OPM Director Wants Federal Workers to Join Retirement Race to the Bottom

AP Photo/Jacquelyn Martin

The Office of Personnel Management in Washington

What better way to kick off Public Service Recognition Week than a proposal to cut retirement benefits for current and former federal employees? Before the start of the annual celebration during the first full week of May, Office of Personnel Management Director Jeff Pon sent a letter to House Speaker Paul Ryan outlining the administration’s proposals to cut monthly retirement income for all future federal retirees and to require employees to fund a larger portion of their retirement. The proposals, which mirror requests made in the White House’s fiscal year 2018 budget, are sure further strain to an already frayed relationship between the Trump administration and federal workers. 

The requested changes would reduce cost-of-living adjustments for current retirees in the Civil Service Retirement System (CSRS), which provides retirement benefits for most federal workers hired before 1984. Such adjustments would also be eliminated for current and future retirees in the Federal Employees Retirement System (FERS), which replaced CSRS. Additionally, the letter called for the elimination of annuity supplements for federal employees receiving benefits under FERS who retire before Social Security benefits begin at age 62. 

Pon estimates that the requested changes would save taxpayers about $144 billion over the next decade and “bring federal benefits more in line with the private sector.” In the last three decades, private-sector workers have become increasingly dependent on personal savings for retirement, a problem exacerbated by a decline in union power and corporate officials’ fixation on stock prices rather than employee benefits. In 1979, nearly 40 percent of private-sector employees had some sort of defined benefits plan for retirement; by 2011, less than 15 percent of employees enjoyed those benefits. Employers continue to freeze defined benefits plans, instead urging employees to rely on defined contributions to retirement accounts as a supplement to Social Security payouts (about $14,000 dollars a year, on average). 

But the problem with having workers rely on retirement accounts is that nearly half of all U.S. families don’t have one, according the Federal Reserve's 2016 Survey of Consumer Finances. Even if a person has an account, a comfortable retirement is far from guaranteed. A 2017 survey of U.S. workers conducted by the nonpartisan Employee Benefit Research Institute in Washington found that 47 percent of workers reported that the total value of their household savings and investments was less than $25,000 (excluding home value and any pension plans). Nearly a quarter said they had less $1,000 in savings.

Tensions between the Trump administration and the federal civilian workforce predate the OPM chief’s letter. As a candidate, Trump delighted in scapegoating civil servants, using the administrative state as a punching bag and pledging to “drain the swamp” in Washington. As president, Trump has implemented a hiring freeze and called on lawmakers tomake it easier to fire federal employees. Meanwhile, former Cabinet members, such as Rex Tillerson, and current ones like Scott Pruitt, have made federal agencies uncomfortable places for conscientious employees, precipitating a mass exodus of career civil servants. 

Pon took to the stage at a Washington town hall hosted by the nonprofit Partnership for Public Service on Wednesday to defend the proposals, including the administration’s plan to freeze all pay raises for civilian federal workers in 2019. Compensation data needed to be collected; the freeze would create an opportunity to “right-size” the pay for different positions. According to a Government Executive report, Pon noted, “Then we can try to right-size the underpaid jobs, and then the overpaid ones will take care of themselves through attrition.” 

Civil servants in good standing who opt to work in the private sector also should be allowed to return to government employment without having to go through a competitive hiring process, according to the OPM director. And the government must adapt its retirement benefits to a modern workforce more likely to switch jobs than remain with one employer throughout their entire career.

“We’d like to provide defined contribution programs, and we want to make sure the federal employee can own their investment, take it with them, and come in and come out of government,” he said. “I don’t believe we should look at it as having a federal job for 30 years, retire, and then have a lifetime retirement anymore.”

Pon’s plan would do little to address the troubling revolving-door phenomenon between Washington and the private sector. But more worrying still is this administration’s overall vision for public-sector workers who, under this OPM plan, would be one step closer to joining the  the gig economy of Uber drivers and Taskrabbits, with no job security and few benefits as they try fitfully to save for retirement—that is, if they can actually ever stop working.

“It is especially disheartening that during Public Service Recognition Week, instead of honoring our public servants, we are having to defend them from plans to slash their paychecks and undermine their retirement security,” National Treasury Employees Union President Tony Reardon said in a statement. “These proposals not only hurt middle-class public employees financially, they are insulting to the men and women who have dedicated their careers to serving the American taxpayers.”

Pon’s goal of pushing civil service reform through Congress by midterm elections in November is ambitious, and one that should worry government employees. Slashing pay and benefits for federal workers is just another race to the bottom that employees in the private sector know all too well. 

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

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