About Those “Overpaid” Federal Employees

As you may have heard, the libertarianish Cato Institute has published a new study to provide some documentation for the standard conservative complaint that federal employees have cushy jobs that soak the hard-working taxpayer etc. etc. More specifically, the study concludes that federal workers are paid 78% more (on average, of course) than workers in the private sector. Time to march on Washington and demand lower pay or better yet firings for these parasites, right?

Wrong, argues the University of Maryland’s Donald F. Kettl in a web exclusive at Ten Miles Square today. The numbers are right, Kettle says, but the idea that the pay disparity is the result of higher pay for the same work is exactly wrong. And the reason, ironically, is that privatizing of government jobs as urged over the years by organizations like Cato has hollowed out the federal workforce to where private contractors are doing a lot of the day-to-day work, at a much higher overall cost and with serious consequences for performance as well.

As I explore in my forthcoming book, Escaping Jurassic Government: How to Reclaim Government’s Lost Commitment to Competence (Brookings, 2016), the big movement to contract out federal jobs, led by groups like Cato, has had a huge impact on the federal workforce. From 1960 to the present, the average level of federal employees in the General Schedule has risen from 6.73 in 1960 to 10.33 in 2014. That alone accounts for half the difference in the public-private comparison that Cato found.

And why has the GS level risen? The nature of federal jobs has fundamentally changed. As the federal government contracted out more work, the number of clerical jobs in the federal government shrank 78 percent from 1973 to 2014, and the number of blue-collar jobs fell by 61 percent. It’s almost impossible to find a federal custodian, cafeteria worker, security guard, or mechanic because almost all of those jobs have been contracted out. In fact, at the now-shuttered Department of Energy’s Rocky Flats plant, which once manufactured the plutonium triggers for nuclear weapons, security was higher even than the White House—and the most dangerous stuff on the planet was carefully guarded. By Wackenhut.

Meanwhile, the number of administrative employees has grown 128 percent and professional workers are up 78 percent—all within a workforce that is just 2 percent larger. Fewer feds are providing front-line services. Fewer feds are providing support services. More feds are managing contracts and are performing more high-level technical work.

Between less accountable contractors and over-stretched government employees, rising costs have been accompanied by dangerous reductions in effective oversight:

The big boost in contracting out has led to a vast array of government programs over which the government has only loose control. For example, at the Centers for Medicare and Medicaid Services, which manages some of the federal government’s biggest and most important programs, each employee is responsible, on average, for $144 million in spending. Stop and let that sink in: $144 million, on average, for each employee. This is for a collection of programs that already represents one of the most privatized systems in government. And it’s responsible for big problems, including $75.5 billion in improper payments every year, according to the Government Accountability Office. In fact, one of every eight dollars in the flagship Medicare fee-for-service program is spent improperly.

So keep it up, Cato–and the Republicans who like to quote Cato’s studies and recommendations–and you could intensify this baleful trend towards more contractors doing more expensive work with nobody really having a handle on what’s being done for the money.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.