Heritage Foundation proposes cuts to federal pay & benefits

A conservative think-tank says federal pay and benefits don’t line up with what’s offered in the private sector, and seeks to cut $333 billion in personnel costs over the next decade.

In a recent report, the Heritage Foundation said federal employees receive on average 22 percent more in pay than their private sector counterparts, and get 30 percent to 40 percent more in compensation when considering federal benefits.

James Sherk, a research fellow in labor economics at Heritage, told Federal Drive with Tom Temin that Congress should reduce within-grade pay raises for federal employees on the General Schedule pay scale, in order to give federal managers more flexibility to reward top performers with merit-based bonuses.

Introducing across-the-board pay cuts, he said, could make it more difficult for federal agencies to hire and retain talented employees.

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“You’ve got plenty of federal employees who could probably make more in the private sector than they do now,” Sherk said. “So what we want to do is bring federal pay to parity with what people would have had in the private sector.”

The Heritage proposal would reduce within-grade pay raises from 3 percent to 2 percent. Between the within-grade cuts and bigger bonuses, Sherk said average federal pay would fall by 5 percent.

The libertarian Cato Institute reported in October 2015 that federal employees on average, earned 78 percent more than the private sector.

Tech companies like Google or Apple offer some of the most flexible workplace hours, but Sherk said most private sector employees still don’t get as much paid leave as feds do.

The typical private sector employee, Heritage found, gets 13 days of annual vacation and eight sick days. A fed with five years of experience, however, receives 20 vacation days, 13 sick days, and all 10 federal holidays.

Firing problem employees

Sherk said Congress should increase the probationary period for new federal employees to one-to-three years, which would allow agency managers to weed out problem employees.

Workers accused of wrongdoing during their probation window aren’t as protected under the federal appeals process as their more veteran coworkers.

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“This is a common complaint, even among federal employees, that they have coworkers who are not pulling the weight, not doing a good job, and they just continue to sit around and drag down the agency for years … and so we want to make it easier to get rid of those federal employees who are making it more difficult on their coworkers and hindering their agencies’ missions,” Sherk said.

The Heritage proposal also suggests limiting the number of forums that employees can use to appeal a dismissal.

“Right now, if an employee gets laid off, they can either go through a union grievance procedure, or go through the Merit Systems Protection Board. At the end of that, they can then appeal to the Office of Special Counsel, alleging whistleblowing, and they can also file a claim to the EEOC, alleging discrimination. What we’ve proposed is they pick one — you can’t just drag out the claim and drag out, essentially, the protections that prevent you from getting fired for years and years,” Sherk said.

The Heritage Foundation also would lower the burden of proof for chapter 75 firing procedures, which state that managers must have a “preponderance of evidence” of employee wrongdoing that would be plain to a reasonable person.

“That can be a pretty high burden of proof. That’s a lot of work on a manager to say that most reasonable people would come to this conclusion,” Sherk said.

Pension and health care changes

When it comes to retirement benefits, Sherk said federal employees have it much better off than the the private sector.

The Heritage Foundation said the average fed receives benefits equal to 18 percent of their base pay, while private-sector receive about 5 percent of their pay in benefits.

Under its proposal, Heritage would shift new hires and non-vested employees — those with less than five years of service, and not yet eligible for Federal Employees Retirement System (FERS) benefits —to a system where they’d receive higher Thrift Savings Plan contributions from the government, but no FERS contributions or benefits.

“I think there would be a fair amount of receptivity in Congress. We’ve seen that Congress has been interested in reforms on the compensation side, we’ve seen a lot of interest in the civil service reform … I think there’s certainly an openness and a willingness to examine these kinds of reforms,” Sherk said.