Last week, the House Oversight and Government Reform Committee held a hearing entitled, “Federal Employee Compensation: An Update,” to examine a recent Congressional Budget Office (CBO) report that found that certain federal employees earned more, on average, in the federal government than in the private sector.
An invited witness from the Heritage Foundation cited flaws in the CBO report for not taking into account federal employee benefits such as child care subsidies, transportation subsidies, student loan repayment and forgiveness programs, retiree health care, flexible work schedules, and job security. Additionally, Heritage proposed reducing the number of paid leave days by eight, eliminating retiree health benefits, and eliminating the current defined benefit pension under FERS and shifting employees solely into the Thrift Savings Plan (TSP), a defined contribution plan.
Although several Members who attended today’s hearing expressed strong support for the federal workforce and defended their current benefits, others supported the idea of changing the federal retirement system, the performance management system, the federal pay system, and the process for managers to remove or discipline employees for poor performance.
NTEU submitted the attached testimony for today’s compensation hearing expressing strong concerns with the CBO report as it compares individuals in the private sector and the federal government based on their educational level, not based on their actual job duties per the annual report of the President’s Pay Agent, which uses data from the Bureau of Labor Statistics and shows that nationwide, federal employees make 34.92 percent less than their private sector counterparts. NTEU also highlighted that the General Schedule’s transparent rules and structure, provide limited ability for favoritism, discrimination, or other non-merit determinations, which accounts for some of the discrepancy found with federal and private sector pay in the CBO report.
Moreover, NTEU strenuously defended the federal retirement defined pension benefit, noting that individuals who have a retirement plan based on both a defined benefit and a 401(k) type plan are nearly 2.3 times as likely to maintain their standard of living in retirement as a worker with a typical 401(k) account. Given the impact adequate retirement plans have on the U.S. economy and the inadequate savings by American workers, it is imperative that the federal government lead by example as a model employer and provide a strong retirement plan—based upon a defined benefit pension, Social Security, and the TSP—and not join the race to the bottom—exacerbating income inequality in the US and hurting the middle class.
As you know, federal employees are some of the most dedicated workers in the country, and our country benefits daily from the knowledge and skills of these highly trained individuals who work in public service. NTEU will continue to monitor the Administration’s proposals and all congressional action in this area and will fight against efforts to cut the pay, retirement, or health care benefits of our members in order to join the private sector in its race to the bottom.