FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
January 29, 2019
Q4 hedge fund letters, conference, scoops etc
IN THIS ISSUE:
- Government Workers Have a Super Sweet Deal
- Don’t Feel Too Sorry For Unpaid Government Workers
- Federal Workers Get Far Better Pay and Benefits
- Federal Workers Have Unmatched Job Security
- “Essential” Versus “Non-Essential” Government Workers
Overview – Government Workers Have a Super Sweet Deal
Last Friday, I was watching Fox News before President Trump announced that he had temporarily ended the government shutdown. The Fox news panel was discussing how bad the shutdown was for the 800,000+ furloughed federal workers.
One of the panelists was a man named Jonas Max Ferris who appears fairly regularly on Fox’s financial programs. He was asked by the host what he thought was the most serious result of the 36-day long partial government shutdown. His answer floored me!
He opined that the worst effect of the record-long federal shutdown was that it would discourage Americans from working for the government in the future, out of fear that their pay could be discontinued at any time. Never mind that they were guaranteed to get 100% of their back pay as soon as the shutdown is ended. I was stunned that he said this was the worst aspect of the shutdown. Which got me to thinking…
Working for the government is one of the most sought-after occupations in this country. Federal government workers make a LOT more than most of their counterparts in the private sector; I’ll bet it’s a LOT more than you’re probably thinking, as I’ll discuss below.
Federal workers have a LOT more job benefits than their counterparts in the private sector, including Cadillac healthcare and near bulletproof job security – it’s almost impossible to get fired. As a result, many government workers are slackers at their jobs. It’s very sad, but true.
Even though the government shutdown has ended for three weeks, today I want to point out the incredible benefits of being a federal government employee. I think you’ll be surprised. I’ll also explain what it means to be an “essential” government worker versus “non-essential.”
Remember, I write about what interests me the most each week. Learning more about the incredible benefits government workers receive, and how many of them are slackers who can’t be fired, definitely peaked my interest last week. Let’s jump in.
Don’t Feel Too Sorry For Unpaid Government Workers
I was already working on the following topic before President Trump caved and ended the government shutdown last Friday afternoon. But even though the shutdown is over, at least for the next few weeks, Americans should know what a great deal it is to be a federal government employee.
While there’s no doubt the 36-day government shutdown was a challenge for many workers, particularly those who don’t budget their money well, Congress had already guaranteed they would get all of their back pay once the shutdown ended. They should receive that missed pay by the end of this week.
Certainly, the shutdown was a hardship for many of the 800,000 federal workers who were affected, but another way to look at it is, the 36 days off was an extended paid vacation for the furloughed workers – in addition to all the other benefits and vacation they receive.
Before I get into those very generous benefits, let me say for the record that I’m sure there are plenty of hardworking, dedicated federal workers. In fact, we have several clients who work for the government and clearly fall into that category. Yet according to recent reports, there are also many government employees that work as little as possible and abuse their positions. Sadly, there’s little their managers can do about it.
Let’s begin this discussion by looking at the various benefits government workers receive as compared to private sector workers doing similar type jobs. In short, they work fewer hours, get considerably better pay and they have much greater job security.
Federal Workers Get Far Better Pay and Benefits
An analysis of federal pay by the Congressional Budget Office a few years ago found that when you combine pay and benefits, many federal workers make 50% or more than their private sector counterparts doing similar jobs, depending on their education level. It also found that this gap has widened in recent years, because even when the economy was in a recession (2008-09), federal workers kept getting annual pay hikes.
A more recent analysis by the Cato Institute found that federal employees make as much as 76% more than private sector workers. Using data from the Labor Department’s Bureau of Economic Analysis, the Cato report found that the average federal employee pulls down $123,160 a year in pay and benefits, compared with an average of $69,901 in the private sector. It also found that this gap had increased since the 1990s, when it was 39%.
[*There are other studies that show the pay gap is not as wide as that shown above, but they usually don’t include benefits, which is a big part of federal workers’ compensation.]
Government employees also get generous amounts of paid time off, including nearly two weeks of paid sick leave, 10 federal holidays and at least two weeks paid vacation.
Not only do federal workers make more, they work less than those in the private sector. A recent Heritage Foundation analysis found that federal employees put in an average 38.7 hours a week, compared with 41.4 hours in the private sector.
Other reports show that government workers are 38% more likely to take time off work for illness or personal reasons, and miss 50% more hours than private sector workers. Here’s one case in point. After the Obama administration eliminated the International Labor Comparisons Office, which employed 16 economists, the private sector Conference Board took on the work. But instead of 16 workers, the Conference Board needed only three to do the same work.
Project Veritas recently produced a series of undercover videos, in which federal workers bragged about how little they work, and how much time they spend at work on outside, personal projects. Is it any surprise that the “quit rate” among federal workers is one-quarter the quit rate in the private sector?
Federal Workers Have Unmatched Job Security
What’s more, it is almost impossible to fire a federal worker. Data from the Bureau of Labor Statistics shows that the rate of layoffs and discharges among federal workers is one sixth the rate of the private sector.
A Government Accountability Office (GAO) audit found that it can take between five months to more than a year to fire a poor performing worker. Another GAO audit found that managers routinely hand out top performance ratings to federal workers. In fact, 99.5% got a “fully successful” rating or above in the latest reporting period. More than a third earned the highest rating of “outstanding.” The reason: high ratings make the manager look good.
At the other end of the spectrum, just 0.4% of federal workers got “minimally successful” and only 0.1% “unacceptable” ratings. This despite the fact that many government workers seem to pride themselves on doing as little as possible to stay in their jobs.
Worse still, federal workers who do cause serious problems at work often get put on paid administrative leave as punishment. Fully paid leave is punishment? How about we say fully paid additional vacation? That’s what it is!
Yet another GAO audit found that the government spent more than $3 billion in just two years for what amounted to these additional paid vacations that are supposed to be punishments. Each year, hundreds of federal workers receive a year or more of paid administrative leave as so-called punishment for various reasons.
“Essential” Versus “Non-Essential” Government Workers
Whenever there are government shutdowns, we hear about “essential” federal workers and “non-essential” workers. While these designations might seem obvious, I don’t get the feeling most Americans know what they mean.
Essential workers are those deemed to be important to the safety of Americans and national security. These workers are expected to continue working even though they aren’t getting paid. Non-essential workers, on the other hand, are not considered to be vital to safety or national security, and they are furloughed and do not continue working (ie – more paid vacation).
In the recent shutdown, apprx. 400,000 government workers were considered essential and the other 400,000 were considered non-essential. As for the total government workforce of apprx. 3.2 million, we don’t know if the percentage of essential versus non-essential is around equal.
As we’ll see below, numerous government agencies are dominated by non-essential workers.
Take a look at the percentage of non-essential workers at a sampling of government agencies:
- NASA: 95.4%
- Housing and Urban Development: 95.4%
- Securities and Exchange Commission: 93.5%
- Commerce Department: 86%
- Federal Trade Commission 76.7%
- Department of the Interior: 76%
- Department of Agriculture: 66.5%.
The point is, many of our largest government agencies have far more non-essential workers than essential ones. The question is, why do we need so many non-essential workers?
It is important to keep in mind that the just-ended government shutdown affected only 25% of the federal workforce. The other 75% was fully funded for 2019 last year.
At the end of the day, we have to wonder if at least half of these federal jobs could simply be eliminated to shrink the size of government and slow the explosion of our national debt. I say the answer is YES.
Yet to liberals, saying something like that is simply barbaric!
The bottom line is that a future shortage of government workers as a result of the recent government shutdown is ridiculous. With greatly outsized pay and benefits as compared to the private sector, and with little to no chance of being fired, demand for federal jobs will continue to flourish. And underperformance by federal workers will continue to increase.
So, who’s to blame for that? Congress! Both political parties have increased the federal budget, one way or the other, for years. That’s why we get more and more government workers. Congress should not only reduce the size of government but also hold federal employees accountable for their performance.
Best regards,
Gary D. Halbert
SPECIAL ARTICLES
So Much of Government in Washington is Non-Essential
Stage is Set For a Deal With the Democrats (good read)
Voter Fraud is Real, and It’s Not Just in Texas
Gary’s Between the Lines Blog: Almost 80% of Americans Live Paycheck to Paycheck
