Fed Up Feds May Have Good News on Shutdown

After enduring the longest shutdown in history, federal workers and contractors who have been facing the possibility of yet another shutdown may have some good news. On Monday night news broke that House and Senate conferees have agreed “in principle” for fiscal 2019 funding for the agencies that were affected by the recent partial shutdown.

The report is good news, but we have seen agreements “in principle” blow up on the way to being finalized. You may recall that the House and Senate had an agreement in December that would have avoided the recent shutdown. We know how that worked out. With that in mind, here are a few of the potential outcomes.

A Deal. There is a chance the deal will hold. Each side will give up something, they will sign a deal, the President will sign off, and the government will be funded until September 30, 2019. For most of our history, that is the way Washington worked. Everyone realized that compromise was the way civilized people operate. Everyone gives a little and declares victory. Let’s hope that is what happens here. I will believe it when I see a presidential signature.

Punt. If this agreement falls apart or takes too long to reduce to writing, the classic Washington move is to pass another short-term continuing resolution (CR) to buy more time. The recent shutdown ended with a short-term CR, which is why we are where we are. The funding for October 1, 2018 through the beginning of the recent shutdown was also a CR. CR is loosely translated as “we can’t do our jobs, so we will punt.” Outsiders may look at CRs and wonder what is wrong with them. Plenty. The biggest problem is uncertainty. Agencies do not know what their budget for the rest of the year will be, so they may limit hiring or contracts. Then they get an appropriation for the rest of the year that has to be obligated before midnight on September 30. Then they are beaten up for spending a lot of money in the last weeks of the fiscal year. Another big problem is that agencies cannot start new projects during a CR. That means many priorities are deferred. Anyone who knows anything about government will tell you CRs are a miserable way to run a government.

A Deal, But … Here is where it gets crazy. There is a chance that the parties will strike a deal, and then we will run into a wall. No, not the President’s wall. The debt ceiling. Another peculiar feature of modern politics is that appropriating money is not enough. Beginning with the Second Liberty Bond Act in 1917, we have a debt ceiling that limits the amount of money the government can borrow. When it comes to spending, where Congress has to appropriate money anyway, the purpose of the debt ceiling is mostly political. But the impacts are real. March 1, 2019 is the deadline for the debt ceiling to be raised or suspended. So it is possible that we could see a crisis averted by an appropriations deal, but then turn around and see another one just two weeks later. Conferees are attempting to include the debt ceiling increase in a comprehensive deal, but there is still no guarantee.

Another Shutdown Now or in October. This is the one most federal employees and contractors in the affected agencies are dreading. They are starting to recover from the five week shutdown that just ended. In fact, some are still dealing with back pay issues and many contractors are not getting back pay at all. The logical take on another shutdown is that it would only last a few days and then the politicians would come to their senses. I used to think that way. But — look at what has happened. The Budget Control Act of 2011 (the resolution of the 2011 debt ceiling crisis) introduced us to sequestration. You may recall that sequestration was supposed to be the legislative equivalent of a gun to the head. The outcomes would be so bad that members of Congress would get their act together and pass appropriations bills. And we know how that worked out. Many people (including me) thought the last shutdown would be brief because the Republicans would want it to end while they still controlled the House of Representatives. And we know how that worked out. The bottom line is that traditional expectations of things happening in Washington are no longer valid. Would another shutdown be viewed by most people as a total failure of the political process? Yes. Would anyone really win? No. Will it happen? Maybe. Even if we see an agreement to avert a shutdown now, appropriators will have to start working on funding for fiscal year 2020 that begins on October 1. Maybe the parties will not want to go into an election year with another failure on their hands. Maybe they will think they should play hardball to appeal to their base voters. Who knows?

After working in and around federal HR for 40 years, I am growing more worried about the impact of shutdowns. The effect on workers is obvious. Another protracted shutdown could be financially ruinous for some people. The longer term effect of the recent shutdown and the continuing uncertainty is that agencies will be more likely to see increased turnover and they will have far more difficulty hiring new people to replace them. Some turnover will be from retirements. While that will be bad, what is even worse is turnover of people who are not eligible for retirement, but who are simply fed up with government and political game playing. For both retirees and the younger folks who might go, guess who is most likely to leave? High performers in high-demand jobs.

So — if we start seeing high performers in the most in-demand jobs leaving, how likely is that agencies will be able to replace them? Let’s see. The hiring process is broken. The government looks like a far more risky place to work than in the past. And there is little likelihood the political situation is going to change soon. The math on that one is simple.

If agencies cannot hire the talent they need, some would argue that they can just outsource the work. The problem is that contractors got hit in the last shutdown too. One question that applicants are likely to ask is “Did any of your employees lose pay in the government shutdown?” If the answer is yes, those companies may find it is much harder to get top talent to say yes. So “just outsource it” is not a good response.

Longtime readers know I am usually more optimistic than this post sounds. I have to admit I cannot blame people who say they would not go to work for the government. In fact, if we see another shutdown this week or in October, or another debt ceiling crisis, or both, my long-standing recommendation that young people seriously consider government as a career may finally change.

Am I fed up? Yes. Are you?


The Earthquake That May Cause a Retirement Tsunami

We have been hearing for years that the federal government was facing a “retirement tsunami” because of the aging federal workforce. During all of those years I have maintained that the fears of a retirement tsunami were completely overblown and were based on faulty use of workforce data.

Here is the problem – most projections look at the number of federal workers eligible for retirement today, then look five years or so down the road and count the number of folks eligible for retirement. That would be fine if the workforce were static, but it is not. Many of the people who are eligible to retire do just that – they leave. So the number of people eligible to retire never reaches the massive percentage that are projected. Just a few years ago I was seeing projections that 30 percent of the workforce would be eligible to retire now. Since then, more than 200,000 people retired, and the number eligible to retire is about 14 percent of the 1.95 million permanent federal employees.

So why the headline about a retirement tsunami? At the same time I have been arguing that we should not expect a retirement tsunami, I have also said the large number of federal workers eligible for retirement presents both an opportunity and a risk. The opportunity is that people who are eligible for retirement are more likely to take a buyout when it is offered. Having a large number of people who can retire means agencies that need to reshape their workforce have a relatively easy and low cost way to do it. Offer buyouts and a lot of people will happily leave.

The risk is that people who are eligible to retire are also far more susceptible to “the hell with it” moments. Employees who are eligible to retire and who get frustrated with work or the political situation, or anything else, are far more able to punch out and leave the federal government. In recent years the number of retirements is actually surprising constant, ranging from 62,000 to 69,000 between fiscal 2011 and 2017. Events that cause a spike in employee dissatisfaction or crush morale are a problem. What happened with the recent partial shutdown is a great example of that type of event. People are angry, depressed, and mostly not optimistic that our political leaders are going to get their act together. The shutdown ended with an agreement to reopen the government until February 15, 2019. That means in a bit over two weeks, we could be in the same mess again.

If that happens, it may be the earthquake that causes the retirement tsunami to finally strike. If a third of the people who are eligible to retire decide to leave this year, we could see the number of retirements increase by tens of thousands. We already know that the federal hiring process is broken. We know that the government is struggling to hire young people. What happens if we suddenly have an extra 30 or 40 thousand jobs to fill? Some agencies will be overwhelmed by the vacancies and will not be able to fill them in anything resembling a reasonable time.

As bad as hiring numbers have been, imagine what they will be like now. The government is still a good employer, but the pitch to potential new hires is certainly complicated by seven weeks of shutdown. If we add another shutdown to that, agencies are going to struggle to explain why it is still a good idea to come to work for Uncle Sam. Good pay? Check. Good benefits? Check. Interesting work? Check. A reliable paycheck? Maybe. Being used as a political pawn whenever it is convenient? Sadly, yes.

Being able to fill behind retirees is a problem, but it is not even the most troubling aspect of a possible shutdown-induced wave of retirements. The real risk is the loss of expertise. Those of us who understand talent management in government know that there is a tremendous amount of expertise in government that is not easily replaced. When agencies lose people who know the ins and outs of critical programs, and who know how to get things done in government, new hires cannot easily fill the gap. They do not know how government works. They do not know why a program is the way it is, and the problems the agency experiences. They may have the basics, but not the depth. Add to that the fact that the government is generally failing in its efforts to bring younger people on board, and what we see is a formula for a disaster. The truth is that the government can be broken, and a widespread loss of expertise is one of the ways it can happen.

We are fortunate to have so many federal workers who are committed to the missions they carry out They are public servants who bring considerable expertise to critical programs. We cannot afford to break them and push them out the door.