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Federal Employee Compensation: an Update Hearing Committee on Oversight and Government Reform House of Representatives FEDERAL EMPLOYEE COMPENSATION: AN UPDATE HEARING BEFORE THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION MAY 18, 2017 Serial No. 115–25 Printed for the use of the Committee on Oversight and Government Reform ( Available via the World Wide Web: http://www.fdsys.gov http://oversight.house.gov U.S. GOVERNMENT PUBLISHING OFFICE 26–558 PDF WASHINGTON : 2017 For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 10:28 Sep 12, 2017 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 H:\26558.TXT APRIL KING-6430 with DISTILLER COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM Jason Chaffetz, Utah, Chairman John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland, Ranking Darrell E. Issa, California Minority Member Jim Jordan, Ohio Carolyn B. Maloney, New York Mark Sanford, South Carolina Eleanor Holmes Norton, District of Columbia Justin Amash, Michigan Wm. Lacy Clay, Missouri Paul A. Gosar, Arizona Stephen F. Lynch, Massachusetts Scott DesJarlais, Tennessee Jim Cooper, Tennessee Trey Gowdy, South Carolina Gerald E. Connolly, Virginia Blake Farenthold, Texas Robin L. Kelly, Illinois Virginia Foxx, North Carolina Brenda L. Lawrence, Michigan Thomas Massie, Kentucky Bonnie Watson Coleman, New Jersey Mark Meadows, North Carolina Stacey E. Plaskett, Virgin Islands Ron DeSantis, Florida Val Butler Demings, Florida Dennis A. Ross, Florida Raja Krishnamoorthi, Illinois Mark Walker, North Carolina Jamie Raskin, Maryland Rod Blum, Iowa Peter Welch, Vermont Jody B. Hice, Georgia Matthew Cartwright, Pennsylvania Steve Russell, Oklahoma Mark DeSaulnier, California Glenn Grothman, Wisconsin John Sarbanes, Maryland Will Hurd, Texas Gary J. Palmer, Alabama James Comer, Kentucky Paul Mitchell, Michigan JONATHAN SKLADANY, Majority Staff Director WILLIAM MCKENNA General Counsel KEVIN ORTIZ, Professional Staff Member SHARON CASEY, Deputy Chief Clerk DAVID RAPALLO, Minority Staff Director (II) VerDate Nov 24 2008 10:28 Sep 12, 2017 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 H:\26558.TXT APRIL KING-6430 with DISTILLER C O N T E N T S Page Hearing held on May 18, 2017 ............................................................................... 1 WITNESSES Mr. Joseph Kile, Assistant Director for Microeconomic Studies, Congressional Budget Office Oral Statement ................................................................................................. 7 Written Statement ............................................................................................ 9 Mr. Andrew Biggs, Resident Scholar, American Enterprise Institute Oral Statement ................................................................................................. 32 Written Statement ............................................................................................ 34 Ms. Rachel Greszler, Research Fellow in Economics, Budget and Entitle- ments, The Heritage Foundation Oral Statement ................................................................................................. 40 Written Statement ............................................................................................ 42 Mr. Robert Goldenkoff, Director of Strategic Issues, U.S. Government Ac- countability Office Oral Statement ................................................................................................. 52 Written Statement ............................................................................................ 54 Ms. Jacqueline Simon, Public Policy Director, American Federation of Govern- ment Employees Oral Statement ................................................................................................. 72 Written Statement ............................................................................................ 74 APPENDIX Senior Executives Association Statement submitted by Mr. Connolly ............... 132 The National Treasury Employees Union Statement submitted by Mr. Connolly ................................................................................................................ 134 National Association of Active and Retired Federal Employees Statement submitted by Mr. Connolly .................................................................................. 141 Center on Budget and Policy Priorities Report submitted by Mr. Sarbanes ...... 146 Response from Mr. Kile, CBO, to Questions for the Record ................................ 151 Response from Mr. Biggs, AEI, to Questions for the Record ............................... 154 Response from Ms. Greszler, Heritage Foundation, to Questions for the Record ................................................................................................................... 160 Response from Mr. Goldenkoff, GAO, to Questions for the Record ..................... 166 (III) VerDate Nov 24 2008 10:28 Sep 12, 2017 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 H:\26558.TXT APRIL KING-6430 with DISTILLER VerDate Nov 24 2008 10:28 Sep 12, 2017 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 H:\26558.TXT APRIL KING-6430 with DISTILLER FEDERAL EMPLOYEE COMPENSATION: AN UPDATE Thursday, May 18, 2017 HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. The committee met, pursuant to call, at 9:00 a.m., in Room 2154, Rayburn House Office Building, Hon. Mark Meadows presiding. Present: Representatives Meadows, Duncan, Issa, Jordan, Amash, Gosar, Farenthold, DeSantis, Ross, Walker, Blum, Hice, Russell, Grothman, Hurd, Palmer, Mitchell, Cummings, Maloney, Norton, Clay, Lynch, Connolly, Kelly, Lawrence, Watson Coleman, Plaskett, Demings, Krishnamoorthi, Raskin, Welch, Cartwright, DeSaulnier, and Sarbanes. Mr. MEADOWS. The Committee on Oversight and Government Reform will come to order. And without objection, the chair is au- thorized to declare a recess at any time. The United States Federal Government plays an important role in the lives of its citizens, and it needs a world-class workforce for maximum effectiveness. The government must acquire and retain top talent, especially in mission-critical occupations such as cybersecurity experts and economists. However, the current Federal pay and benefits structure is really not conducive in my opinion to this goal. The general schedule, the pay schedule for the white-collar workers rewards tenure rather than performance, and the problem with this system is that it cre- ates a two-fold problem: One, taxpayers are stuck paying for overly generous compensation packages in comparison to private sector salaries for a comparable job; and two, the Federal Government is unable to adequately recruit and compensate top talent in other fields. Additionally, we need a Federal retirement system that is re- sponsive to the needs of a transient millennial workforce. And in an era when employees are highly mobile and can frequently change jobs, it makes no sense to have an archaic pension system that is designed for a workforce that stays in place for decades. Simply put, the current system is expensive and does not incentivize the best and brightest to join and stay in the Federal workforce. According to the Office of Management and Budget, in fiscal year 2015 more than two million full-time-equivalent non- postal individuals were employed in the executive branch, and the cost to the Federal Government for these employees was nearly $256 billion in direct compensation and benefits. (1) VerDate Nov 24 2008 10:28 Sep 12, 2017 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 H:\26558.TXT APRIL KING-6430 with DISTILLER 2 According to the Congressional Budget Office’s recently updated Private Sector Compensation Comparison Report, Federal employ- ees earn 17 percent more in total compensation than a comparable private sector employee. The CBO analysis might not tell the entire story either. Other analyses conducted by the Heritage Foundation, which we will hear from today; the American Enterprise Institute additionally who we will hear from found that Federal employees are compensated at even greater rates than private sector workers. Interestingly, the CBO report found that compensation differs high- er among higher workforce than with lower levels of education and lesser among those workers with advanced degrees. So we need to have a fiscally sustainable pay and benefits system that allows the Federal Government to reward performance and compensate others based on the importance of their position and not simply on tenure. And I will want to make one other further comment. These hear- ings can many times be construed as taking one direction or an- other, and I have committed not only to my colleagues to my right to make sure that we get it right for the Federal workforce. One of the most illuminating aspects that I have had is I have gone from workforce place to workforce place, some very large and some very small that I was the first Member of Congress to ever visit them. I have found that we have an incredibly dedicated Federal workforce. So today, I would like to use this hearing to not only get at the facts but also get an action plan where we can work in a bipartisan way to make sure that people are fairly compensated, but also to make sure that there is an incentive there to not only attract new Federal workers but also to make sure that the very thing that we are working
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