'Benefits Envy' May Be Partly to Blame for the Erosion of Fed Compensation

Two weeks ago, this column sketched the power of both pay and prestige, for better and for worse, as factors in determining the quality of any public-sector workforce across various times and places in history. 

Indeed, we were reminded that when—as is often the case—either pay or prestige for government jobs aren’t tip top in a given society, as long as a public-sector job offers some kind of comparative advantage over the more volatile private sector, such advantages can be a strong enough lure for job prospects and to keep current employees from leaving. 

And often in this country there’s another obvious factor that’s perhaps even more important than pay and relative prestige to making job decisions: benefits. Government job benefits tend to be good. Federal employees generally have seen their benefits such as vacation, leave time, health coverage and the like improve for over a century after passage of the landmark law that created a politics-free (or more politics-free) civil service, the Civil Service Act of 1883. That legislation—also known as the Pendleton Act—enshrined into law merit principles in hiring, discipline, firing and, significantly here, compensation. The stability and professionalizing of the federal service brought about by the Pendleton Act was followed up by a slew of key laws through the 20th century, such that, for the most part, merit principles and access to fair pay for government work were strengthened. 

Yet, in recent years, that trend toward improvement arguably has sputtered—certainly on the pay and benefits side of things. In fact, since the 1980s there has been a strong counter trend, often as part of various efforts under different administrations to reform—or “reform,” depending on who you ask—and reduce the size of the federal government. And to offer less generous pay and benefits to those who remain. Some of these many efforts were soon abandoned (and of course the government is not smaller, not even after President Trump’s call for more diminutive agencies.) But some remain at least partly implemented, and are still hurting feds and their financial health. 

As far as benefits go, perhaps most significantly in recent years the most significant cuts that came in legislation passed in 2013, since which time new federal hires see more money deducted from their current pay to fund future retirement. In recent years, too, employee cost for health care benefits, like the cost of healthcare generally, has increased sharply. Meanwhile, pay slowly eroded, even against what was until recently relatively low inflation. As unions and advocates point out, for affected feds it’s not just pay but benefits too that have been subjected to long-term cuts. 

Most of the time—and certainly in the case of major changes to federal benefits that passed a decade ago—such reforms (or “reforms”) are framed by their backers in purely economic terms. In the case of the 2013 budget law, a Republican-led Congress determined chintzing on feds was necessary to reduce government spending. Yet—however antiseptically the issue may be framed for fellow lawmakers—the not-so-well-hidden and less tidy part not shouted on the Hill but seeded and pushed along in social media is a lot less accounting and a lot more emotion. The just-beneath-the-surface public sales pitch for this product—economizing on federal compensation, including benefits—is sometimes just plain mean. 

University of Toledo law professor and labor expert Joseph E. Slater summarized one of the less savory forces that’s actually in play when the public shrugs over such cuts (or, more technically, erosion of compensation versus inflation, which is really the same thing) in benefits for public servants. A kind of “benefits envy,” as he put it. Slater referenced, as just one example of the private-sector’s disadvantage here, the fractional percentage of private-sector workers who even have access to employer-furnished health insurance—most recently tallied by the Bureau of Labor Statistics at about two-thirds for private industry—compared with 100% of feds. 

“A lot,” Slater said, in an interview with Government Executive some time ago, speaking of the push to slash compensation for public employees, ”is about a certain amount of jealousy—the sense that public employees have stuff that’s better than what those in the private sector have.” 

“But,” he added. “I have always felt the reaction to that instead should be, ‘Hey, that’s great what those public-sector workers have. We should have that, too!’”