, he says the General Schedule classification system from 1949, though updated a couple of years ago, still barely mentions the crucial field of cyber security. He would like to see a more occupation-based compensation system. Currently, all workers classified as GS13 make the same amount, whether they’re engineers, lawyers or HR managers, Briefel says.

“Does that make sense? That’s not how the labour market works,” he adds.

He also notes that those who leave the civil service and then return aren’t able to easily rise to a level commensurate with the experience and skills they’ve accumulated.

Briefel admits there will probably be losers as well as winners from these changes. Most studies on the topic show, he says, that GS9s and below without college degrees are generally overcompensated, whereas GS9s and above with advanced degrees are often undercompensated.

“Unfortunately, some folks may be negatively impacted,” he says, but “federal employees are here to serve the American people; and having a job is better than not having a job, even if you’re getting paid a little less.”

But here as with benefits changes, Briefel is eager to see the changes made forward-looking; he argues against cutting the salaries of employees who chose the civil service with certain expectations around pay.

As for how these changes might take place, Briefel says the OPM and the administration can do some things on their own. The Federal Salary Council, for example, makes adjustments to salaries to account for regional variations, and it plans to reexamine its methodologies for pay determinations.

But, Briefel says, “To really get at it systematically you need legislative reform, because the general schedule and classification system is codified in law.” He reserves judgment on whether such reform could pass with the mid-term elections looming, but advises all concerned to keep an eye on the civil service reform package that OPM plans to submit to congress in September or October.

There will clearly be major battles ahead around these topics. The administration’s response to the legal challenges and political opposition to its executive orders may provide a weather vane, signalling how committed it is to making major reforms. But as things stand, Pon certainly sounds eager to push ahead with changes. In a period of disruption and policy change for the federal civil service, Trump looks set to slim down the honey rations that help the medicine go down.

About Tamar Wilner

Tamar Wilner is a Dallas-based journalist and researcher who writes about public policy and the media. She's written extensively on energy, the environment, urban planning and small business for trade publications in the US and UK, and contributes regularly to the Columbia Journalism Review. Find her at @tamarwilner.

5 Comments

  1. Cheryl W.

    15/06/2018 at

    All the work we federal employees do each day to help the American people, why can we get a pay raise each year? Why do you think we do not deserve a pay raise?

  2. Deidre

    21/06/2018 at

    Why is there such a push to have the federal workers in line with private industry? Doing so will hurt recruitment for important positions and lessen the likelihood of the “best and the brightest” being drawn to the federal workforce. Somebody is not thinking clearly.

  3. Glenn C

    22/06/2018 at

    this is so short sighted- the loss of goodwill and less discretionary spend from public staff will impact on all private businesses, and so a vicious downward spiral begins. Ending in Depression.
    Trump being a business man should know that you need to invest long term (like mortgages ) to improve and provide a stable platform, by cutting one leg shorter on a table only makes it wobble – unless you know what you are doing.
    I can see this from England, beware of the consequences of ill concieved policies, they may not have the desired effect……except if you are mega rich!

  4. Mike D.

    22/06/2018 at

    I strongly disagree with the statement that government employees make more than their civilian counterparts. I believe the opposite to be true. I know many people with a degree that make far more than I do with private companies. The reason that government employees had a good pension plan was to help offset the difference in salaries when compared to non-government employees of the same level.
    Taking away from government employees is just another way to divert funding from those that deserve it and into the greedy coffers of the rich. These companies/ people will continue to get fat off of their pork barrel politics until we band together and resist.

  5. CGRoy

    22/07/2018 at

    This narrative that governments need to “align” with the private sector is simply wrong. The government should treat its employees in an exemplary fashion for the private sector to emulate. That is how a government serves the interests of its citizens.

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