Tag: federal pay

ICYMI: FMCS

During the hullaballoo around the government shutdown, the Washington Examiner published a jaw-dropping series of stories about blatant waste in an obscure federal agency called the Federal Mediation and Conciliation Service. These stories shouldn’t be missed.

Reporter Luke Rosiak writes:

One federal employee leased a $53,000 take-home car with taxpayer money in apparent defiance of federal regulations and regularly billed the government for service at shops such as BMW of Fairfax.

Others charged the government monthly for family members’ cell phones and high-end TV packages and Internet at home — and even at second homes.

Managers freely made out checks to employees without requiring documentation of how it would be spent, giving $1,316 directly to one who said she was reimbursing herself for furniture she bought for a “home office” and using convenience checks to give workers bonuses.

Federal bureaucrats dole themselves these perqs in an agency where the median annual salary is already $120,000. Federal pay, of course, is something Chris Edwards has highlighted for a long time.

Rosiak’s stories on FMCS are worth a read. They’re worth more than that—like maybe some congressional oversight. Because internal oversight is failing.

“With three whistle-blowers gone,” he concludes, “there is little indication that the spending abuses have stopped.”

Overpaid Feds: Some Market Evidence

In a story titled, “Federal government upping pay, seniority to lure skilled workers from private sector,” the Washington Business Journal notes:

“Government contractors are losing their upper hand in hiring and retaining the best and brightest former feds, as several economic forces under way hint at a potential mass migration from the private sector to public service… .

 ’Government employment is growing more attractive during the economic downturn because it brings job security and the comprehensive benefits that a lot of private sector firms are doing away with,’ said Alan Balutis, director of Cisco Systems Inc.’s Internet Business Solutions Group.”

Aside from adding evidence to my overpaid federal worker thesis, the article suggests trouble for the broader economy if more high-skill workers are running to the government for safe refuge. Federal hiring of the best and brightest imposes an “opportunity cost” on the economy by drawing talented people away from higher-valued activities in the private sector.

It is true that the relative economic harm is less when we are comparing, for example, hiring in-house computer experts to support wasteful farm subsidy activities, or whether we contract-out farm subsidy computer support to, say, Cisco.

So first we should downsize the government to its proper areas of responsibility, thereby releasing hundreds of thousands of smart people to engage in market-based activities. Then we should contract out the remaining core government activities if it makes economic sense.  

Hat Tip: Bill Erickson

Overpaid and Undertaxed

I sympathize with almost all taxpayers, but it’s difficult to feel sorry for government workers who get in trouble with the IRS. Compensation packages for federal bureaucrats are twice as lucrative as those for workers in the productive sector of the economy and their pensions are similarly extravagant. Yet they often can’t be bothered to fully pay their taxes, owing billions of dollars to the IRS according to a Washington Post report.

Among the biggest scofflaws are the folks at the Postal Service, who have accumulated more than $283 million of unpaid taxes. Retired bureaucrats, meanwhile, have amassed nearly $455 million of back taxes. Even tax collectors sometimes fall behind. Treasury Department bureaucrats owe $7.7 million. How hard can it be for them to walk down the hallway and cough up? Or do they think they’re exempt since their boss barely got a slap on the wrist after “forgetting” to declare $80,000?

The most startling part of the story, though, is the degree of tax dodging on Capitol Hill. Here’s an excerpt from the story:

Capitol Hill employees owed $9.3 million in overdue taxes at the end of last year…. The debt among Hill employees has risen at a faster rate than the overall tax debt on the government’s books, according to Internal Revenue Service data. …The IRS data… shows 638 employees, or about 4 percent, of the 18,000 Hill workers owe money, a slightly higher percentage than the 3 percent delinquency rate among all returns filed nationwide. …”If you’re on the federal payroll and you’re not paying your taxes, you should be fired,” [Congressman] Chaffetz said in an interview. He said the policy should apply across the board and “there should be no special exemptions.”

The shocking part about this blurb, at least to me, is not the 638 staffers who owe money to the IRS. It’s the fact that there are 18,000 bureaucrats working for Congress. Do 100 Senators and 435 Representatives really need that many attendants? How I long for the good ol’ days, when each politician had about two staffers. I suspect it’s no coincidence that the federal government was a much smaller burden back when there were far fewer staff.

It’s Summer in Washington and the Livin’ Is Good

“According to a new Regional Income Earnings Index developed by the Martin Prosperity Institute, Greater Washington, D.C. is the nation’s metropolitan region with the highest income,” writes Richard Florida, author of The Rise of the Creative Class.

Washington, which produces rules, regulations, and political consulting services, ranks just ahead of San Jose and Stamford, Connecticut, where people invest their own money to produce software and allocate capital for a complex economy.

Even before the Obama administration started concentrating job creation on the federal sector, the Washington Post was reporting

The three most prosperous large counties in the United States are in the Washington suburbs, according to census figures released yesterday, which show that the region has the second-highest income and the least poverty of any major metropolitan area in the country.

Rapidly growing Loudoun County has emerged as the wealthiest jurisdiction in the nation, with its households last year having a median income of more than $98,000. It is followed by Fairfax and Howard counties, with Montgomery County not far behind.

This of course reflects partly the high level of federal pay, as Chris Edwards has been detailing. And it also reflects the boom in lobbying as government comes to claim and redistribute more of the wealth produced in all those other metropolitan areas.

To slightly amend a ditty I posted a few years ago,

Mamas, don’t let your babies grow up to be cowboys,

Don’t let ‘em make software and sell people trucks,

Make ‘em be bureaucrats and lobbyists and such.

John Berry: Angry about Federal Pay

The head of the federal Office of Personnel Management, John Berry, has become unhinged by a few recent critiques of federal worker pay. Berry is an Obama appointee who apparently views his role as being a one-sided lobbyist for worker interests, rather than a public servant balancing the interests of taxpayers and federal agencies.

Here is an 11-minute audio interview with Berry on Federal News Radio on Friday, where he lashes out at USA Today, Washington Times, and the Cato Institute. Berry is defensive, emotional, and unwilling to accept that new data might indicate a possible problem with the underpaid federal worker thesis that is constantly pushed by the unions.

What do I mean when I say he is unhinged? An investigation by the USA Today found that in 83 percent of 216 occupations examined, federal workers earned more than comparable private-sector workers. Here is Berry’s response when asked whether he thinks the USA Today analysis is a good one: “It is absolutely not! It comes straight out of the Cato Institute!” But, believe it or not, the nation’s largest newspaper is not part of some libertarian plot.

The most troubling aspect of Berry’s performance is his deliberate effort to wrap himself in the flag and deny that anyone should even ask questions about federal workers during a time of national security concerns. It is strange that an Obama administration official would so vigorously use the Bush administration tactic of “waving the bloody shirt.

Here are excerpts from the interview starting at 1:48 minutes and then 5:54 minutes (my transcription):

Interviewer: “There was a line in this [Washington Times] editorial, one of the first lines, it was the first line of the second paragraph, and that is: ‘Consider how much money a bureaucrat can make for successfully sitting at his desk for a year.’

Berry: …You know, this is the kind of, it’s just a denigration of public service and, and it is, there should be no place for it in our country… And to be denigrated and say that they’re bureaucrats sitting at a desk pushing paper there should be no place in American society for such hyperbole.

Interviewer: I wonder if this is something that comes because of the economy. Where is this upswell of anger coming from?

Berry: …And that’s why I just get steamed when I read something like this because it denigrates that incredible motivation, and like I said to denigrate those who even put their lives on the line day in and day out so that the rest of us and our children can be safe, there should be no place for it. And I think my hope is that a lot of people, not just me, will rise up and respond to this with the anger and the facts that it deserves. Because as long as people can get away with denigrating that level of service, then we are putting at risk the future of our country.”

Have you got Berry’s message? We simply cannot allow people to use their free speech rights to question the operations of government because that will undermine national security. So people need to “rise up” and get “angry,” grab their pitchforks, and head to the homes of anyone who dares question high government worker pay because it puts “at risk the future of our country.”

Good grief!

More from me on federal worker pay here.

(Thanks to Solomon Stein and Justin Logan)

Federal Pay Gap Reversed

I’ve long raised concerns about the rapidly rising costs of federal worker pay and benefits. Despite the obvious acceleration of federal compensation above private compensation in recent years, federal unions have continued to claim that federal workers suffer from a giant “pay gap,” which is currently supposed to be 26 percent.

Unfortunately, the pay gap mythology has been spread by Washington Post reporters, one recently writing, “The budget answers critics … who say federal civilians earn much more than private-sector workers… [G]overnment figures indicate that federal employees are underpaid by 26 percent compared with their counterparts in similar position in the business world.”

The Post is generally a great paper, but they seem to have blinders on with respect to federal pay issues. As a result, the USA Today has repeatedly scooped them. USA Today has a groundbreaking piece today revealing that in job-to-job comparisons, federal workers typically have wages 20 percent higher than private-sector workers.

Instead of federal workers suffering from a 26-percent “pay gap,” they actually have a 20-percent advantage over private sector workers. And that doesn’t include benefits, which are four times higher in the federal government than in the private sector, on average.

How could the federal unions get it so wrong? The calculation of the supposed 26-percent pay gap is reported in this annual memo. But the underlying calculations are extremely complex, non-transparent, and subject to a huge degree of statistical modeling.

One reason I’ve been suspicious of the official gap claim is that while Bureau of Economic Analysis data show that average federal wages have grown far faster than private wages in recent years, the official “pay gap” has remained very high. In 2001, the pay gap was said to be 22 percent. By 2008, the gap was said to have increased to 25 percent.

Yet BEA data show that average federal salaries rose 46 percent between 2001 and 2008, much more than the 26-percent average increase in the private sector. Since the BEA data are extremely solid, there must be something wrong with the official pay gap methodology.

Where should we go from here? The first step should be to freeze federal salaries, as proposed by Sen. Scott Brown (R-MA). Then we should start cutting back overly generous federal benefits.

And to get to the bottom of the ”pay gap” mystery, Congress should hire an independent human resources consulting firm to dig into the official methodology and propose a more accurate way to compare federal and private worker compensation.

For more, see:

Perceptions of Government Pay

A new poll by Rasmussen finds that the general public has an accurate assessment of government worker pay.

Compared to the average government worker, most Americans think they work harder, have less job security and make less money.

In fact, 59% of Americans say the average government worker earns more annually than the average taxpayer, according to the latest Rasmussen Reports national telephone survey. Just 15% don’t believe that to be true, while another 26% are not sure.

Among those who have close friends or relatives who work for the government, the belief is even stronger: 61% say the average government worker earns more than the average taxpayer.

Feeding that belief is the finding that 51% of all adults think government workers are paid too much. Only 10% say they are paid too little, while 27% say their pay is about right.

Bureau of Labor Statistics data indeed shows that government workers work fewer hours in a year and have much higher job security than private sector workers. And I’ve argued that they are generally overpaid, and by increasing amounts.

For more, check out: