House GOP plan to curb fed pay and benefits would come at a cost, experts say

Republicans in Congress are proposing to cut deficits by way of steep curbs to federal employee compensation—for example, ending “automatic” annual pay boosts and increasing the price of health insurance premiums. But some experts—in public administration, labor and business—see the plan’s savings as potentially very limited, and the costs potentially high. 

Last month, over 150 House Republicans issued a proposal detailing the cuts along with multibillion-dollar estimates of future savings. The news of the proposal also noted an added aim of stripping down the General Schedule system—cheering backers of former President Trump’s “Schedule F” plan, and raising renewed severe criticism from federal employee unions. 

“The federal government’s current compensation framework largely ignores the more efficient compensation approach used in the private sector,” the 167-page GOP document posits as a basis for cutting back—citing a 2017 Congressional Budget Office report finding feds were paid 17% more on average than“comparable” private-sector counterparts. It should be noted—and federal employee unions have done so, loudly—that conflicting government calculations have found feds are greatly undercompensated—for instance, according to the Federal Salary Council, by 24%. 

The House GOP proposal goes on to call for reductions that would severely ding the financial picture for federal employees. It recommends adjusting “federal worker paid leave policies to match the value of benefits paid by the private sector,” slashing costs by $75 billion over 10 years. It calls for making all increases in pay fall under an as-yet only sketched in “merit-based” system, cutting another $57 billion over a decade. Most substantially, it advocates “reforming” federal retirement savings as we know it—more or less abolishing it—and merging this function into TSP. In other words, ditching the defined-benefit aspect of federal retirement altogether. The purported savings? The GOP group lists that as clawing back “$235 billion over 10 years.”

Whichever bottom line you use for federal compensation, high or low—and there are others in between—and whatever the likelihood of such a belt-tightening program actually passing—one thing seems almost certain: if Congress compelled federal agencies to enact these drastic “savings,” there will also be costs at the personnel level beyond economics—in morale, recruitment and retention of the existing workforce. And sure enough, that’s what experts we asked said. 

“A lot of these kinds of proposals look at a dollar amount—just thinking budgetary savings, and just thinking budgetary tests,” Jenny Mattingley, Vice President for Government Affairs at the Partnership for Public Service, told Government Executive. “But the problem with that is when you're looking at employee recruitment and retention, most companies and organizations actually really compete on more than that.”

“Yes, there's a budget component,” she said. “But it’s really about a lot of things that help recruit and retain the best talent, so you need to have a conversation about the skills you need, and how you compare to the market sector on recruiting and retaining.”

“What those behind this proposal are talking about here, among other things, is moving towards a purely defined contribution benefit plan,” Merick Masters, a professor of business and expert on labor in the Department of Management and Information Systems at Wayne State University, told Government Executive. “And I would say that all these things they are thinking of doing here to cut or reduce—if the plan comes to pass—they should be very careful in calculating and adjusting. That’s because a federal government employee’s compensation package is very different on average than someone in the private-sector workforce—government has more professionals on average, for a start.” 

“But there's no doubt that this plan, if it were done, would be taking a heavy hit at federal employees,” Masters continued. “There are items in here that remind me of what the Trump administration proposed to do, to make it easier to terminate federal employees. When you look at this, in total, it looks like an attack on federal employees.” 

Masters added that the plan wouldn’t be very effective, in any case, at its stated aim of making substantial savings against the deficit. The “excessive costs” of government, as he put it, are “so much higher” than the projected savings. “If the plan saved, you know, a few hundred billion over 10 years, we are dealing with deficits so much larger than that now—it's really not going to make that much of a difference.” 

And then there are the costs. “It clearly doesn't help morale among the existing workforce,” he said. Whatever the rationale, “people will feel they are being unnecessarily targeted and scapegoated for the actually much larger deficits and other problems in government.” 

The real fix, if there is one, Masters advised, is to pare down over time the actual number of employees across some parts of the government’s workforce—downsizing only certain departments or units of them. And to further slash federal expenditures by “reining in entitlements to the public” to a more sustainable level.

Another expert on the public workforce, Timothy Hagle, a professor who for decades has taught political science and public administration at the University of Iowa, like Masters would like to see government cut costs against the growing deficit (estimated at around $3 trillion this year alone)—but he sees some minuses in the proposed plan. 

“When I was at the Office for Victims of Crime at the Department of Justice”—where he served during the George W. Bush Administration— "I saw some of the problems in government, first-hand,” he told Government Executive. “You want people in government to be sufficiently compensated with decent benefits and incentives, because professionals like lawyers and doctors could go off and make more money somewhere else.” 

Because of its indiscriminate nature, Hagle said the kind of cuts outlined in the House GOP plan would likely cause morale problems in the existing workforce. “Still, you have to reach some sort of balance,” he said. “These are taxpayer dollars, and so making an effort to save is important too—especially for Republicans who run on that.” 

“We need to come up with compensation plans that create better retention for some areas of government where that is a big problem,” Hagle said. “In theory, it would be great if we could increase the benefits, or even salary, for government jobs that are hard to recruit and retain,” he said. “But it could cost less in other areas—maybe important, but not nearly as difficult to fill, for example some purely administrative work. Look, we can try to make these distinctions—but this is the federal government, and on the ground with compensation you are sort of locked in with the system across the board. It would be—and has been—very hard to change it.”

This story has been updated to include additional comment.