Do We Need a Million Fewer Federal Employees?

The Washington Post published an interesting opinion piece on August 29, suggesting the best way to have a better and smaller government is to hire another million Federal employees between now and 2035. The author makes the argument that many Federal programs are operated by state and local government, for-profit contractors and not-for-profit grantees. He also says moving much of that work back to direct performance by Federal employees could reduce cost, generate economies of scale, and result in overall government spending going down. He makes the argument that the number of Federal employees relative to the population of the United States is far lower than it was in 1965. To help make the point that there are too many contractors, the article also says the Department of Homeland Security has more contractors than Federal employees, citing a report from 2010.

DHS Does Not Have 200,000 Contractors

I was Chief Human Capital Officer for DHS in 2010. The Post article was correct when it said DHS reported it had more contractors than Feds. What is missing is that DHS later corrected that number and it actually had less than 100K contractors.

Hire a Million or Fire a Million?

The problem with some of these numbers is that we can make them say whatever we want them to say, based upon our biases and how we analyze and present the data. Using employment data we can argue we should hire a million Feds or that we should fire a million Feds or anything in between. The “hire another million Feds” argument goes like this: We currently have 2,038,000 non-postal Federal employees. The current U.S. population is 316,000,000. That means we have 155 residents per Federal employee. In 1965, we had a population of 193,000,000 and 1,900,000 Federal employees, for a ratio of 102 residents per employee. We have far fewer employees per U.S. resident than we had 49 years ago, so we have shrunk the Federal workforce considerably, at least when in terms of the Fed-to-resident ratio. The Office of Management and Budget cites similar numbers in their Analytical Perspectives on the FY 2013 budget submission, going back to the 1950s, when there were 92 workers for every resident. OMB used the numbers to point out that the Federal workforce is becoming far more highly skilled, but is not growing in real numbers. The Post article argues that the government should hire another million employees by 2035 and transition services back to the government from states, localities, contractors and non-profit grantees. A million new Feds is a nice number and it makes for an interesting headline, but it does not necessarily make good public policy.

Whether we believe the government needs more or fewer people, we should make the case based on the work that needs to be done, the benefits to the taxpayers, and the most efficient way to get it done. The workforce to population comparison does not do that. It takes two data points – population and Federal jobs – links them as top line numbers, then proceeds to argue that the number should be higher today because the ratio has changed. The problem with that is that our nation, our expectations of government, the world, the nature of work, technology, and virtually everything else has changed. Comparing the size of the 1950s or 1960s workforce with the 2014 workforce at a macro level does not tell us anything that we can use to determine if the number is too high, too low, or where it ought to be. When we look at the number of employees, the number of contractors or the number of grantees, we need to dig a lot deeper in the numbers before we make public policy.

The belief that government employment has failed to keep pace with the population is not new. OMB’s Analytical Perspectives addressed the issue directly –

“Fifty years ago, most white-collar Federal employees performed clerical tasks, such as posting Census figures in ledgers and retrieving taxpayer records from file rooms. Today their jobs are vastly different, requiring advanced skills to serve a knowledge-based economy. Professionals such as doctors, engineers, scientists, statisticians, and lawyers now make up a large portion of the Federal workforce. More than half (55 percent) of Federal workers work in the nine highest-paying occupation groups as judges, engineers, scientists, nuclear plant inspectors, etc., compared to about a third (33 percent) of private sector workers in those same nine highest paying occupation groups. In contrast, 45 percent of private sector workers work in the seven lowest-paying occupation groups as cooks, janitors, service workers, clerks, laborers, manufacturing workers, etc. About 26 percent of Federal workers work in those seven lowest-paying occupation groups. Between 1981 and 2011, the proportion of the Federal workforce in clerical occupations fell from 19.4 percent to 5.1 percent of the workforce, and the proportion of blue-collar workers fell from 22.0 percent to 9.7 percent.”

OMB rightly pointed out that the workforce of today is far different from what we had in the 1950s and 1960s. Most readers are probably too young to remember, but in 1965 most offices were full of clerks. In fact, when the Classification Act was passed in 1949, the work force was mostly clerical. A Washington Post article from January 2014 put the number at three quarters of the workforce. (In the 1950s we had about 400,000 blue collar employees, so it is more likely that 3/4 of white collar employees were clerks.)

Where did all of those clerks go?

1950s and 1960s offices were full of clerks doing paperwork. They were pulling paper files from file cabinets. They were processing personnel actions using paper documents and paper official personnel folders. They did bookkeeping (using paper ledgers), they worked at telephone switchboards. And they typed. On typewriters. That work is mostly gone due to automation. People input their own work on the computers sitting on their desks. The idea that we would pay someone to write something with a pen and paper and then hand it off to another person to use a typewriter or word processing software to finish it is a relic of the past. The idea of accounting technicians by the thousands doing double entry bookkeeping in paper ledgers is just as dead. Typewriters and telephone switchboards are museum pieces. The nature of work in the Federal government has changed so radically that comparing top line 1950s and 1960s employment ratios to today tells us nothing. The more accurate comparison of 1950s and 1960s government to 2014 is the white collar nonclerical workforce, because the role of government is defined far more by higher-skilled and higher-paying occupations than by clerical and blue collar jobs.  I say that because most clerical work is done to facilitate other , more substantive, work. Most blue collar work is either maintaining facilities (another example of facilitating other work) or repairing boats, ships and aircraft. If we correct for the number of blue collar and clerical positions in government in the 1950s and 1960s, we get an entirely different view of the ratio of employees to residents. I have included a chart with all the numbers , including the resident to non clerical white collar employee ratio at the end of this post for those folks who want to see details.

In 1955 we had 503 residents per non-clerical white collar employee – today we have 183. The workforce performing substantive government work has grown a lot. As technology moved into government, it displaced clerical workers. The white collar workforce fluctuated over the years, but the number of non-clerical white collar workers has continued to grow. In just the last 5 years, the number of Federal employees started at 2,038,000, rose for a few years, and is now back to 2,038,00, yet the size of the clerical workforce has dropped from 151,000 in 2009 to 123,000 today and the blue collar workforce has dropped from 207,000 to 189,000. Using the comparison of nonclerical white collar work in the past and today, one could make the argument we have a million too many Federal employees. It is an absurd idea, but the idea of laying off a million Feds and cutting the budget more than $108 billion is about as realistic as hiring a million. Neither is going to happen, because neither is based on a realistic analysis of the work that needs to be done, the political environment, our economic conditions, or any of countless other data points that must go into any discussion of the right size of the workforce.

 

The Details

Federal Employment vs Population 2

 

10 thoughts on “Do We Need a Million Fewer Federal Employees?

  1. John Tomlin says:

    This is a very important debate, but the real issue, in my humble opinion, is whether or not we should pay the private sector to make a profit doing the public’s work. For example, before WW2, most US Navy warships were designed by the Navy and built in Naval shipyards, staffed predominantly with civilian Navy employees. Now designs are prepared by private sector firms and ships are built in privately-owned yards. Is this cost effective?

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    • Jeff Neal says:

      Thanks for taking the time to comment – I appreciate it. I think if you check the numbers on WWII ships, you will find many, if not most, were built in private shipyards. Only 11 of about 25 Essex class carrier, for example, were built in Navy Yards. The rest were built by commercial shipbuilders (mostly Newport News shipbuilding). The Navy built the Iowa class battleships, but almost all of the large destroyers (such as the Fletcher class) were built in private yards.

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      • John Tomlin says:

        Very true, but only because the demand far outstripped the Navy’s yard capacity. With the small number of ships being built today, I’d argue it would be better for the Navy to build them. The cost of maintaining an industrial base could be an issue, but when the WW2 workload disappeared, the private yards and their workforces disappeared with it. Tony Cope wrote a very interesting book titled “On the Swing Shift” about building Liberty ships in Savannah, Georgia. The most interesting part, to me, was how the city helped get the yard going and how the workforce was developed.

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  2. George Tobin says:

    Interesting perspective. Thought-provoking article. I’m glad the article touched on the much increased automation in the overall environment over the last 50 years. By any measure I would have absolutely expected the ratio of feds to poulation to be lower. In fact, I would the current ratio of 1 fed per 155 US citizens/residents seems as compared o 1 per 102 in the 1960’s is what I would have expected. In fact, I’m thinking the ratio should move even closer to 1 employee per every 200 US residents as we get better at technology assimilation, the workforce gets younger and we get better at leveraging resources and technology.

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    • John Tomlin says:

      Increasing the application of technology would reduce one need but could very easily lead to increases in the number of folks working with the increasing amounts of information provided by the technology. The other important variable in all this is just what is the public’s expectation of the Federal workforce, and, by extension, the Federal government. As an entity, the Federal government, or any other governmental entity (state, local, etc.), can achieve things desired by the public but not doable by the public in the private marketplace. Look at the DC area rail transit system. It’s something the public wants (and needs) but there’s no way the public could have designed, funded, engineered, and built the system by itself.

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  3. Jay Kresge says:

    The resident-to-employee ratio in that last photo is wrong.

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  4. As a retired Federal Employee, I can tell you that too much money is waste hiring contractors. They pay the companies a fortune and still the feds have to check on what they do and this takes additional money and time. Several years ago it was decided that work that was inherently government should be done by government employees and this was supposed to be done. However, it never panned out that way and more and more employees were lost due to contracting.

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