It’s Simple: Replace Retiring Feds and Pay More
In conversations with federal managers, one of the most common phrases the Federal Managers Association (FMA) hears is “I’ll be retiring soon.” There’s a pretty good reason for this. In 2021, 30 percent of the federal workforce was over the age of 55. With an average retirement age for feds of 62 almost a third of the federal workforce is within seven years of retirement, and far more than a third is within ten years.
Replacing people with decades of knowledge, expertise, and experience will not be easy or painless. In that same year, less than 7 percent of the federal workforce was under the age of 30. That same demographic now makes up a full 25 percent of the broader workforce.
Why is the federal government struggling to attract younger workers?
One answer is that the government doesn’t pay enough. The longer answer highlights how big that problem is.
In 2008, a Step One GS-10 made $43,824 per year. In 2022, a Step One GS-10 would make $51,864 per year, for a cumulative increase of approximately 18 percent. During that same period, cumulative inflation has reduced purchasing power by approximately 30 percent–in other words, something that cost a dollar in 2008 now costs an average of $1.30. With the average fed getting paid only 18 percent more, their real wages have effectively been cut by 12 percent over the past 14 years.
Now, that’s bad. What’s worse for federal hiring efforts, however, is what’s happened to private industry salaries in the same period. Across all industries, salaries have increased by approximately 35 percent over the past 14 years, outpacing inflation by a total of roughly 5 percent. In other words, the average pay that the federal government offers compared to equivalent positions in the private sector has slipped by roughly 17 percent over the past 14 years. Even in 2008, however, the private sector already paid more on average. As a result of this, equivalent positions in the private sector now pay a whopping 23 percent more than in the federal government.
So, the federal government is playing with a massive handicap when it comes to attracting candidates. The federal hiring process only exacerbates this problem.
In the private sector, the average time to fill an open position in 2019 was 36 days. For the federal government, that average time to hire was 118 days, or three times as long. In other words, attracting top candidates for the federal workforce only works if the average candidate turns down three job offers, each one offering an average of 23 percent more than the equivalent federal government position, in order to potentially get offered a position in the federal government. Most of those feds who are still on the job joined the federal workforce in better times and have invested too much time to leave early. Is it any surprise that there are only a quarter as many federal employees under the age of 30 as would be expected based on their prevalence in the workforce?
Structural problems make this gap even more difficult to overcome. The average recent graduate owes $28,400 in student loans. With an average monthly payment of more than $300, there simply aren’t that many recent graduates who can afford to accept a job paying 23 percent less than they could get in the private sector. Many people who feel called to public service, and who would happily work for the federal government, cannot afford to wait for months to see if they will be offered a job that pays less than the alternatives they were offered two months earlier.
How can this be addressed? There are two obvious solutions to this. 1) reform the hiring process to decrease time to hire, and 2) pay more. Senator Brian Schatz (D-HI) and Representative Gerry Connolly (D-VA) are keenly aware of the need for these reforms. Sen. Schatz and Rep. Connolly annually introduce the Federal Adjustment of Income Rates (FAIR) Act, which typically features raises for federal employees that are at the level needed to allow the federal government to compete with the private sector. The current FAIR Act (H.R. 6398 / S. 3518) would give federal employees a 2023 pay raise of 5.1 percent, inclusive of an average 1 percent increase in locality pay. This contrasts favorably with the 4.6 percent increase that is likely to be proposed by the Biden Administration. FMA strongly endorses this edition of the FAIR Act, and views it as a good first step in addressing the major disparities harming the ability of the federal government to replace retiring feds.
If you are not already a member of FMA, please consider becoming a member.
The views reflected in this column are those of FMA and do not necessarily represent the views of FEDmanager. To learn more about the Federal Managers Association (FMA), visit their website: FedManagers.org.