CBO Report is No Justification for Cuts to Federal Employee Benefits, NTEU Says

Press Release May 18, 2017

Washington, D.C. — Congress should not rely on a flawed analysis of federal compensation to justify cutting salaries and benefits to thousands of middle-class federal employees around the country, said Tony Reardon, National President of the National Treasury Employees Union.

Reardon submitted a statement for Thursday’s hearing by the House Oversight and Government Reform Committee, strongly contradicting the claim that public sector compensation is too generous compared to the private sector.

The committee’s hearing is focused on the Congressional Budget Office analysis, which compares public and private sector jobs based on employee characteristics like educational attainment and job titles. This method is a flawed analysis and paints a less accurate picture than comparing actual job duties, which is the method used by the U.S. Department of Labor.

“The federal compensation system is not overly generous and employees do not get wealthy. They are true public servants who diligently do their jobs and are too often portrayed as taking advantage of a system that has denied them pay increases and raised their retirement contributions with no increase in benefits,” Reardon said. “I strongly urge this committee not to rely on flawed analysis when reviewing federal compensation but to use the best data possible.”

 NTEU represents federal employees at both ends of the pay scale, from scientists with advanced degrees to entry-level customer service representatives, all of whom chose a career of public service which appropriately comes with access to adequate health insurance, a secure retirement and a decent wage.

“To consider further cutting the pay, retirement, or health care benefits of these federal workers in order to join the private sector in its race to the bottom will only further squeeze the middle class, increase income inequality in the U.S. and risk the overall economic and retirement security of the nation as well as the skill set of our civil servants,” Reardon wrote.

The study by the Bureau of Labor Statistics in the Department of Labor, which compares actual job duties, shows a consistent gap in compensation that favors the private sector.

“For example, how many budget analysts in the private sector oversee multi-billion-dollar agency budgets? How many logistics managers in the private sector implement the deployment of tens of thousands of troops and their supplies?” Reardon asked.

Reardon defended the General Schedule pay system, which helps reduce inequities in salaries between men and women and includes performance-based measures, such as the ability to deny merit pay increases or reward others with quality step increases.

“With these rules, there is limited ability for favoritism, discrimination or other non-merit determinations to come into play,” Reardon wrote. “This is an area where the federal government is leading by example and others should follow.”

If Congress chooses to accept the CBO analysis, Reardon warned that it should not be wielded as a weapon against the civil servants who work in all 50 states and the U.S territories to carry out the missions of their agencies and serve taxpayers, Reardon said.

The Federal Employees Health Benefits Program is a crucial way for the government to cut down on lost productivity by providing wellness programs and solid healthcare benefits. Notably, enrollees pay on average 30 percent of the total premium cost of FEHBP, compared to an average 18 percent for workers in the private sector.

The federal government should be commended – not criticized -- for making sure retirees are not living in poverty. The CBO finding that public sector retirement benefits are more generous than the private sector can largely be attributed to pension cuts in the private sector, not overly generous federal benefits. The typical federal employee with a lifetime of service has an annuity of about $1,000 a month from the defined benefit program. If that employee contributes 5 percent of their salary to the Thrift Savings Plan for 30 years, the annuity is about $400 a month when they retire.

Over the past few years, federal workers faced a three-year pay freeze, an increase to their retirement contributions, increases in their FEHBP premiums and unpaid furloughs. The CBO analysis failed to take those factors into account.

The CBO also fails to consider benefits that are common for larger private sector employers but not available to federal employees, such as stock options, paid parental leave and employer contributions to vision and dental benefits.

“If the federal government were to cut benefits for health care and retirement, it would lose whatever edge it has in recruiting and retaining top talent and adversely impact the important services the federal government provides to the American people,” Reardon wrote.

NTEU represents 150,000 employees at 31 federal agencies and departments.