Back in February, FedSmith published an article entitled A Perfect Storm for Federal Employee Pay and Benefits. The article noted that federal employee pay and benefits may be running into the political equivalent of The Perfect Storm named after a 2000 sea-faring disaster film. A “perfect storm” is an expression describing an event where a rare combination of circumstances will drastically aggravate a situation.
Last week, we came across an article by Mike Causey entitled The perfect storm for buyouts. The gist of the article was that “Efforts by Congress and the White House to trim the deficit combined with pending budget cuts have created perfect storm weather that is almost certain to produce more offers of buyouts and early retirement” for the federal workforce.
It raises the question: What is happening in the federal workforce? Here is a quick summary on the size of the federal workforce over the past several years. Please note that the 2011 figures only reflect a partial fiscal year, through June 2011.
So, despite the recession and the high unemployment rate, the federal workforce has been growing. We will leave to the political pundits and partisans to debate whether this is a good or bad thing. The data is from the Office of Personnel Management.
So, now that the number of federal employees has increased by more than 280,000 since 2006, is it time for the federal government to start having buyouts to reduce the number of federal employees? That isn’t a very efficient way to run an organization but, when politics is the basis for making decisions, it is probably inevitable.
This chart to accompany the buy-out article referenced above shows that 15 agencies are in various stages of a buy-out mode. Compared to the workforce increase of 280,000, the number of buy-outs being offered are not that significant. The biggest number of buyouts would impact the U.S. Postal Service and that agency or company or organization is not included in the workforce statistics above. (OPM states that the data “includes all Executive Branch agencies except the U.S. Postal Service, the Postal Rate Commission, the Central Intelligence Agency, the National Security Agency, the Office of the Director of National Intelligence, the Tennessee Valley Authority, the White House Office, the Office of the Vice President, the Board of Governors of the Federal Reserve System, and the Defense Intelligence Agency.”)
Not that there are some buyouts in place, we can expect the rumors to start flying. One perennial favorite: There will be a buyout ($50,000, $100,000 or insert your own number) of everyone in the CSRS and still working for Uncle Sam as a federal employee. Several readers have already written in to ask if it is true. To our knowledge, it is based on wishful thinking from some who were planning on retiring anyway—just as it was for the past several years. (See The Joy and Pain of the Rumor Mill)
There are a large number of federal employees eligible to retire. (See “Changes in Latitudes, Changes in Attitudes:” The Elusive Retirement Tsunami) The possibility of a buyout of any kind will certainly appeal to this group of people in agencies that are offering them—many of whom may have wanted to retire already but decided not to with the uncertain economy. There is a possibility of a number of these folks leaving in a relatively short time. That opens up new opportunities for younger people but would also leave an experience gap as the older employees often walk out the door with unique institutional knowledge that cannot be easily replaced.
No doubt, there will be many changes coming for the federal workforce as the United States starts to deal with massive spending deficits we are accumulating through the political process. There is no doubt the federal government is going to change. It has to change if the country is to survive in anything like its current form. Some current employees will decide the best way to deal with the changes is to retire, hope for the best in calculating future retirement income, and enjoy life within their financial limits. What we do not know is the nature and shape the federal government will take and the role of government in our daily lives as elected officials deal with the unprecedented federal deficits and spending.
