The Cato Institute (Cato) recently released a lengthy report with various recommendations to the Department of Government Efficiency (DOGE) on areas where it believes cuts should be made to the federal government. Among the long list of suggestions in the report was a section dedicated to federal employees.
As to why Cato suggests the cuts, the report states:
Data from the Bureau of Economic Analysis show that the average federal civilian worker made $157,000 in wages and benefits in 2023, much higher than the average US private-sector wages and benefits of $94,000. Lucrative compensation and high job security induce federal employees to stay in their jobs for decades, which can create a sclerotic culture infected with groupthink. Bureau of Labor Statistics data show that the quit rate in the federal government is just one-quarter the rate in the private sector.
It adds also that federal employees are rarely fired, and data from the Federal Employee Viewpoint Survey show that poor performers are not dealt with effectively.
Recommendations for Federal Workforce Cuts
These were the specific recommendations outlined in the report:
Cut Overall Compensation for Federal Employees by 10%
Cato recommended this because it said that federal employees are paid 17% more than comparable private sector workers and 47% more in benefits. It got this information from an April 2017 Congressional Budget Office report which compared compensation of federal employees with that of private sector employees.
The CBO report states, “On average for workers at all levels of education, the cost of benefits was 47 percent higher for federal civilian employees than for private-sector employees with certain similar observable characteristics, CBO estimates.”
“There is no reason why federal employees should be an elite island of highly paid workers immune from the performance requirements typical of workers in the private sector. The great majority of Americans think that the federal government is wasteful, corrupt, and incompetent. Curbing excessive compensation and job protections for federal workers could help change that perception,” says Cato.
Cut the Total Number of Federal Employees by 10%
Cato estimates that this would save about $40 billion per year.
Limit Federal Employee Unions
The report recommends that when he is back in office in 2025, President Trump should reinstate two Executive Orders that imposed restrictions on federal employee unions. Among the provisions of those Orders were the following:
- Unions were charged rent for federal office space and would not be reimbursed for travel expenses or for hours spent appealing worker firings.
- All federal employees were ordered to spend 75 percent of their time doing the work for which they were hired as a federal employee.
- Federal agencies were required to publicly post union contracts in an online repository.
- Agencies were encouraged to conclude negotiations with federal employee unions in less than a year.
- The use of official time was severely restricted. Official time is the system under which federal employees are paid salary and benefits working on behalf of the union rather than performing other work. Federal employees were not allowed to spend more than 25 percent of their time on union or other non-agency business.
- Unions were to be charged rent for using space in federal buildings.
Making It Easier to Fire Poorly Performing Federal Employees
The report recommends reinstating President Trump’s 2018 Executive Order that made it easier to fire federal employees for performance reasons.
Reinstate Schedule F
The report recommends bringing back Schedule F because it says, “Federal workers must
implement official policies without regard to their personal opinions.”
End Affirmative Action in Federal Hiring and Contracting
Cato says that executive orders from the Nixon and Johnson administrations should be amended to eliminate any affirmative action requirements. As to why, Cato states, “Affirmative action is an expensive, largely ineffective, and discriminatory policy that seeks to benefit some federal applicants and contractors because of their race, color, religion, sex, national origin, handicap, or age at the expense of others. These EOs have forced the federal government to discriminate based on those characteristics and to incentivize many firms to do so as well if they are government contractors or hope to sign government contracts in the future.”
Privatizing Federal Operations
The report also recommended privatizing the Postal Service, Amtrak, and air traffic control system. President-elect Trump has floated the idea himself of the possibility of privatizing the Postal Service and said, “…there is talk about that, it’s an idea that a lot of people have liked for a long time. We’re looking at it.”
Why This Matters Now
Reports from conservative institutions such as Cato or the Heritage Foundation have been making these types of suggestions for years. To date, nothing of any substance has come from them in terms of enacting significant cuts to the federal workforce or government spending.
The size of the federal workforce has been relatively flat for the past several decades, and government spending has continued to rise as seen in the size of the federal debt which topped $36 trillion this year.
However, there seems to be a renewed interest in making meaningful cuts to government spending and regulations. Donald Trump campaigned on making significant cuts to government spending and regulations, and that cost-cutting sentiment led to DOGE and its stated agenda. Add to this that Republicans will control both the House and the Senate and the potential is there for more meaningful cuts to be made.
