Federal Employees Already Have Given Enough

August 1, 2012

The 2.6 million civilian employees of the federal government perform a multitude of jobs on behalf of the American people, including but not limited to, care for veterans; administration of Social Security, veterans benefits, Medicare, and Medicaid; collection, processing, and delivery of mail; border security; guarding inmates in federal prisons; ensuring the safety of the airline passengers; and enforcing law and regulations regarding public health, environmental protection, fair housing and housing for the poor, workplace safety, private pensions, wage and hour standards, and logistics, administration, repair, and maintenance of weapons and other support for our military.

Federal employees are substantially underpaid for performing this important work. Salaries of federal employees are on average 24 percent below those of comparable jobs in the private sector. Their health insurance is less generous than that provided by large firms in the private sector. Their pensions are equivalent—not more generous—than those provided to employees of large private firms.

Nevertheless, there has been relentless pressure to reduce the compensation of federal employees. Such proposals have been justified by the need to bring their compensation down to the level of the worst private employers or to reduce the deficit. However, federal employee compensation already is too low, and federal employees played no part in causing the economic crisis or the increase in the federal budget deficit that resulted from the crisis.

The successful campaign to reduce the compensation of federal employees began with the current unprecedented two-year pay freeze that is scheduled to expire in January, 2013. This sacrifice by federal employees already has produced $60 billion in budget savings over 10 years.

The pay freeze was followed by tax increases on federal employees in the form of a mandatory increase in their pension contributions. In February 2012, federal and postal employees were required to contribute $15 billion over 10 years, which added up to 50 percent of the cost of legislation to extend the federal unemployment benefit program. The unemployment extension bill required a 2.3 percent reduction in salary, in the form of an increased pension contribution, for employees hired after 2012. By contrast, BLS data show that among private employers that provide defined-benefit pensions such as FERS and CSRS annuities, 96 percent pay the entire cost of providing that benefit and charge the employee nothing. Federal employees already have given up $75 billion over 10 years through the two-year pay freeze and the increase in pension contributions.

With regard to the 2013 pay adjustment for federal employees, whether it is 0.5 percent, as proposed by President Obama, or whether it is frozen for another year, this will be yet another sacrifice by federal employees. Their additional contribution to deficit reduction will be $28 to $30 billion, for a total contribution by January 2013 of $103 to $105 billion over 10 years.

In addition, federal employees also have been negatively affected by the massive downsizing in federal employment that will result from the discretionary spending caps in the Budget Control Act of 2011 and scheduled across-the-board sequestration cuts.

A similar dynamic has forced more than 125,000 job cuts in the Postal Service in recent years, as Congress has refused to reform a grossly unfair mandate to pre-fund future retiree health benefits for postal workers decades in advance. This Bush-era mandate, which no other agency or private company in America faces, is responsible for 85 percent of the financial losses recorded by the U.S. Postal Service since 2007.

It often is said there must be “shared sacrifice” to reduce the deficit, but it hardly qualifies as “shared sacrifice” when nobody else shares in the pain. Unlike federal employees, millionaires, billionaires, Wall Street firms, and the 1% have not been asked to pitch in one dime.

Neither have the CEOs of federal contractors. The federal government continues to employ a “shadow government” workforce of contractors that is vastly larger and far more expensive than the federal workforce. Today federal service contractors can charge taxpayers up to $760,000 annually for the compensation of one single employee. The compensation cap applicable to government contracts has more than doubled—from $340,650 in 1998 to $693,951 in 2010, which then was increased to its current level in 2012. Of course, contractor employees often really make millions of dollars every year because their firms supplement the compensation provided by taxpayers with fees and profits earned on federal contracts. Taxpayer compensation for contractors should be capped at $230,000, which happens to be the salary of the vice president.

All efforts to privatize, outsource, reduce, undermine, politicize, underpay, or undervalue the work performed on behalf of the American people by our federal workforce should be vigorously opposed.

Author: Michael J. Mikulka

President, AFGE Local 704, representing over 900 bargaining unit employees working at the U.S. EPA Region 5 Offices in Chicago, Grosse Ile, MI and Westlake, OH.

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