Issue Briefs

Following are sections of the recent White House budget proposal directly discussing the federal workforce and the administration’s plans for it.

The Federal Workforce Today
The Federal Government has more than 2.1 million civilian workers and 1.3 million active duty military serving throughout the country and the world. Chart 7-1 broadly shows the personnel trends in the Federal security related agencies (inclusive of the Departments of Defense, Homeland Security, Justice, State, and Veterans Affairs) and non-security agencies, in comparison to state and local governments and the private sector.

Estimated employment levels for 2018 are higher than the 2016 actual FTE levels, but a decrease from the 2017 estimates, all of which are around 2.1 million civilian employees. From 2017 to 2018, increases totaling approximately 23,000 FTE are seen across 7 of the 24 Chief Financial Officers (CFO) Act agencies, and decreases totaling approximately 24,000 FTE occur across 17 of the CFO Act agencies. The increases are primarily driven by growth of civilians in three security-related agencies (Departments of Defense, Veterans Affairs and Homeland Security).

A Congressional Budget Office (CBO) April 2017 report found Federal employees on average received a combined 17 percent higher wage and benefits package than the private sector average over the 2011-2015 time period. However, that represented a range that was broken down by educational level. Taking into account educational level, employees with a professional degree received about 18 percent less in total compensation, while those with a high school degree or less received 53 percent higher total compensation.

The Federal government continues to offer a generous package of retirement benefits. CBO found that on average the cost of benefits was 47 percent higher for Federal civilian employees than for private-sector employees, with the Federal defined benefit pension plan (a predetermined set amount regardless of market fluctuation) being the most important contributing factor to cost differences between the two sectors. Consistent with the goal of reining in Federal government spending in many areas, as well as to bring Federal retirement benefits more in line with the private sector, adjustments to reduce the long term costs associated with these benefits are included in this Budget. These proposals include: increasing employee payments to the defined benefit Federal Employee Retirement System (FERS) pension such that the employee will generally be paying the same amount as the employing agency; and, reducing or eliminating cost of living adjustments for existing and future retirees. Increases to employee pension contributions would be phased in at a rate of one percent per year to lessen the impact on existing Federal employees.

In 2016 (as of September 2016), the Federal workforce is 63.6 percent White, 18.4 percent Black, 8.6 percent Hispanic, 5.8 percent Asian, 0.5 percent Native Hawaiian/Pacific Islander, 1.6 percent American Indian/Alaska Native, and 1.4 percent Non-Hispanic/Multi-Racial. Men comprised 56.8 percent of all Federal permanent employees and women 43.2 percent. Veterans are 31.1 percent of the entire Federal workforce, with 12.7 percent of the veterans disabled. By comparison, veterans comprise approximately 6 percent of the private sector non-agricultural workforce.

The Federal Workforce Going Forward
Despite growing citizen dissatisfaction with the cost and performance of the Federal government, too often the focus has been on creating new programs instead of eliminating or reforming ineffective programs. The result has been too many overlapping and outdated programs, rules, and processes, and Federal employees stuck in a system that is not working. The Federal government should be lean, accountable, and more effective.

To begin addressing this challenge, on January 23, 2017, the President issued a Presidential Memorandum (Hiring Freeze PM) imposing a Federal “Hiring Freeze.”
This ensured immediate action was taken to halt the growth of the Federal workforce until a “long-term plan to reduce the size of the Federal Government’s workforce” was put in place. On March 16, 2017, the President submitted his Budget Blueprint to Congress proposing to eliminate funding for programs that are unnecessary, outdated, or not working. Additionally, on March 13, 2017, the President issued an Executive Order (Reorganization EO) directing the Office of Management and Budget (OMB) to submit a comprehensive plan to reorganize Executive Branch departments and agencies. OMB Memorandum M-17-22, “Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce,” provided agencies with guidance on fulfilling the requirements of the Hiring Freeze PM and the Reorganization EO while aligning those initiatives with the Federal budget and performance planning processes. OMB directed agencies to identify workforce reductions over a four-year period (FY 2018 through 2022) consistent with forthcoming OMB guidance on 2019 Budget submissions. The Agency Reform Plans combined with public input and cross-cutting proposals developed by OMB will inform a Government-wide Reform Plan that will be published as part of the President’s 2019 Budget in February 2018.

Reshaping the Workforce
Any meaningful discussion of Government reform must include an examination of the Federal workforce to ensure it is aligned to meet the needs of today and the future, rather than adhering to requirements of the past that are obsolete. The Hiring Freeze PM put a pause on the hiring of Federal civilian employees across the board in the Executive Branch, while requiring OMB to develop recommendations for a Government-wide long-term workforce reduction plan. The hiring pause allowed the Administration to take the first steps toward a thoughtful effort to reshape the Federal workforce to more optimally meet mission and functional needs. The Hiring Freeze PM applied to all executive departments and agencies regardless of the sources of their operational and programmatic funding, but not to military personnel in the Armed Forces. The Administration allowed exceptions to ensure public safety and security, as well as certain exemptions for critical functions. The hiring freeze ended April 12, 2017 with a requirement for agencies to begin working on long-term Agency Reform Plans to reduce the size of the Federal civilian workforce. Agency plans will be incorporated into a Government-wide Reform Plan.

To lift the hiring freeze, OMB also required agencies to take action immediately to achieve near-term workforce reductions and savings, including planning for budget levels that were released in the 2018 Budget Blueprint, and consistent with budget levels in this full 2018 Budget. Agency Heads maintained the discretion to determine the best method to accomplish this task. Notably, agencies were asked to examine the total cost of their operations (and not just FTE counts or headcounts) to incentivize more optimal operational decisions. Agency long-term planning must be done within the broader reorganization effort to align the civilian workforce to evolving needs.

As agencies look at how they can operate more efficiently and effectively, it is important to continue monitoring employee engagement as a key indicator of success. The Office of Personnel Management will continue the annual Federal Employee Viewpoint Survey (FEVS), a collection of 84 questions that measure employees’ perceptions of whether, and to what extent, conditions characterizing successful organizations are present in their agencies. Using the FEVS results, agencies will continue to monitor employee engagement trends, using an aggregate Employee Engagement Index derived from a subset of the questions, as well as trends in additional questions relating to other facets of organizational effectiveness.
In 2016, agencies were able to analyze data from more than 20,000 distinct work units across the Federal government, which allows for insight into the workforce. The 2016 survey found that while many work units and agencies had a highly engaged workforce, others need leadership and management attention. One issue that is common across agencies is that fewer than 30 percent of employees believe managers will address a poor performer who cannot or will not improve.

While FEVS results generally show that managers are not always perceived by employees as effectively managing performance issues, it is important to note that supervisors and agency managers find personnel processes overly complex and difficult to navigate. Most agencies are subject to more than 3,400 Federal personnel regulatory provisions. Agency human resources staff are familiar with many, but often not all, of the rules. This voluminous set of regulations becomes a barrier to managers when it comes to basic human resources functions, including hiring top talent or dealing with poorly performing employees.

Rewarding top performers and dealing with poor performers is key to effectively managing the workforce. To directly address this seemingly intractable problem, all agencies must: review their employee performance management policies; provide management with training on how to address performance and conduct issues; eliminate non-statutory barriers to removing those who do not improve; and develop a mechanism to provide managers with real-time guidance to ensure managers take the appropriate steps. Poor performers and those with conduct problems have long tainted the positive contributions of the vast majority of the Federal workforce. Managers spend a disproportionate amount of time addressing these individuals while the rest of the team must work harder to accomplish their mission. Freeing the managers and employees from the extra burden will allow more time and resources to developing and rewarding the rest of the workforce. Dispelling the myth that it is nearly impossible to hold employees accountable in the Federal government will enhance credibility and respect for the many employees who uphold the nation’s values for public service every day.

Fixing human capital issues that have developed over generations is complex and will take time to unwind and rebuild. Overall, the Administration is examining administratively burdensome agency activities and processes, including barriers to efficient human capital management that exist in policy, legislation, and regulation. There is a commitment to advocating for policies to help agencies manage their workforce in a more agile manner, reducing barriers employees face in their jobs, and providing flexibilities for agency leadership and management that will allow managers to adopt practices that are common in high performing organizations