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Federal Employees News Digest : May 20, 2013
May 20, 2013 Vol. 62, No. 42 3 Visit us on the Internet at www.FederalDaily.com lower-grade and lower-step employees. So there's payroll savings also in this change in the demographic complexion of the work- force. And overall payroll, as I said, also has declined---last year was the first year since 1996 that the overall federal payroll declined. All these figures you just mentioned are at the national level, correct? Fuller: Yes. Remember, the approxi- mately 10 percent retirement rate is an OPM estimate---if these trends continue as they have done the first few months of this calendar year. Now, locally, some 35 percent of the federal workforce in the Washington area already qualifies for their pensions. The expectation is that as the private-sector employment picture likely strengthens---and working for the federal government could become rela- tively more onerous, with wage freezes and greater unhappiness from some fed- eral workers---more federal workers may bail out. That's the thinking right now. How are the effects of sequester and furloughs hitting the federal workforce? Fuller: The bottom line is that the [major] effects of sequester are really already being felt. In fact, the impacts of last year may exceed what we experience this year. If you look at 2012, we shed about 5,000 federal workers, and payroll declined slightly---and then on the pro- curement savings side we shaved about $5 billion. And you can get an idea of what we'll get this year by looking at last year's cuts. Why do you cite last year with respect to furloughs? We didn't yet have fur- loughs. Fuller: Right, last year we didn't have furloughs. But agencies were already act- ing more like private-sector companies in a recession, and were saving money. They knew times were tight and they anticipated further cuts---and so they started managing payroll and workforce in a way that would produce savings. They were in a wage freeze, for years now. As normal vacancies occurred, because of the demographics and age of the federal workforce, many agency managers slowed hiring specifically in order to save money. They were banking their bucks. That, in turn, is what has allowed the furloughs to be less severe at some agencies than others. Finally, the continuing resolution funding the government permitted more flexibility at some agencies---including DOD, which has just announced it's reducing its fur- loughs from 14 days to 11 days this year. Remember, they started out at 22 days of furloughs. They found more money than they thought they had. Did some savings come from other efficiencies, beyond greater numbers of retirements and slower hiring? Fuller: Yes, there are other kinds of efficiencies in play. Just like in the pri- vate sector, during the recession federal employees have had to work smarter and harder, getting their work done faster, with fewer hands---in part because they were motivated in various ways to do so by the situation. Greater efficiency is what happens during recessions. We sometimes think of it as only a private- sector phenomenon, with private com- panies employing various techniques. But the public sector uses these as well. Look back at what has been happening at the state and local level as of the last few years. Key question: Federal managers can't just keep finding new efficiencies to cover the cuts required under sequester, correct? That is, they can't for the next eight years "find" new money intend- ed for new hires but instead squir- reled away. If the sequester continues, the impacts will hit harder in coming years---right? Fuller: Not necessarily. It all depends on how the accounting and managing is done. The federal government will not be hit harder and harder on the payroll side of things. Once you cut---say, by $2 billion, locally, in the D.C. area--- that's it. You stay at that cut level, locally, and you don't grow on that front---at least for a while. On the procurement side of savings, once they've dropped to this level they don't have to drop any further---they stay at this level [of cuts next year]. They don't cut yet another $50 billion out. What projections do you have for feds, and their economic lives---as to their home prices, their community services, and the like? In the Washington area, and other areas where large numbers of feds live? Fuller: Certainly, at first glance, Washington would seem more vulner- able. But, not really. The slower it hits, and the longer it takes for the sequester cuts to show up in the local economy, the better the local economy is going to absorb those cutbacks. The private sector is now growing, even while the public sector is shrinking. Fortunately, the private sector's growth is accelerat- ing. The impacts will be worst in 2013. In 2014, even with the cutbacks, there will be substantially more growth due to private-sector growth. A lot of that gain, in my opinion, is because some of the uncertainty is leaving the economy. The private sector is already "right sized," it has a lot of capital in reserve, and the Congress has gone ahead and cut gov- ernment and there will be even more certainty from Congress, I'd say, by this fall, about spending. continued from page 1 Don’t miss our discussion of weekly news topics. Discuss these stories and more with your fellow federal workers at www.FederalSoup.com. continued on page 4
May 13, 2013
May 27, 2013