Lost Youth

cores of federal employees have attended retirement parties in the past year for older federal workers lured into retirement by buyouts. But while the gold watches were being passed out, did anyone notice the young professionals who slipped out the back door and into the private sector?

There is growing evidence that the government is losing its cadre of highly skilled young professionals. In the past four years, more than 100,000 employees aged 35 and under have left the federal workforce. At the same time, hiring of younger workers has plunged from upwards of 70,000 a year in the late 1980s to a little more than 10,000 in 1994. As a result, the government has gone from a net gain of nearly 30,000 employees 35 and under in 1991 to a net loss of almost 10,000 such workers in 1994.

During a mid-November meeting of the National Academy of Public Administration, leading academics in the field lamented the public's sour attitude toward government and the consequent reluctance of young people to consider public-sector careers. Elizabeth Hollander, executive director of the Egan Urban Center at DePaul University, said that in her experience, the generation of young people coming out of schools today "want to make a difference by doing good. But when you suggest working in government, they look at you like you're crazy. There is profound distrust."

Surveys of young people used to show that their idealism drew them to public sector careers, but that's no longer true. Much remarked-upon at the NAPA meeting was a recent poll showing that small business careers attract the most interest among young people-reflecting low opinions of large institutions in both the public and private sectors.

And for young professionals already in the civil service, working for Uncle Sam simply isn't as enticing as it used to be. Benefits and perks-such as the notion of a lifetime employment contract-are eroding. The budgetary squeeze besetting all federal agencies has slowed down promotional opportunities. And many young employees believe today's top federal executives, instead of responding to the call to streamline and reengineer their operations, are burying their heads in the sand and trying to ride out the storm.

On the other hand, many young professionals anticipate a wave of opportunity to follow the downsizing. The buyout-takers and early retirees, they are convinced, are opening up the upper ranks of the civil service. So enduring the short-term pain of budget cuts may be worthwhile.

"Downsizing and the effect it's having on morale forces you to think long and hard about your experience in the federal government and about the possibility of changing jobs," says Debbie Eisenberg, who left the Small Business Administration's Office of Inspector General last September to carve out a new career as an attorney in Connecticut. Eisenberg, now 41, embarked on a long-range plan to make a career change when she was in her 30s by attending law school at night.

Like many who leave, Eisenberg was proud of her experience in government. Though other parts of SBA were downsizing when she decided to leave, her position was not in jeopardy. Nevertheless, Eisenberg felt that the private sector offered her a better prospect for remaking her career.

Moving On

For Eisenberg and others who choose to leave federal employment, options such as the private sector or returning to school beat staying in government mostly because they offer the opportunity to launch new careers or to prove one's skills in a performance-driven environment. They insist that the tarnished reputation of the civil service, though discouraging, is not why they are leaving. In fact, many who leave would consider returning some day.

"I'm not running away from government," says Ashlyn Holland, a 34-year-old former assistant director at the General Accounting Office, who took an early-out incentive last September and accepted a job as a bank controller in North Carolina. "I'm running to a better opportunity."

Compared to most executive branch agencies, which are just beginning to experience the impact of budget cuts and workforce restructuring requirements, GAO is a downsizing veteran. The legislative agency offered its first round of buyouts and early-outs two years ago and instituted a hiring freeze to cut staff by 12 percent. In September, the agency entered its second round of buyouts and early-outs to reduce staff an additional 15 percent. More cuts are expected in 1997. In Holland's division, roughly 20 percent of those who took buyouts this year were professionals under 35.

During the first round of buyouts, Holland began assessing private-sector opportunities. After visiting a headhunter, she found lucrative positions for CPAs with her experience and skills. She began preparing for the transition by paying down her debt and boosting her savings. Last July, she decided she would leave before the end of the year-whether or not she landed a job. When the second buyout program was announced, she kicked her search into high gear.

"I came to feel that there were enough opportunities that it would all fall into place if I did leave," Holland says. "I never had a doubt that I would make it in the private sector."

Her co-workers admire her courage to move on, she says, and some wish they could do the same. But they're not as willing to take the risk. Financial considerations definitely weigh heavily on the minds of those considering leaving.

"In the government I felt like the paycheck was always going to be there for me," says Eisenberg. "I don't feel that here. My job is much more subject to the local economy and my ability to generate work."

But Eisenberg also values the absence of bureaucracy and red tape. "I feel like I am more autonomous," she says. "Because there are no bureaucratic layers, decision-making is a lot less laborious. Things get done quicker, and I am more productive on a day-to-day basis."

Holland values the private sector for similar reasons. "Although GAO is far more progressive than most government agencies in terms of providing managers with autonomy, I think you're generally trusted more in the private sector and you're more accountable for your actions," says Holland. "There's also something to be said for the flexibility you get as a manager when it comes to managing staff and rewarding performance."

Up or Out

For many young professionals, whether top management promotes based on performance rather than seniority, loyalty or favoritism is a significant factor in their decision on whether or not to leave government.

Younger workers often are told they have to wait their turn for promotions, bonuses and awards. In the current budget-cutting environment, by the time their turn arrives, promotions frequently have been put on hold.

Tracy Johnson, 27, an economist at the Bureau of Labor Statistics' Consumer Price Index section, decided to leave this summer partly because of a promotion freeze at the agency. The freeze was lifted by the time she actually left, but by then she already had taken time off to work in a law firm where she found colleagues generally more motivated and ambitious.

A 31-year-old colleague of Johnson's at BLS who asked not to be identified was also frustrated with the freeze on promotions. He weighed the costs and benefits of leaving and even investigated a few job possibilities, but ultimately decided to stay and move into a new program where he hopes to take on more challenges.

If he didn't have a mortgage payment or wasn't married, the employee says, he might have chosen to go to graduate school. But for the moment, he says, "the pay and benefits are good enough that I can't afford to quit the government."

Along with rewarding top performers with promotions, many young professionals say the government should stop rewarding non-performers. Put simply, motivated federal workers-young and old-are tired of carrying dead weight. This is an old complaint. But compounded with other pressures that come with downsizing, it becomes a sore point for many young professionals.

"If you don't get promoted or rewarded for your performance, after a while you just stop working," says a 29-year-old GAO auditor who considered leaving earlier this year. "When you stop working, people lose confidence in you. They stop watching you. You lose confidence in yourself and soon you're dead weight. I wondered at what point I would be like that," she says, noting that promotions in her audit group are often based on loyalty and favoritism rather than ability and performance.

The GAO auditor, who also asked not to be identified, has found a new assignment with different managers, whom she hopes will reward her performance. But if nothing changes, she says she may end up leaving the agency.

Creating a performance-driven environment in government is difficult, say the authors of a 1993 Brookings Institution report, Improving Government Performance: An Owner's Manual. It requires deep changes in the civil service system.

"Getting the best is difficult enough, keeping them is even harder," write John DiIulio Jr., Gerald Garvey and Donald Kettl in the report. "Rewarding outstanding performance (or for that matter, withholding benefits, including promotions, from nonperformers) is largely incompatible with the current civil service system.

"Experiments with total quality management, team approaches to policy problems, decentralization and delegation to employees (empowerment), and customer-centered management have been hamstrung by civil service and statutory limits on managers' abilities to reward outstanding performance. Performance rewards are frequently tiny when they exist at all."

The guide also notes that poor performers can count on drifting up through the General Schedule with regular salary increases. It recommends that Congress extend the bonus system for outstanding employees beyond the Senior Executive Service and permit SES-level managers to allocate bonuses based on the work performance of employees at the GS-1 through GS-15 levels.

Various members of Congress have pledged to deal with the issue of poor performers in the civil service. But last year, the Clinton Administration was forced to withdraw a proposal to allow managers to temporarily cut poor performers' pay by up to 25 percent in the face of opposition from federal employees unions.

The Benefits of Leaving

When it comes to making the tough decision of whether to leave federal service, younger employees have an advantage over their predecessors-the Federal Employees Retirement System.

FERS, which was created in 1987, has several features that make it more attractive to younger employees than the old Civil Service Retirement System. CSRS benefits are tied to age and length of service, and they aren't "portable"-that is, they can't be readily transferred to a job in the private sector. But employees under FERS, like private-sector employees, are eligible to receive Social Security benefits. And if they are vested in their basic federal pension plans, they can continue to make contributions to those plans even after they leave government. Finally, they can also participate in the federal government's tax-deferred savings plan, which is also portable.

Shortly after FERS took effect, a study by the Hudson Institute for the Office of Personnel Management concluded that employees covered by FERS would find it much easier to leave if their benefits and working conditions were perceived as inferior to those available from the private sector.

This was true for Debbie Eisenberg. When FERS was offered as an option, she switched plans, knowing she wanted portable pension benefits. The decision ultimately paid off.

"I could leave government knowing that I wasn't forgoing benefits," she says. "I had 16 years' experience and I would still get a pension. I put the maximum savings in FERS. And I knew I would get Social Security."

What also made it easier for Eisenberg to leave was the fact that it is difficult to change professions in the civil service. Putting the law degree she had earned to use in government would have meant, in effect, starting a new career.

"There are very archaic rules for becoming an attorney in government," says Eisenberg. "I would have had to start over as a GS-11."

A younger colleague of Eisenberg's likewise discovered that to become an actuary in government he would have to drop several grade levels, even though he is a certified public accountant, an experienced auditor and has already passed six professional actuary examinations. So he is also considering a move to the private sector.

"The government should encourage employees to move to different careers and jobs," says Eisenberg. "What the federal government would get from me as an attorney with 15 years' experience in government I feel is greater than what it would get from a 27-year-old recent law school graduate."

Choosing Security

Despite the drawbacks to federal employment, many young professionals are coming to the conclusion that jumping to the private sector is still a scary prospect. Out of nearly 37,000 employees who took buyouts in 1994, only 2,134 were under 40. Those who choose to stay also believe that if they endure the downsizing, they'll end up in a leaner, better-managed place, ripe with promotion opportunities and new and exciting challenges on the job.

"Eventually we will see that this is part of a cycle and that at the end of the downsizing, hiring will resume," says Dan Blair, a 33-year-old senior auditor at GAO. "With the increase in staff, there will come opportunities."

Before joining GAO five years ago, Blair worked for two small public accounting firms. In the spring, when talk of RIFs and even bigger budget cuts swirled around his agency, he considered leaving. But he ultimately decided to stay.

"There's not as much job security in the government as there was before, but there is very little in the private sector," says Blair. "And my pay is comparable to what I would make in the private sector." He believes that the hours would be longer in the private sector and that the level of professionalism in GAO is equal to the private sector. In his view, GAO is beginning to foster the same level of efficiency and accountability as he found in the private sector. He also doesn't want to give up working on audits that result in significant improvements in government.

For those anxious about job security, the government will continue to be a better option than the private sector, argues Michael Horowitz, senior fellow at the Hudson Institute.

"Whatever's happening in government downsizing is worse in the private sector," says Horowitz. "Law firms are collapsing. Big corporations are engaged in downsizing." In the information age, Horowitz predicts, government workers will become more like today's consultants, entering into a series of ad hoc relationships rather than spending an entire career or even several years at the same job.

Carol Bonosaro, president of the Senior Executives Association, which represents high-ranking federal managers, notes that while downsizing has eliminated many executive jobs, a dramatic increase in Senior Executive Service retirements in 1994 is opening up slots in the upper ranks. (See "Room at the Top," page 44.) And a number of agencies are petitioning for increases in their allocations of SES slots.

"The prospect is not as dim as one expects," says Bonosaro. "There are still opportunities."

That's exactly what those staying want to hear. "Sooner or later, they will promote again," says the 31-year-old economist at BLS who decided to stay. "The attrition will continue, the young GS-11s will leave, and older GS-12s will retire. If you stick it out long enough, the numbers will turn in your favor eventually."