Year in Review: 2017 and Its Impact on Federal Employees

View this article online at https://www.fedsmith.com/2017/12/31/year-in-review-2017-impact-federal-employees/ and visit FedSmith.com to sign up for free news updates
By on December 31, 2017 in Human Resources, Pay & Benefits with 0 Comments

3D numbers 2017 with a magnifying glass focused on the '17'

We have reviewed the most widely read articles on our website for the past year. This is a good indicator of the issues capturing the greatest attention of readers—whether the interest is due to a positive response (such as a raise) or a negative response (such as a hiring freeze). The assessment that jumps out in reviewing the most popular items of interest in the federal community is an overriding concern about pay, benefits and job security.

10 Significant Events for 2017

Here is our list of the top ten issues in 2017 for the federal employee. Feel free to add to the list using your own judgment in the comments section following the article.

1. A New President in Town (Washington, DC, that is)

President Trump assumed office in January 2017. Federal employee unions staunchly and loudly supported his opponent in the general election. Federal employees gave money in amounts overwhelmingly in favor of Democrats and, in particular, to Hillary Clinton, instead of to Donald Trump.

Despite polls and prognostications in the main stream media that led many to believe another President Clinton was a sure bet to win the election, the man promising to “Drain the Swamp” came out on top. Perhaps the “silent majority” cited by President Richard Nixon held sway in 2016. In any event, the final result was that Donald Trump won the electoral college tally by a margin of 306 to 232.

There was little doubt the very liberal philosophy of the Obama administration was going to be replaced by a different approach and new assumptions underlying policies of the Trump administration. While it is still early in the administration, 2017 clearly signaled to the federal workforce that President Trump actually intended to implement the type of policies he championed during the campaign.

2. A Federal Hiring Freeze

Shortly after taking office, President Trump issued a memorandum imposing a federal hiring freeze. That should not have been a big surprise based on issues and campaign rhetoric leading up to the election. The memo was part of a long-term plan to reduce the size of the federal government largely through attrition.

The hiring freeze was lifted but has effectively been kept in place in some agencies. By the end of September, according to research reported in several publications, the federal government had 1.94 million permanent workers. That number is down about 16,000 since January. By comparison, in the first nine months of the Obama administration, the federal government added 68,000 permanent employees.

3. Proposed Spending Cuts

The federal employee retirement system is a major benefit of working for the federal government. Proposed changes to this program gather attention quickly.

Perhaps because of the rhetoric on draining the swamp or just fear of the unknown, possible changes and proposed cuts to the retirement program garnered considerable interest.

In Trump Administration Proposing Drastic Cuts to Federal Workforce, “dramatic” cuts to federal spending over the course of the next several years would align closely with the 2017 budget blueprint adopted by the Republican Study Committee. The cuts would potentially reduce federal spending by up to $8.6 trillion over the next 10 years.

4. Proposed Changes to Federal Retirement System

In the 2018 budget proposal, the White House made it clear it intends to shift the philosophy of compensating the federal workforce to be more closely aligned with how it is done in the private sector. This is the underlying principle guiding many of the changes in the budget. (See 2018 Budget Proposes Eliminating COLAs, Increasing Retirement Contributions)

The budget proposed eliminating COLAs for current and future federal retirees under the Federal Employees Retirement System (FERS). For retired federal employees under the Civil Service Retirement System (CSRS), a proposal was outlined to reduce COLAs by 0.5%.

Other proposed changes included moving from a high 3 computation for retirement pensions to a high 5 system and increasing the amount FERS employees would contribute to their future retirement payments.

5. 2018 Pay Raise Approved

A pay raise for the coming year is always a popular subject. The approval of a pay raise for federal employees averaging 1.9% for 2018 was no exception. (See Federal Employees’ 2018 Pay Raise Approved in Executive Order)

The raise will be effective on the first day of the first applicable pay period beginning on or after January 1, 2018. The amount of the raise will depend on an employee’s locality pay amount for 2018. The actual pay rates for each grade, step and locality are available in our GS Pay Calculator.

6. Pay Freeze Coming in 2019?

A much less popular topic but one which would impact most federal employees in some way is the possibility of a pay freeze in 2019.

Proposals outlined in a leaked White House policy council budget document contained a section on federal employee pay and benefits reflecting earlier proposals in a Heritage Foundation Blueprint for Reform. (See Worst Case Scenario: Proposed Cuts to Federal Pay and Benefits)

Other proposed changes in the leaked document included proposals to:

  • Slow the pace of seniority-based pay increases by 50 percent.
  • Eliminate FERS defined benefit retirement plan for new hires.
  • Enact all the FERS reforms for existing hires included in the FY 2018 budget.
  • Eliminate retiree health benefits for new hires.
  • Eliminate the mandatory 25 percent employee co-pay for federal health benefits to encourage greater competition between FEHBP plans and reduce costs.
  • Bring Federal paid leave benefits in line with private sector norms.

7. Buyouts and Early Outs

Buyouts and early outs do not impact as many federal employees as a pay raise, but these issues can be very important to federal employees in an agency that is cutting down the size of its workforce.

A private sector employee may show up for work and find out it is his last day on the job. If lucky, he might receive severance pay and outplacement assistance.

Federal employees are protected by reduction-in-force regulations and have procedures that regulate early outs and buy outs. No doubt, the sudden interest in an explanation of buyouts, early outs and a summary of these programs was from agencies where there was already internal discussion of when and how these programs would be interested. (See Buyouts and Early Outs)

8. A COLA for 2018 and How Much Will it Be?

A cost of living adjustment for the coming year is another popular topic. This is particularly true in a year when agencies are downsizing and a larger number of employees than usual are considering retirement as a near-term option.

The article on 2.1% COLA in 2018? drew considerable interest as a result. The cost of living adjustment (COLA) for Social Security recipients and federal retirees averaged about 1% since 2012. This average included Social Security and federal retirees not receiving any increase in 2016.

News that the COLA in 2018 would exceed this average drew a lot of attention from readers. In January 2018, federal retirees and Social Security recipients will receive a 2% increase, their largest cost-of-living adjustment in six years.

The 2% increase came about, in part, to the timing and severity of the storms that affected Texas, Florida, and other southern states in August and September. The storms caused a spike in gasoline prices that accounted for about 25% of the 2018 COLA. (See Hurricanes in August and September Dramatically Impacted 2018 COLA)

9. The Debt Ceiling and the G Fund

When the Thrift Savings Plan (TSP) announced the government was borrowing from the G Fund to avoid running up against the debt ceiling limit, it gathered a lot of attention from readers. (See Government Begins Borrowing from the G Fund to Offset Debt Ceiling)

Federal employees learned more than once during 2017 that they were contributing to financing the operation of the federal government when the debt ceiling was being challenged—whether they knew about it or not. The reason is because the G fund assets within the Thrift Savings Plan (TSP) are used by the federal government to help meet expenses.

Readers submitted about 200 comments on the subject, and most of the comments reflected a strong dissatisfaction with a system that readers often viewed as tampering with their money without their permission.

This was not the first time the G fund and the debt ceiling have become interconnected and it is unlikely to be the last. No one lost interest or other money, but their was certainly considerable concern among federal employees.

10. How to Quickly Reduce Salaries and Agency Programs

Most people have never heard of the Holman rule. Congressman William S. Holman was a Democrat from Indiana who died in 1877. Why would federal employees suddenly show interest in legislation championed from a Democrat who would be completely out of step with today’s Democrats? (See How To Quickly Reduce Federal Employee Salaries and Agency Programs)

The reason is because the Holman rule was a way to reduce federal spending. This Indiana Democrat was intensely focused on reducing federal spending. His frugality was legendary. Early in 2017, it looked as though his legacy could have an impact on today’s federal employees.

The Holman rule gave the House Committee on Appropriations authority to cut back on spending by reducing the number of federal officials and cutting the salary of federal officials. It was also a way to quickly reduce the compensation of any person paid out of Treasury funds and to reduce the amount of money covered in an appropriations bill.

The Holman Rule would enable the House of Representatives in the current Congress to reduce the number of federal workers at specific agencies or cut their compensation. It would be done as a provision of or an amendment to an appropriations bill.

With the overall fear and concern among some employees about their job security and benefits, an explanation of the Holman rule struck a chord. See the nearly 300 comments (as of the time of this writing) left on the article for a look at what our readers thought of the Holman rule.

Summary

2017 brought a lot of surprises to the federal workforce. Many people do not like change, especially change that may negatively impact a person’s economic interests. There were plenty of possible changes in 2017 to make many people working for Uncle Sam uncomfortable.

While it is highly unlikely most of the more dramatic proposals will ever be enacted, the possibility is unnerving in a workforce where changes may often be slow or nonexistent. The change in political philosophy ushered in by the Trump administration was probably shocking. The work environment in many agencies has often remained unchanged through several administrations. Possible cuts in agency budgets and reducing the size of the federal workforce has not occurred for many years.

It is likely there will be a number of similar changes and proposals in 2018. Many will be unexpected. The mood of the electorate will be measured again late in the year and more surprises may be forthcoming.

We thank all of our readers and those who choose to subscribe to our free daily newsletters for following our efforts to inform those in the federal community about topics and events that impact all of us.

We also want to give a special thanks to our authors who write articles for our site and share their knowledge and expertise with the federal community. The service FedSmith provides to the federal community would not be possible without their contributions.

© 2018 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

Tags:

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47

Top