Publisher's Perspective

Ever since the first of the Baby Boomers noticed that they had more than a few gray hairs, there have been warnings about a “brain drain” from the government as that demographic bulge in the federal workforce hit retirement eligibility.

What we might be seeing now instead is a “brain retain.”

ADVERTISEMENT

At this time a year ago stock markets were plunging as the economic impact of the pandemic was first being felt, much like they did in the 2008-early 2009 period due to the bursting of the lending bubble. That led to projections of a repeat of one of the side effects of that downturn, a drop in retirements by federal employees.

That repeat in fact does seem to be happening, although with a difference that could have important implications for the careers of those near, or already beyond, their first retirement eligibility.

Over fiscal year 2020—that is, from October 2019 through September 2020—federal retirements in agencies other than the Postal Service fell to about 52,000, from an average of about 62,000-67,000 a year in the prior years. Within those totals, regular “voluntary” retirements were just above 48,000 in fiscal 2020, compared with about 58,000-61,000 previously.

More important than that, though, is the trend within the trend. Of the voluntary retirements in fiscal 2020, nearly 23,000—two-thirds—occurred in the first half of that period, ending last March. The number fell to just above 11,000 in the April-June quarter—likely reflecting the impact of definite retirement plans that had already been set in motion before the pandemic broke out—and to less than 5,000 in the July-September quarter.

(For those who prefer looking at data based on calendar years, the October-December figures aren’t available, but a separate indicator—the number of retirement applications that OPM receives each month, reflecting a delay of several weeks or longer from the time the employee leaves the job—those numbers also are down compared with prior years.)

In the Great Recession federal retirement downturn, it took several years for retirement levels to return to their prior levels, as people rebuilt TSP accounts and other investments that the stock markets had damaged. That’s not a factor this time—stocks recovered almost instantly in 2020, which turned out to be a very good year for those investments. Yet even as the stock markets went up, federal retirements went down.

Why? It’s not because the demographics of the federal workforce have changed. The evidence is mostly anecdotal so far but it is consistent: it’s because of the changes in work brought on by the pandemic for the large majority of federal employees. Most of those not in front-line positions such as law enforcement, health care, passenger screening and others that require a physical presence on the job have been teleworking mainly, if not exclusively for the last 12 months.

What you’ll hear over and over is that working from home has made a big difference in their satisfaction with their jobs in several ways. Those who had commutes mention the savings in time, hassle and cost of doing that. Others cite the freedom from unnecessary meetings, overly chatty co-workers and other interruptions and distractions of any workplace.

ADVERTISEMENT

Add to that the public service motivation effect. Surveys annually show that federal employees overwhelmingly believe their work is important, a feeling that a national emergency will only heighten. And yes, some people would have been motivated in their decisions by who would be the president starting this year.

Incidentally, those factors are at work not just for retirement decisions but across the board. Quits, which had averaged 73,000-83,000 over the five prior years, fell to 56,000.

Another factor for retirement seems to be the social restrictions. Talk to a few retirees and you’ll hear about thwarted plans—for vacations, visits to family, new hobbies or volunteer work they had wanted to begin, classes they had wanted to take, and on and on. That’s especially prevalent among those who have retired within the last year or so, who had planned post-retirement cruises and the like; they’re likely to say something like “I might as well have continued working.”

Many in fact have continued working. The question now is, how long will that be the case? Partly that depends on the individual but partly it depends on the government.

There’s also anecdotal evidence that federal employee productivity increased during the pandemic. This is sure to be examined in terms of quantity, to the extent that it is measurable, but it will also be important to understand the underlying reasons. Is it because people are more focused? Or is it because they are working longer and harder?

If it’s the latter, they will only keep it up for so long. Already there are complaints about the virtually total breakdown between home and work life, with teleworkers feeling they are expected to be available all day, every day. And once travel and entertainment options are more available, that factor keeping people on the job will diminish.

On the employer side, the government has been given, in golf terms, a mulligan: a second chance to do something right that you messed up the first time. For many years the government’s own data has shown that many federal employees were being denied telework even though their job could accommodate it, with managerial reluctance the primary barrier.

To the extent that there were legitimate reasons behind that reluctance—such as the adequacy and security of the IT needed—those issues have been solved by the surge of investment over the last year. To the extent that the resistance was a matter of managers believing that people wouldn’t do their work unless someone was physically looking over their shoulder, that has been disproven too. It helps that many more of those managers now have teleworked themselves.

As the nation opens up, will federal agencies build on what has been accomplished and learned over this last year? Will they continue the expanded use of flexible working schedules and telework, even if not at the exceptional level of the last 12 months? Will they recognize the benefits to employee morale, to the retention of valued employees, to continuity of operations considerations, to the potential savings on real estate and other benefits? Or will they revert to the old “army of clerks” style of management that has so many employees counting down to retirement eligibility years, even decades, in advance?

Everyone retires some time. But for many federal employees, the answers to those questions will be very important in deciding when.

ADVERTISEMENT

Bill to Soften ‘Windfall’ Reduction Reintroduced

Q1 Adds 10K New TSP Millionaires; Mixed Returns for March

Yes It’s OK to Spend Your TSP in Retirement

IRS Issues Reminder on Retirement Savings Withdrawal Policies

What it Takes to Be a TSP Millionaire in Today’s Dollars

Do You Really Need to Save 10X Salary for Retirement? Not if You Have a Pension

FERS Retirement Guide 2021