Big Government, Issues

The real 1 percent: The federal workforce

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The non-defense, non-postal service part of the federal government comprises about 2 million employees — about 1.37 percent of the total U.S. workforce.

Image Credit: A dazed memory CC by SA 3.0

Since 2004, federal government average hourly earnings have increased from $28.57 to $39.19 in 2016, while private sector average hourly earnings have only increased from $20.91 to $25.67, according to data compiled by the Bureau of Labor Statistics.

On average, private sector workers only make about 65.5 percent of their federal government counterparts.

The states with the most civil service federal workers are California (171,820), Virginia (149,560), D.C. (148,610), Texas (142,840) and Maryland (135,770). The states with the highest hourly pay are D.C. ($54.57), Maryland ($49.01), Virginia ($43.92), New Jersey ($42.54), Rhode Island ($42.31), Connecticut ($40.40), Massachusetts ($40.24), New Hampshire ($40.23) and California ($39.62).

Federal government employees also outpace private sector pay in the 3 key regions of the government, where private sector workers receive $39.88 an hour in D.C., $26.98 in Maryland and $25.53 in Virginia in average hourly earnings.

The cause?

On top of cost of living adjustments, there is a seniority system in the federal workforce, where the longer you have been on the job, the higher the step you are and the more you get paid, automatically. Then there is the federal system of generous benefits and job security — it is next to impossible to fire a federal employee — all of which creates an incentive to stay there, thus exacerbating the situation.

There are also near-limitless resources for the federal government to borrow funds that states and localities lack. Federal government employees can see pay increases even in bad economic times.

Also, thanks to slow-growth policies by that very federal workforce and successive administrations and Congresses, with ever increasing regulation of the private sector, trade deals that have outsourced production, and importing low cost labor via lax immigration policies, the economy, which incomes are tied to, is growing slower than ever.

The pay disparity also creates a perverse incentive to work for the government, attracting good talent away from the private sector.

In that sense, it is the federal government that is the true 1 percent, profiting off of the misery of everyone else.

At the state and local level, government employees are more on par with their private sector counterparts, earning an average $26.41 an hour at the state level and $24.91 at the local government level, compared to $25.67 an hour for the private sector nationally.

In the meantime, the perverse incentives created are arguably shifting the political balance of power in the U.S., particularly by peopling the Commonwealth of Virginia with federal employees, which has tilted Democrat in the past three presidential elections.

To win in 2016, as a result, President Donald Trump had to turn to Rust Belt — Pennsylvania, Michigan, Ohio and Wisconsin — to those blue-collar conservative and union households that have been left behind in the current economy and had previously voted for Obama.

Politically, this creates an opportunity for the Trump administration using the disparity to take on civil service reform in Washington, D.C. and around the country. After all, only about 450,000 of the 2.1 million civil service federal employees live in D.C., Virginia and Maryland. The vast majority live all over the country.

You want performance-based pay? If the federal government is to be judged by the health of the economy, then by that standard it has been performing terribly and has been for some time.

Trump and Congress could say that for every year the economy underperforms below the post-World War II average of 2.9 percent — a level not seen since 2005 — then all non-essential personnel in the federal government gets a pay cut.

There is a certain element of class warfare to this logic, but on the other hand, nothing says “drain the swamp” quite like sticking it to the government class. It’s about time the people’s representatives in Congress remind the administrative state who’s really the boss.

This is a guest post by Robert Romano senior editor of Americans for Limited Government.

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