Just How Ridiculous Are Government Salaries and Benefits?
America is heading toward a financial reckoning because of exploding government spending and debt.
There are too many government employees doing too little work, and getting paid salaries and benefits far beyond what private sector employees make. A new Washington Post poll demonstrates that American voters have figured out that the pay and benefits received by government employees are far out of line with their own careers: according to the poll released today, more than half of Americans think federal employees are overpaid, and three-quarters of Americans believe government employees get paid more and have better benefits compared with those outside government.
I should know how good federal employees have it. For five years, I was one.
The concept of “public service” is dead. Federal employees now make higher salaries than their private sector counterparts. For example, lawyers at the United States Justice Department, where I worked, regularly make between $130,000 and $155,000 per year. This is significantly higher than the average lawyer salary — particularly private sector lawyers outside large cities. While U.S. Justice Department lawyers enjoy these salaries, their state government attorney counterparts often make less than half this amount, even with the same experience.
This isn’t a knock against federal government employees as people. Most of them are fine individuals, and scamming the taxpayer is not part of their plan. This is a knock against the system that employs them. Government pay and benefits have been allowed to swell to an unsustainable bloat. Until recently, the financial solvency of the nation was not at risk, but now sovereign debt threatens the economic life of not only the United States, but also the entire world.
During my last week at the Justice Department, I received notice that I received an automatic “step increase” to a higher salary. To workers in the real world who must ask their employers for a raise, a step increase is an alien concept. In the federal government, you don’t ask for a raise, you don’t apply for a raise. If you breathe and wait, you get one.
Realizing it was absurd for me to receive a significant raise for an inactive final month, I asked for it to be revoked. I didn’t want the raise. But I learned that salaries only go up when you work for the feds, never down. I was told by the human resource professionals it would not be possible to reduce my pay. I must accept the raise.
It is no mystery why the Washington Post poll found what it found.
High and automatically increasing salaries aren’t the only great part of a federal government job. A vast buffet of benefits makes federal employment extremely lucrative. Life insurance, child care help, dental, health care subsidies, and transportation subsidies only add to the take. Best of all, while the real world is jettisoning costly defined benefit plans or pensions and moving toward defined contribution retirement plans, the federal government offers its employees … both!
When I tell people in the wealth-producing world about the federal defined benefit plan, they are shocked and intrigued. It is like discovering a steel toy truck in an attic, or finding faded color photos of grandpa’s chrome-trimmed DeSoto gracing a driveway. The federal defined benefit plan is an economic relic from another age. The federal pension plan is so preposterous, many federal employees don’t know it exists because they never imagined it could exist.
The federal government also attracts lawyers who stay their entire careers, further burdening the rest of us. Every year of federal service entitles a retiree to that same percentage of their three-highest salary years, every year, for the rest of their life. So a twenty-six year government attorney who retires making $155,000 per year gets $40,000 per year starting as early as age 55 for as long as the retiree lives. That same attorney in the coveted Senior Executive Service can look forward to about $50,000 per year in retirement.
No need to worry about rising costs of living — Uncle Sam adjusts the payout for inflation. Even lower-paid federal employees enjoy a defined benefit plan that has no equal, except maybe among General Motors retirees.
This retirement largess doesn’t even include the defined contribution plan — remember, federal employees get both. Through the twenty-six year career of that federal employee, contributions to a separate retirement fund were matched up to about $5,000 per year tax-free.
And of course, an array of other benefits continues for the federal retiree, such as health care and other insurance.
Who gets to pay for this luxurious living for retired bureaucrats? You do! How many small- and even medium-sized businesses paying the taxes to support these federal benefits can provide a similar plan?
Probably none. The marketplace has no tolerance for fantasy.
well put, but it’s too late, our government has willfully and knowingly bankrupted itself, it will not be able to fulfill it’s long term commitments, defaulting on America
Tranquility? Serenity? Why dost thou evade me? As I settle taut and tidy ‘neath the banyan tree, ochre striped macaques and red-assed baboons cavort with frantic abandon ‘bove me head. And still, chaos reigns throughout the land, the “internets”, and of course, within me noggin’, wi’ out unnecessary floggin’. There, I rule the roost, with only chicken shit below me. But out there, me thinks I espied too many chicken shits, none that say “pull”, eh, but quite a few that answer to “press”. I know, I know, it takes a little patience and perhaps a wee dram to penetrate my clever iambic pentameter, as I am given to waxy poetry, rhymed and sloshed with 15 year old liquidity. Such is me lot. But these baggers and press, such a thick bunch and given to all things stupid, lock, stock and barrel. The maiden’s head and the weasel’s tail, and telling a tale told with much alack and alacrity; truth stressed and stretched on the gerund, or alas, lost in the gravy.
My only solace is perhaps that intellect win out over balderdash, or maybe just a vision of a tender lass, whose summer thin shift allows the setting sun to shine through the woof and warp of a poorly woven sheer fabric, as she stands on the hill, giving me gaze in a coveted lustful manner; her thighs inscribed with the graphic eloquence of an illuminated script of Medieval gospel or bronze age fairy tale. They’re out there talking polls, I’m seeing visions of Joanna as I try in vain to satisfy the Greek chorus with my plaintive bleating, as they toss the rotten vegetables of their own failed schemes at me every night on the evening “news”. They sure got a lot of gall! These visions of Joanna kept me up past the dawn (Sorry Bob). Somebody please tell me what salvation is like after a while. Jeez, I can’t find my knees.
Relevance?
You forget that federal pensions were reduced from 80% of base pay to 33% of base pay, which is much less than what state and local workers from NYC, NY, NJ, and CA receive. A better solution would be to require federal workers to work until 68 years of age. That would eliminate much of the problem given that most would die before age 80.
First the DOJ will be after him, now the IRS … bravery.
Good article, Mr. Hanson. But I suspect that you would have received more responses if only you hadn’t mentioned that you are an attorney.
Oops, that was supposed to be Mr. Adams, not Mr. Hanson. (Darned retarded computer.
)
What sort of repsponse should I be looking for? I certainly wasn’t in the market for responses.
It’s time to change the language used in the debate. They don’t get pensions. They get a SALARY FOR LIFE. Whether they still work, or worked, they are being paid a salary. Why are they so special? Why can’t they rest of us be paid not to work? Why are we paying them not to work? Why are we forced to do without, so they can live large? What did they do all the years they worked that entitles them to continue to receive payments?
A suggestion I heard James Lileks make on Ricochet seems germane. He suggested that tenure, meaning the guarantee of a job, be taxed. Tenure needs to be operationally defined so that the term does not apply only to positions in universities and other schools but also includes any job with guaranteed increases such as Mr. Adams describes. The tax could be calibrated to the discounted cash flow of these tenured jobs so that the tax-paying public is not subsidizing these positions. This tax would be in addition to any income tax. Security would have a cost, one that would not be borne by risk-takers.
Let’s keep this in perspective. Many companies had defined benefit plans at one point in time. There is nothing inherently evil, wrong, or even odd about the government setting up a defined benefits plan when they were created. There are certainly problems with government pensions now but it’s the same problem that companies had with pensions. So what did the companies do?
From my limited experience (due to the people I know this is mainly in the chemical and airline industries) there were two main approaches; freezing pensions at current levels (generally in connection with the start of a defined contribution plan) and buying out the pension plans with a lump sum (generally less than the real future value of the pension).. Basically recognizing that the individuals involved were not attempting to fleece anyone, or cheat, or otherwise acting unethically. They were just entering into legal contracts the same as anyone else taking a job.. If anyone proposes a similar scheme for getting rid of government pension liabilities I think you’ll see a huge wave of support even within the ranks of government employees.
I have a friend who retired a year and half ago from a career in education. His final eight years were spent as a principal following a coaching career spanning 19 years (he retired in his mid-fifties). His defined benefits package entitled him to 60% of the average of his last three years. His first year retirement pay was $63,000 and he only pays $68 per month for health care as well as an automatic 3% raise every year. Since all money for education comes from taxing the private sector, we sure are generous here in Georgia.
He has intimated to me that he was informed by the Georgia Education Association that he will have taken out all the contributions he put into his retirement plan in approx. 18 months. Multiply this by all the municipal, state and federal workers and we the people are being taken for a ride. I don’t know how much longer this gravy train for gov’t. workers will last, but the current system is unsustainable.
I have a friend who is a Department of Defense quality assurance specialist and they get nothing like this. Theirs is only a defined contribution plan and does not include any defined benefits. He tells me this is true for most federal employees so I assume that federal attorneys get a special deal.
Please also note that it is the retirement benefits other than the pensions which can be most abusive, and sound like they are here. The medical benefits in particular can be enormously expensive.
It is also critical when pension benefits can start being paid. If they are payable, for employees whose jobs do not involve major physical stress, before age 65, they are abusive per se. Defined benefit plans which are payable before an employee is retired for Social Security benefit purposes are incredibly expensive. They should not be payable before age 65 absent a job-related disability or for jobs involving major physical stress.
People who answer the phone at DOJ get this. there is no special deal for federal lawyers.
Tom – your friend may prove my point that they dont even know about it. I didn’t know about it for years. It is called the FERS. You can read basic information here:
http://www.opm.gov/retire/pre/fers/index.asp
Tom – make your friends day. Break the news to him he has a pension. Maybe he’ll take you to Panera for lunch. Go here for more information:
http://www.plan-your-federal-retirement.com/fers-retirement.html
Amend that to read “payable without penalty.”
I am a fan of Mr. Adams — but it is just like a smart attorney to present a case that should be about numbers without any kind of financial analysis.
Look, I’m all for government pensions so long as they are reasonable. Reasonable on the benefits, reasonable in what they require employees to contribute, and reasonable in that they allow the employee to opt out if they believe the dems and unions will conspire to under-fund or over-benefit the plan such that taxpayers or legislators gut it or make it financially insolvent. Reasonable is easy: set the benefit level based on investment returns, and the more you want, the more you require employees and employers to contribute.
I am personally covered by a state govt pension plan that allows me to retire at age 50 with 75% benefits. The pension plan is presently funded by my own contributions and the employer’s contributions. It is not funded by taxpayer money nor has it ever received any kind of taxpayer bail out. If you posit that a taxpayer funded salary or its employer retirement match is taxpayer money, cease reading here because you are not sufficiently well versed in finance to understand anything further. That is to say, it most certainly is not taxpayer money if it is compensation provided in exchange for labor. The taxpayers are not entitled to free labor and they are not entitled to renegotiate compensation after the fact.
In this plan the government employer has reneged on keeping its funding level in step with employee contributions at every single opportunity. Not surprisingly the plan is now ripe for problems, although better than most public pensions.
I have been working 15 years and I put in 20+ percent of my salary to retirement accounts for that time. My contributions alone are well into 6 figures that I cannot invest myself. That being the case, I expect the terms of my defined benefit to remain exactly as they were the moment I became vested in the plan. Otherwise, I would like my money back now, right now, with interest, so that I can invest it myself and wipe my hands of this ridiculous ponzi scheme that I was required to participate in as a condition of my employment.
The problem with most critiques of govt pension plans is that the critics never look at the actual funding source of the plan, and worse, never endorse current employees opting out, because they want the current employees rather than taxpayers to fund the unfunded liabilities that the taxpayer’s elected representatives saw fit to enshrine in law. This is bunk. If you want a defined benefit (believe me I’d rather invest my own money), go work for govt. Otherwise the fault is yours for electing democrats who force public servants to participate in such a stupid and envy-inspiring enterprise.
I would love to have a defined contribution plan (and I have a 401k and Roth as well). I would much rather manage financial risk than the risk of incompetent policy analysts and envious citizens and taxpayers pulling it out from under me after they have gotten their 30 years of labor.
You said you were covered by a state government pension plan, so I assume you were employed by the state government. The state government gets its money from the taxpayers, right? How can you then say “The pension plan is presently funded by my own contributions and the employer’s contributions. It is not funded by taxpayer money …” Your employer is the taxpayers of your state. If I’m confused, please clarify.
“I am personally covered by a state govt pension plan that allows me to retire at age 50 with 75% benefits. The pension plan is presently funded by my own contributions and the employer’s contributions. It is not funded by taxpayer money nor has it ever received any kind of taxpayer bail out.”
No offense, but did you actually think about what you wrote here? Could you explain exactly how any kind of government activity takes place without taxpayer money?
And do you realize how ridiculous it is in the real world to be able to retire at age 50 (at least fifteen years before the majority of people in the private sector would even dream of retiring) and have your employer pay 75% of your salary and benefits for what will likely amount to close to THIRTY years?! It does not happen in the private sector. Correction, it happens in the auto and airline industries who have received numerous and generous federal bailouts.
This reminds me a lot of the conversations I have with my mother, a retired schoolteacher who taught grade school for thirty-seven years before retiring at age 59. She now receives nearly 100% of her salary in pension, and incredibly comprehensive medical benefits with next to no out-of-pocket expenses. Again, something unheard of in non-subsidized, non-union jobs.
She insists that she funded her own retirement, with her own money. Apart from the fact that it would take an incredible feat of luck and investing skill to take a small portion of her own contributions appreciate into thirty-plus years of 100% wages (at her final salary, no less), it simply does not occur to her that the compensation was completely funded by nothing but taxpayer money and state bond sales (aka future debt).
There’s going to be a lot of people in for a rude awakening when the government gravy train derails, which will be very soon.
When one is in the same rut with all other parasites that in some way feed off the wealth created by those in the bottom 20% that actually sweat to mine, drill, create or improve a product for consumption or export one tends to forget where it all comes from. Even worse they eventually assume that their automatic salary increases represents superiority over all on a lower pay scale and assume that speaking to others from a podium of belligerence should be accepted out of respect. Appointed czars are the epitome example of evolution of the species.
How many of seemingly humble character can you name from any branch of administration in government, banking, insurance, legal profession or even seven figure business circulating only in their small circle of associates that are not the lowest form of hypocrite? The few that I have known were suffering from day to day with knowledge of corruption available only to those inside and trying to hang on until retirement without having to encounter “whistle blower” relocation. Those yet on the progression ladder dread making the decision of where to stand when the line is drawn but would gladly accept witness protection relocation if the final sack drops into the furious fan.
Tom, your friend is right. Maybe this is a special deal for DoJ lawyers. Also, the old civil service retirement system was retired during the Reagan administration. Everyone hired since then gets a small pension and pays into the government version of a 401K.
Maybe you think a pension that grants a percent of your high three salary is “small.” But it isn’t 33 years of service means 33 percent of your high three salary. The article is correct. You just have different versions of small.
As an “overqualified” and “over the hill” unemployed male who has spent the last 33 month looking for work… I am thrilled to see that if I ever get employed again I will be contributing to the happiness of the American Nomenklatura until I am unable to work anymore and they put me on train to Treblinka where whatever protein left in my body will be processed to feed farm animals.
Arbeit Macht Frei, Kameraden!
You do not have a job because of clique of greedy billionaires like the Koch brothers controls all of the wealth which they use to dine maintain mansions and exotic cars while dining on lobster and caviar while the working class has nothing but crumbs. Instead of resenting the fact that goverment employees earn a living wage why not demand politicians seize the wealth of the greedy billionaires and provide similar jobs for all?
Because that only works for a few years until you run out of seized money.
Throbbin whatever, watch the news and see how those kinds of aruments are working out for the French right now… The greedy rich must pay…. You might also think back to Greece’s labor problems…
An aside, the 18 to 20 “kids” are striking in France for their entitled retirements !!??!!
OK we get it – you have a “govmint job 4 life” and feel threatened.
None of us cares, THROBBIN FEDERALE.
Back to the teachers union congregation at Daily Kos for you.
Down boy!
My Throbbin’ friend,
You don’t know this but I spent the first 26 years of my life in a country where thay applied the same ideas you propose while building a gigantic government. That country used to be the 5th economy in the world. It is currently in default. All the large corporations that employed thousands upon thousands moved to nearby countries or to Asia. A nation is like a human body: you cannot have a dwarf with a gigantic head. Proportion is the root of happiness. Just think how many 18 wheelers filled with grain do you have to sell to sustain one federal administration, or one federal mandate. Then imagine yourself harvesting the grain and filling the 18 wheelers. It is sobering exercise.
That is why there were Gulags in the old USSR. They did not have corporations to tax, so they had to resort to slavery.
You do the math.
Mr. Adams does not make clear that there are two federal systems now in effect: the old Civil Service Retirement System (CSRS), a defined benefit plan, which originated in the 1920s, before Social Security; and the Federal Employee Retirement System (FERS), a defined contribution plan, instituted in 1983; at that time enrollment in CSRS was CLOSED. As Tom Holsingers DoD friend noted, most federal employees are now in FERS. CSRS, obviously, has a diminishing number of beneficiaries (and the actuarial elves have determined when the last dinosaur will die out); retirement is based on average of “high 3″ years salary times a percentage based on years of service and can be up to 60 percent, but that is unlikely if not impossible for anyone with less than 30 years service. Both systems are much less generous with benefits than many state and municipal retirement systems, in say California or New York.
Let’s get this straight – the current federal retirement system – FERS – has BOTH a defined benefit plan and a defined contribution plan. It is UNTRUE that you don’t enjoy the defined benefit plan with less than 30 years of service. False. You VEST IN FIVE years. To recap, Federal Employees under the CURRENT retirement system get:
1. A defined contribution plan up to a $5,000 a year match. This acts like a 401K and employees can contribute about $16,000 a year to it, for a total of about $20,000 a year.
2. A defined BENEFIT plan, or pension. You vest after 5 years. Your annual pension is equal to your high three salary times a percentage represented by your years of service. Eg. High 3 is $100,000. Years = 15. Annual pension = 100,000 x .15.
Yes, it is smaller than some states pensions probably – but it is a straight out pension. If you retire at SES (Apx $180,000 and have 20 or 30 years of service, well, you do the math. It ain’t “small” to most Americans unless they governmetn employees from New Jersey or Bell California.
The fact that so many people have no idea what is going on, including apparently Tom’s federal employee friend, and it proves my point:
“The federal pension plan is so preposterous, many federal employees don’t know it exists because they never imagined it could exist.”
Suggest people go to the links I posted. They’ll see plain as day that the Feds have BOTH the defined benefit and defined contribution plan under the existing FERS program.
Mr. Adams is very much on mark. Federal pensions are generous by virtually any standard, with the possible exception of those now in place for New Jersey’s teachers and New York’s firefighters. And then of course, there’s California.
I would submit, however, that the underlying and more salient problem connected with such Federal largesse is the very size of today’s Federal government. It is mammoth. And growing. And so the costs go up. But most who work within the Washington Beltway understand that a great many Federal programs are wasteful, or outdated, or irrelevant. In short, they are unnecessary. Were our elected officials in the U.S. Congress to seriously review and eliminate unneeded and wasteful programs—from HHS to the Pentagon, from the Veterans’ Administration to the EPA and the Social Security Administration—we would need far fewer Federal employees. And that would mean lower overhead, including runaway pension and retirement costs.
2. A defined BENEFIT plan, or pension. You vest after 5 years. Your annual pension is equal to your high three salary times a percentage represented by your years of service. Eg. High 3 is $100,000. Years = 15. Annual pension = 100,000 x .15.
You can only vest with five years if you start working for the government over the age of 62. Most people who retire at or after the Minimum Retirement Age (roughly mid-fifties) require at least ten years just to receive the prorated annuity. In my experience most people retire with MRA and 30 years although we have a number of people who will put in almost 40 years before they hit MRA.
Sorry Jeff, as a former Federal Civil Service employee, I started working for the feds when I was about 35. I was vested in FERS after 5 years. When I quit working for the feds at age 50 I was entitled to draw 13% of my high 3 salaries once I reach age 62. My high 3 will average about $33K, not the fancy salaries that the higher ups draw. I doubled my salary by going elsewhere. But the federal retirement system, FERS, is based on the idea that you draw the 33% prorated by the number of years of service, plus whatever you manage to squirrel away in your Thrift Savings Plan, which, while I was employed there was up to 10% of my salary plus matching funds up to 5% of my salary. The third leg of the stool is Social Security for the other 1/3 of my so called retirement. So for my 15 years of service I’ll get about $250 a month when I reach age 62, a couple of years from now and I can withdraw my savings (augmented by the feds contributions, minus my losses when the stock market tanked) and I can hope there is something left of SSI when I get there. Your statement that we can only vest in 5 years if we start at age 62 is incorrect, but we cannot draw any retirement except our own savings (plus matching funds) till age 62, which may be where your confusion came from. Mr. Adams article is short on a few details but is essentially correct. There are still a few persons working under the CSRS system but they are now few and far between.
You are correct, I was looking at the immediate benefit tables. In order to get an immediate retirement benefit in 5 years, you have to be over 62. Or be going out because of workplace disability. Everything else requires MRA and 10-30 years to collect your annuity. At my workplace hitting MRA with at least 30 years is currently the most common form of retirement.
You need 5 years and 62 years of age to collect deferred benefits. Then you collect a prorated amount.
While working for the federal government I prided myself on my ability to find creative ways of complying with environmental regulations while saving the federal government hundreds of thousands of dollars. Perhaps, a fix would be an incentive-based system where the employees are challenged to save the government their annual salary x years in service. If they don’t rise to the challenge they are terminated for just reason.
I’ve emailed my friend and maybe he will come by here. Note, however, that THE major abuses of the federal pension system are not the pensions, but the other benefits, chiefly medical, and that all benefits can begin well below the normal retirement age for people in private employment, such as at age 55 after 30 years of service.
I work with a men and women that are paid maybe $50,000 or less each year. They would all like to work for the government. If we are demoralized anymore maybe we won’t have this job and we will at least get paid by the government. It is a downward spiral but again denial in Washington DC is a river in Egypt.
The military pension system is different from the civilian service pensions, but it comes from the same thing – taxes. I will be eligible to retire next year at age 46, with an average of my last three years pay at 50%.
Somehow, though, I don’t feel my pension for sacrifices made are “ridiculous.” I will mull over these comments of “living large” as I limp to the doctor’s office from chronic pain and injuries sustained from military service. I doubt I will be able to work in my chosen field upon retirement for health reasons, as well.
As a footnote – I have worked with many civil employees, and the vast majority would rather have a 401K plan, as do most military personnel, but we don’t really have a say in it – the politicians do.
Camo,
Only the most far left lunatics advocate that military pension benefits are “too much” (with an occasional libertarian chiming in also). There isnt a single conservative I know that believes a vet is a drain, or hasnt earned their relatively meager annuity. I retired as an E-7 after 21 years, and the additional 18K per year is a nice second income, but you cant live on it alone, much less support a family. I also was rated as 40% disabled upon seperation, due to two separate combat injuries (a bullet and a spine injury), but my “retirement” annuity is offset exactly by the same amount as my disability pay, making the loss of motion and feeling in my right leg a sum zero gain, but something I will live with for the rest of my days.
Fortunately, other than those injuries, the culture of physical fitness the military fosters has stayed with me, and I can still certianly work full time (and do).
Given Mr. Adams tireless efforts on behalf of military voters, I suspect he is not reflecting on over paid military but rather the over paid DOJ workers that are not enforcing the laws that ensure your colleagues right to vote. And of course the other bureaucrats bloating the federal workforce. Thank you for your service.
Bravo Zulu James. My article has nothing to do with the wholly separate defense/military pension system. Nor does it dealw witht he pre-1986 system. Many of the comments claiming that civilian workers have no pension but only 401(k)/TSP have been illuminating. It proves my point. Some federal workers don’t even realize they have both.
Camo,
Thanks for making the point about sacrifices some federal workers (-military vets) make. Like you, my service has left me unable to continue working in my chosen field. My fear is that the budget cutting zeal now being promulgated by many will lead to the demise of military pensions while the contractors that produce the hardware that actually breaks the budget go unnoticed.
As you yourself said, “The military pension system is different from the civilian service pensions.”
We’re talking about the latter, not the former here. Nowhere in Mr. Adams’ article did he mention military pensions. Please don’t conflate the two… it does not put you or your comments in a good light.
I, for one, find no problem with rewarding those who put their lives on the line to protect us. It’s the featherbedding for federal bureaucrats whose most likely injury is a papercut that incenses me.
This author NAILS the problems!
But note that military and civil service policies are totally different from each other! Using the civilian GS-13 vs military Lt Col jobs as examples, you will see the VAST differences…ALL favoring the civilian govt employee! (The largest difference, of course, is the fact that the GS-13 can accept or decline a transfer while the military officer MUST transfer FREQUENTLY, uprooting his family and destroying any personal savings he has managed to accumulate during his short & varied assignments.)
Even the moving expenses policies are MUCH more favorable for the GS-13. The huge differences, in ALL areas, are laughable.
In my city, I volunteer DAILY for a city govt program. Recently, due to property tax reductions, this govt program staff was forced to be cut by 50%. The result: absolutely NO DIFFERENCE! All these govt employees STILL manage to be out of the building before 5pm! And STILL no work on weekends!
Now that I’m retired, I’m much wiser and I sure wish I had started my career with a govt job…I wouldn’t have had to have all those 100 hr work weeks, constantly looking to provide excellent results.
I could have had twice the pay with half the work!
The military pension system is different from the civilian service pensions, but it comes from the same thing – taxes. I will be eligible to retire next year at age 45, with an average of my last three years pay at 50%.
Yet I don’t feel my pension for sacrifices made are “ridiculous.” I will mull over these comments of “living large” as I limp to the doctor’s office from chronic pain and injuries sustained from military service. I doubt I will be able to work in my chosen field upon retirement for health reasons, as well.
As a footnote – I have worked with many civil employees, and the vast majority would rather have a 401K plan, as do most military personnel, but they don’t really have a say in it – the politicians do.
Nor do we begrudge veterans their military pensions. Truth is, those pensions are reasonable- 50% of base pay (which is a fraction of total compensation) in exchange for 20 years of work, much of it being dangerous. What we object to is civilian employees of the federal government getting a better deal than the military.
I work for the federal government as a GS employee. I have to say the benefits are GREAT. Other points to ponder:
1. Once a federal worker is past the probationary period, it is nearly impossible to fire him or her. As long as the person shows up and looks like he or she is doing something they are in the job until they retire; and that can be at a very young age. So you have a bunch of people who may or may not be working who you can’t fire and have great, expensive benefits.
2. I am retired military so I get my retirement check and my GS salery; along with building another retirement.
3. I do get disability also for my active duty service; tax free and not small potatos.
The department of defense had been converting to a system called NSPS where employees were rewarded for working hard and got no raises if they didn’t work (still couldn’t fire them, but a step in the right direction). This conversion was halted and then reversed over a year ago. So get ready for the tax increases to fund the transition.
Don’t forget that the government has recently started converting contractor jobs with no future obligations to civil service. More money, more bloat and more people you can’t fire.
I think the whole system is nuts. But it will help me put my daughter through college when she starts next year.
My father in law retired from GAO at age 55 as a GS15. He is now 91 and receives $92,000 per year in gov. retirement pay.
Military is a special case, as you are expected to risk (and these days, often enough, to loose) life and limb for the State, and therefore as compensation you get a pension. I myself will retire from the Navy in 3 years with 50%.
Here’s a plan; Reduce the federal workforce by 5 percent per year for 10 years, reform the pay and benefit packages for all federal employees, and ban public unions.
GREAT idea Charlie! Why are public school teachers allowed to have unions? Military personnel can’t…why can other govt employees?????? Does anyone out there know WHY?
Um Charlie that idea has been tried by Sarkosy here in France, freezes in government hires, lowering slaries freezing salaries…nice thoughts but I think that all of us need to admit that we’ve gotten dependant on government and greedy to boot…except of course for the military, which in that case let’s put some perspective into what many of them put into defending us…we owe them for protecting us so that we can live the way we do…Maybe we all have to swallow hard, and think about what is really necessary…so that we can continue to live…
Christian Adams,
You are also missing certain issues of sovereign risk Federal Civil servants face with their retirement.
Specifically the fact that the Clinton Administration seized the FERS Thrift Savings Plan G-Fund (government bonds)to pay for Federal government operations during the mid-1990′s Federal Government shut down confrontation with the Gingrich lead Republican Congress.
The Clinton Administration later put back the money and paid for the lost interest, but had the confrontation gone on longer. There was serious talk of unwinding the Federal government position in the Thrift Savings stock and bond funds to keep the Federal government going.
When people talk about how crazy talk is about the Federal government seizing private (401)K plans to make them pensions. Remember that the Feds have already seized Federal employee pensions once already to pay for government operations.
I used to work for Argonne National Lab, which was a DOE lab ran by the University of Chicago. We didn’t have a defined pension plan (at least, not that I was aware of.) However, we did receive a 9% match to our 401K – as long as we contributed 2.5%! (Technically, a 403B.) Insurance was cheap. Holiday’s were a monthly occurance. And you started with 18 days of vacation annually. After 5 years, they bumped you up to 24 – and you could accumulate up to 42 without losing them.
This was 10 years ago, and even then my co-workers would joke about the lab system being “white collar welfare.”
I just heard the ad yesterday from the Federal Workers Union (close to its actual name), where they used the word “teabaggers”. It was very angry in tone.
I thought; why wouldn’t they be? We are talking about ending the gravy train for them. Yes, Medicare and Social Security will take “hits” too: they have to. Only people that have been bottlefed their entire lives in a consequence free environment could believe that you can spend more than you make forever.
This fact becomes particularly galling when one consideres that they are using TAXPAYER money to run these ads. All of their salaries–all of them–are paid by us, and their union dues taken from that. This situation stinks to high heaven.
The real problem is not that there are too many federal employees. The number of civilian feds is about the same as it was in 1960 – around 2.3 million. But the government has greatly expanded since then. The additional workload is taken up by service contractors. There are, some estimate, around 5 or 6 contractors working for the feds for every federal worker. So the fed workforce is actually more like 12 million people. We don’t pay a federal pension for the contract workers, but we do pay the company’s costs to employ the workers through their overhead rates – and that includes whatever pension the contractor has set up for their employees. It is vastly more expensive to hire a contractor rather than hire a fed, but it comes out of a different pot of money, and most folks outside the Beltway have no desire to see more feds hired. So we are stuck with contractors doing the majority of the government’s work – despite the fact that this kind of contract is actually illegal under the federal contract rules. Of course, the solution is to shrink the goverment back to 1960 size and get rid of the contractors. If the Republicans can’t find the grit to at least start on that – well, we may have to look elsewhere in 2012.
Most people, needing a job, go out and find one. As in all arenas of life, some have better luck than others. Some find better jobs than others. Better as defined as better paying, anyway. Should they all apologize for that? Conservatives defend the principle of “life’s not fair” except, apparently in this issue? Tell us then. Should all workers get the same wage regardless of employer?
The article quite clearly states that the employees are not to blame in these situations. But that doesn’t change the fact that we have so many unfunded liabilities in retirement funds, be it in federal, state, or city government, that something is gotta give.
And surely you can differentiate between people working for private industry vs. the government being in different pay/benefit situations? One of those entities creates wealth, while the other destroys it.
I know of another “Federal” agency that has a pension and a defined contribution plan. It’s called the US military. Should we take it away from them as well? Or are you just mad at your former comrades at the DOJ?
I would like to clarify 2 points.
Unfortunately, the US Millitary, and those that work under it, is probably the branch of government workers with the highest number AND percentage of employees that will not be able to collect their benefits due to ‘Work Related Injuries’. And I’m not talking papercuts here.
So take that straw man of yours, douse it with lighter fluid, and shove it up your ass before igniting.
1. You mentioned non-essential personnel when D.C. was hit with the worst snowstorm in over 50 years. In most cases non-essential means their job is not directly related to National Security or personnel accountabiltiy. Essential personnel has a job that DIRECTLY affects NATIONAL SECURITY. You make it sound like non-essential personnel are non-essential to the govt, which is misleading (obvoiusly your intent).
2. You made a point that an SES retirement is good. That is correct. But you implied that every worker can make it to SES. That is incorrect. In fact, less than 5% of Fedeal workers make it to SES.
“Non-essential” is the literal term used by OPM. The only “intent” was the use the term the government uses to describe who must stil work dring a blizzard. And you probably know it involves more than just national security people. Many Americans would like to hear more discussion about what is really essential to the country.
Regarding SES, I think I made it pretty clear that it was a “coveted” position. I am astonded that 5 percent, according to you, of the Federal workforce is SES. If true, that is a bigger burden on the retirement pension system than I anticipated.
I work for a large fed agency.
In my particular job, I would actually make MORE in the private sector. However, I could not get a good job in the private sector when I got out of school. I tried for a year and did lot of odd jobs. In addition, my gov job is less stressful and deadlines are more flexible than they would be in the “real world”. For me it is worth taking less pay for less stress and job security.
One thing I have noticed, having worked a little in private and public, is that the government has a lot more managers and layers of command. There are countless little programs and doo-dads with their own manager, office, and budget. And every program has lots of requirements which means more people are needed to write reports and quality analyses above and beyond the people actually doing the work. Many of these managers have less education than I do, but are getting paid more since they are, well, “managers” while I just do work. Something to think about when comparing public to private.
As a state govt employee in the criminal justice system, I have watched Wall Streeters come through our building who make more in a quarterly bonus than I make in a year.
No one complained about that in 03 04 or 05. At my HS reunions, I was told by numerous VPs at this bank or that that I was a dupe to work for the state. Yes, I get a pension.
I work with child molesters and murderers. I show up whether or not there is crime. I will never be rich. I will be comfortable, guaranteed. That is why I took the test for the job that you bankers and bond traders and bloggers could have taken.
This is all just sour grapes during a depression brought on by the Baby Boomers going bananas on housing and with the help of their agents in congress, creating a huge bubble. Once they are busy trading worthless paper again, and making remakes of remakes of remakes, they will stop complaining.
Many a good man and woman is awake at night while you sleep to make sure you are safe, crooks are locked up and your house will not flash over from a fire. Stop complaining, and build a time machine so you could have gotten a govt job back in the 80s or 90s.
Ultimately we are talking about Big Government and its relation to government contracts and interference with free markets.
Big Government creates its own demand in the form of voters who can give themselves entitlements, grants, and “disadvantaged group” contracts they, the voters, don’t have to pay for. For instance, Big Government created “no-downpayment” mortgages for people who don’t pay their bills. This was to close the “housing gap” between minorities and whites. If you don’t believe me look on a map for the demographics of foreclosures in what used to be called the Subprime Crisis.
The Small Business Administration now awards government contracts based on “disadvantaged group” membership rather than quality and value to the taxpayer.
Maryland is the first state to enact something called “socially conscious businesses”, SB690/HB1009. In Maryland one can incorporate as a “benefit corporation” which would entitle you to disburse profits to “community organizations” without being sued by stockholders.
From Capital News Service, about a month ago:
“Assefa hopes Blessed Coffee will become a community center in Takoma Park and will bring some of the culture of the Ethiopian coffee growers to Maryland. The business will give 50 percent of profits to community organizations in Takoma Park and Silver Spring.”
What the article doesn’t mention is exactly which relative is going to run the “community organizations” and by what means the “benefit corporation” will use to shake down “investors.” Also, why do they want Ethiopian Culture in Maryland? So they can become poor and corrupt?
A study by economists from UC Berkeley and Rutgers University show just the opposite. It was reported in a story in the San Francisco Chronicle, 10-19-2010
If you read further down they cunningly discriminate between higher educated employees (lawyers and doctors) and everybody else:
But the public sector “also appears to set a floor on compensation,” so less educated public sector workers generally make more than people with the same level of education working for a private company. The study attributed this in part to the fact that “the earnings floor has collapsed in the private sector.”
Read more: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2010/10/19/MNUJ1FUAOH.DTL
Mind you, I’m not criticizing government employees. They are merely doing their job, do not set policy, and (from personal experience) I believe the US taxpayer is well-served by the vast majority of federal employees.
I’m an electrical engineer working in R&D at a Naval research laboratory, and am in the FERS system. The author is correct in saying that many people don’t know about the retirement annuity – I didn’t know about it for several months after I had accepted my job! Or maybe that is just me being an idiot – your call. I thought the 401k plan match of 5% was just lovely, after 9 years of a miserly 1.5% match at the company I had been working.
“There is a RETIREMENT plan too?! Cool!!!”.
The retirement is a nice bonus, but nothing like the old CSRS system. I joined 10 years ago, when I was 30 years old. If I worked until 55, I would get 25% of my “high 3″, less a penalty (about 1/4) due to retiring with less than 30 years of service. So say about 20% of my salary, more or less. If I stay until I’m 62 then it would be 30%. We are talking about a pension of around $20k to $30k per year. Nice to have.
The caliber of people in our division is excellent and there are few duds. Engineers, physicists, a few comp-sci types. Average education level is a masters degree, and only a few are MBAs – most are technical degrees. We have 5 PHDs out of 100 people. Not the typical Fed worker at Justice Dept or whatever.
Most of us would have commanded a far higher salary in private industry, but for various reasons took the DOD job. Security, family history, love of country, desire to make a difference, etc. Nobody I know took the job because “they can’t get fired”, though one or two evolved into that kind of turd employee due to lack of ability. These days the only people we hire are contractors working on-site that we have been able to evaluate for a couple of years – just so we don’t get saddled with a 30-year piece of dead weight. We don’t hire directly out of school in our division, anymore.
I chuckle when I think of the comments I received in 1998 or so, when friends made fun of a government R&D job and the comparatively low salary and lack of prestige. “We have sofas, a rec room, and a cappucino machine at our office”. One friend working in an infotech venture capital firm was especially unbearable. In those times I was a bit envious. Not in these times. But times will continue to change – it all evens out I suspect.
So I would offer the caveat that you shouldn’t shoot all public employees in your goal to score political points. Many a good, hard working fiscally conservative engineer is toiling for modest pay (with excellent bennies to keep us and our portion of the all-important corporate knowledge base around) trying to build better ships, save the Navy money, and fight to prevent or mitigate the damage caused by unscrupulous large contractors (Northrup Grumman – I’m looking at YOU) who blow design after design and then propose more crap designs at huge cost. Cut our benefits, see us leave, watch the corporate knowledge containing 100 years of ship design go away, and then have fun trying to run your Navy.
Have you ever heard of the “retired annuitant” program? It’s when a government retiree is allowed to come back to work (because they have no life) at one grade below their retirement grade. Even better, they get to keep their pension. If you think about it too long, your head will spin ALL around your shoulders!
Excellent article. I think the tsunami that is coming will include the taxpayer’s refusal to pay to bail out the public employees’ unreasonable pensions. When will these people learn?
I am a 31 year DoD civil servant with an electrical engineering degree and two Masters Degrees including an MBA. When I started in the late 70s, I had three job offers, one from the DoD, and two from DoD contractors. I accepted the DoD offer which was 15% lower than my highest offer. I did so because at the time, DoD contractor jobs were volatile, with little assurance of long-term employment. I also did so because of a good (not great mind you compared to teachers, but good) benefits package. At that time I was in the CSRS retirement system (defined benefit) where I paid 7% of my salary into the retirement system and did NOT contribute to Social Security. I left govt. employment in the early 80s and then returned in the mid 80s after the transition to the FERS retirement system and was required to move to that system where I pay a minimal contribution into the defined benefit portion of the plan, pay into Social Security, and am allowed, which I do, to pay up to 15% of my salary into the Thrift Savings Plan (401K-like Defined contribution portion) with the govt. matching 5%. The matching portion was about the same as what I received when I worked in industry. I also currently pay about 1/3 of my family’s health insurance premium. I admit, I make a VERY good salary now… but it is at best, comparative to my industry counterparts within the DoD arena. I hired an employee from industry a year or so ago, offered them the top salary available on the scale, and only because they were in financial trouble and needed a job were they willing to accept, complaining that the offer was a major cut in pay. We hire a great deal of new college grads (just to maintain our current workforce numbers) and we offer salaries that are at or below the 50th percentile of salaries paid to grads with similar degrees across the country. I can’t speak for the entire Federal workforce, but I do not believe our salaries in the DoD realm are higher than our DoD Industry counterparts. Many of us do our job because we want to support the defense of our nation and we accept the lower salaries, knowing that our overall compensation (salary, retirement, insurance, vacation, etc) are close to comparable. BTW… I had a MUCH better benefits package, other than the retirement, when I worked for industry. I also received a cost of living raise and there were fairly well defined, scheduled salary increases too. I will also say that I have worked in a DoD pay-for-performance demonstration program for almost my entire 30 years. The program that led to the NSPS system mentioned above. It’s not as good as the demonstration program, but it did do away with step increases based on time-in-grade. Alas… it was shut down by our wonderful Democrat lead congress after HUGE lobbying by the unions. Go Figure. As I’m sitting here about to write a check for an attorney for his services required due to a death in the family and am noting his $250/hr fee… I’m surprised to read that $155K way above average for attorneys.
When one is in the same rut with all other parasites that in some way feed off the wealth created by those in the bottom 20% that actually sweat to mine, drill, create or improve a product for consumption or export one tends to forget where it all comes from. Even worse they eventually assume that their automatic salary increases represents superiority over all on a lower pay scale and assume that speaking to others from a podium of belligerence should be accepted out of respect. Appointed czars are the epitome example of evolution of the species. How many of seemingly humble character can you name from any branch of administration in government, banking, insurance, legal profession or even seven figure business circulating only in their small circle of associates that are not the lowest form of hypocrite? The few that I have known were suffering from day to day with knowledge of corruption available only to those inside and trying to hang on until retirement without having to encounter “whistle blower” relocation. Those yet on the progression ladder dread making the decision of where to stand when the line is drawn but would gladly accept witness protection relocation if the final sack drops into the furious fan.
it is a same the author didnt do more research as any good attorney should, OMB itself says that we are underpaid. read on
http://goliath.ecnext.com/coms2/gi_0199-1554926/Federal-employee-pay-comparability.html
Thats a 2002 report! What a scoundral!
I don’t believe it’s the salaries that are the problem. We should only want and recruit the best to run our government. It is the retention and personnel policies that ruin a good thing. Recruiting and promotions should be based on merit, not race, sex, tenure, or who you know. I’m a retired Army officer and have worked hand-in-hand with many Government service officials – some good, some bad. I chose to go into the private sector for the same reasons I’ve listed (I’m white, male, educated, motivated)and don’t want anything to do with that system. To bad, I’d love to continue serving my country, but…
Mighty Monarch,
“No offense, but did you actually think about what you wrote here? Could you explain exactly how any kind of government activity takes place without taxpayer money?”
None taken. Taxpayers receive services from government employees. I’m not talking about a government benefit program, even though you may not in your mind distinguish the two. It is foolhardy for you to suggest that a salary from a taxpayer is charity or benefit. Labor is exchanged for compensation. If I perform a service for the taxpayer, they own me compensation at the pre-arranged rate. My salary belongs to me the moment I perform labor. It works the same way in the private sector, the difference being that government cannot declare bankruptcy. Very, very elementary, and evidently totally lost on you, which nicely illustrates my point that with people like you going to the ballot box, I’d much rather manage my retirement contributions myself than risk your incompetent and envious whims gutting my salary retroactively.
Look, you need to distinguish what you’re talking about — is it the size of government? If so I’d likely agree with you. But don’t employee me and then refuse to pay my compensation, as if it’s some kind of benefit for me to receive my salary. I’ll bet I work a lot harder than you do, although that is irrelevant.
Last, the question of whether one should be “allowed” (who is the judge of this anyway?) to retire at 50 with a defined benefit is simply math. Put in 20+ percent of your salary in retirement planning for 30 straight years, which by the way I’m quite certain you are personally not doing, and you can get pretty darn close with the magic of compounding. You’re just ticked about bearing actuarial risk while simultaneously not saving enough yourself. That, my good man, is merely envy. Haves vs. have nots, something that a conservative is supposed to acknowledge is a b.s. conversation, personal responsibility being what it is and all.
No matter what job you have in government, no matter how hard you work, the salary and benefits you receive are paid by taxpayers.
That is unless, of course, you work for some department that actually sells its goods or services to willing buyers and your department generates a profit, and you are paid from that profit.
I’m slightly surprised that any government worker does not realize that his salary and benefits are paid with money taken from taxpayers. I do not read this column to mean government workers should not be compensated for their labor, but government workers ARE paid with taxpayer dollars. It’s kind of the definition of a “government job.”
(If your department, your job, generates a profit–defined as money left over after all expenses, including your salary, are paid–please explain. I will apologize.)
“Last, the question of whether one should be “allowed” (who is the judge of this anyway?) to retire at 50 with a defined benefit is simply math. Put in 20+ percent of your salary in retirement planning for 30 straight years, which by the way I’m quite certain you are personally not doing, and you can get pretty darn close with the magic of compounding. You’re just ticked about bearing actuarial risk while simultaneously not saving enough yourself. That, my good man, is merely envy. Haves vs. have nots, something that a conservative is supposed to acknowledge is a b.s. conversation, personal responsibility being what it is and all.”
Hmm, wondering exactly where I said “allowed”. I suggested that it is economically unlikely to be able to obtain that kind of retirement without massive infusions of cash from the private sector. Let’s assume you stared working at age 22 and retired at age 50. That’s twenty-eight years of putting in a fifth of your salary (derived taxpayer money as opposed to actual wealth creation, let’s not forget that) and drawing out 75% of your ENDING salary for what will most likely amount to a term equal to or longer than the amount of years you put it.
Even with compounding interest and incredible investment timing, your scenario is damn near impossible unless your funds are supplemented by more taxpayer money. Please see CALPERS and their impending funding disaster for what happens when you try to make that work.
It isn’t about whether you “earned” anything. The fact is your compensation is derived from private sector money obtained without their consent. You may well be a hard worker and feel you do worthwhile work…but you can’t fight the mathematics of it. Same reason why Social Security and Medicare are destined to failure. Interesting things happen when 70 million people retire in a short period of time and start drawing off instead of contributing.
I should also add, it would prove fairly easy to save 20% of your salary when it far outpaces your private sector counterpart. This is assuming your job would actually exist (it wouldn’t) were it subject to free-market forces and the compensation of which wasn’t appropriated at the point of a gun.
Oh yes, and I do manage to save a pretty hefty chunk of my own salary, despite seeing 40% of it go to taxes, and a third of what’s left go towards paying for my own insurance (yes, people that don’t work for the government actually pay for their own insurance! Isn’t that silly? And we don’t even get to keep it when we retire!). And who cares if I didn’t? I earn my salary and I choose how to spend the fraction the government doesn’t forcibly take. If I choose not to save for retirement I must deal with those consequences.
And really? Questioning my work ethic? You seem to pride yourself on being able to retire at age 50. I plan on working well into my seventies. Not because I feel I’ll have to (and given the state of Medicare and Social Security I will), but because I want to and feel driven to be productive. You on the other hand seem to look forward to retiring well before your working ability has ended, and spending thirty-plus years sucking off the teat of taxpayer-funded retirement programs and lifetime benefits.
Your prerogative, of course, and I wouldn’t begrudge it at all if I weren’t helping to shoulder the cost of it. Maybe if taxes were optional…then again if they were you’d be out of a job.
Mighty Monarch, by the way, please respond. I know you’re checking.
You don’t get to have govt employees perform you a service and then not pay them, no sooner than you have your oil changed and not pay the bill. So tell me exactly how I’m wrong in that. I really look forward to that.
Save your government sector arguments for the politicians, and stop trying to pretend that a public sector worker is an indentured servant to you. If you espouse private sector principles you will surely understand my point.
LennyB, it is called free market competition. If the department is overstaffed. If it can be privatized more efficently. If the entire function is obsolete or actually counterproductive to our country’s economic growth, then it should be eliminated. So, now they are not our captives to work without pay. But, nor are we their slaves to pay their salaries and benefits when we can outsource the functions and streamline the processes for less money. It is called reality in the real world.
Too close to the bone? I hear the little government piggies squealling in the comments column. Oh, it was bliss to have the public sector unions fighting for our benefits and wages with the Democratic and Republican politicans we vote for and help keep in office with our dues. And now that it is out in the open, oh I hope they don’t think they can really do anything about it. We all know that no one is really accountable in the government, so how are you possibly thinking the “new” republicans you are about to vote into office will actually screw with us? Not close. We dah boss, honky. Every Governmental organization in the United States from Frannie to Freddie to the Post Office and every Social Security department and every single Federal Government bureaucracy that is fully staffed under affirmative action. You won’t be asking for a salary reduction in those organizations without a long and public outcry of “racism”.
Nickel, if you agree that government workers are entitled to a salary, we have nothing further to discuss. Except I don’t think are any taxpayers can consider themselves slaves since they are the boss and vote for elected officials who determine the size of government. People get the government they deserve. For the record I believe it should be smaller than it is now. And I think public sector unions are a scourge.
LennyB I agree.
Mr Adams,
I’m in the FERS program, and I believe you have missed the point that in your example, if he retires at 55 years, he’ll have a 5% penalty for each year under 62, so that’s a 35% penalty, reducing the $40,000 to $26,000. The information is here:
http://www.opm.gov/retire/pre/fers/eligibility.asp
The old system (CFRS) was very generous. The new FERS system is less so, although it does in fact have a pension component and a 401 option. The pension component is only generous to really high-wage earners, but it is still better than most private employers who have no pension component.
I think you’ve overlooked a particularly nasty aspect of some public sector defined benefit pension plans, the concept of calculating the “salary” on which the pension is based.
Some government pension plans allow the soon-to-be retiree to game the plan by allowing him to work outrageous hours, i.e., overtime, holiday pay, shifts for others, etc., to raise his gross pay in his last year which, in turns, significantly raises the final salary on which his lifetime pension will be calculated.
Thank you so much for your article. I admire the fact you tell the truth, most attorneys don’t.