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False statements regarding the federal community continue to circulate in the media and within Congress. This misinformation threatens good policy making and makes it easier to unfairly target the federal community.
In order to better educate NARFE members, who in turn educate their members of Congress, NARFE publishes a myth vs. reality section in each narfe magazine. Below are previous debunked myths.
Myth: Members of Congress continue to vote themselves pay raises, while federal retirees receive small or nonexistent cost-of-living adjustments (COLAs) and federal employees receive small or no raises.
Reality: Members of Congress have not received a pay raise since 2009, having repeatedly voted to freeze their pay. The Ethics Reform Act of 1989 established an automatic annual adjustment formula for congressional raises based on the Employment Cost Index, which measures changes in private-sector wages. Any increase may not exceed the percentage base pay increase for General Schedule (GS) employees. However, Congress can choose to vote to freeze its pay, separate from the raises for federal employees, which it has done since 2009.
Myth: Cost-of-living adjustments (COLAs) for federal retirees are determined in the same manner as pay raises for federal employees.
Reality: COLAs and pay raises are determined differently. Yearly federal retiree annuity COLAs are provided under an automatic formula using the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). To calculate the COLA, the indices of July, August, and September are averaged and compared with the previous years’ third quarter average. The percentage increase, if any, determines the COLA. Congress and the president do not authorize or determine the COLA. The goal of a COLA is to help retirees’ annuities keep pace with inflation. Meanwhile, pay raises for federal employees must be authorized and determined by Congress or the president on a yearly basis. Pay raises are provided to employees to ensure their pay remains competitive with private-sector pay.
Myth: It is impossible to fire a federal employee.
Reality: From fiscal years 2000-2014, more than 77,000 full-time, permanent federal employees were fired as a result of performance and/or conduct issues, according to a May Merit Systems Protection Board (MSRP) report. This figure does not include an unknown number of additional employees who voluntarily resigned after being counseled that their performance was unacceptable.
Myth: Federal employees enjoy lavish pensions at the expense of taxpayers.
Reality: The average federal pension is quite modest. According to June 2015 data from the Office of Personnel Management, the median pension for retirees under the Civil Service Retirement System (CSRS) was less than $3,000 a month in fiscal year 2014. For employees hired after 1986 and in the Federal Employees Retirement System (FERS), the median monthly pension was less than $1,000.
CSRS employees do not pay into Social Security and, accordingly, do not receive Social Security benefits for their government service. If they paid into Social Security for a private-sector job, their Social Security benefits are greatly diminished under the Windfall Elimination Provision. FERS employees pay Social Security taxes at the same rate as private-sector employees and receive the same benefit.
Myth: Federal employees investing in the Thrift Savings Plan (TSP) G Fund are receiving a rate of return more generous than they should be, given the limited risk associated with this investment. This “sweetheart” deal is available to no other investor in this or any similar investment.
Reality: The TSP’s G Fund rate of return is identical to the current investment arrangement for the Social Security Trust Fund and the Civil Service Retirement and Disability Trust Fund. Deposits are invested in nonmarketable government securities, not only as a relatively risk-free investment but also for the convenience of the United States government in managing the public debt. During times when the public debt limit has been suspended or breached, the Secretary of the Treasury has accessed the G Fund to pay current bills. The rate of return has been historically low, around 2 percent.
Myth: Federal employees are more likely to be delinquent on their taxes compared to the rest of the U.S. population.
Reality: The general public is twice as likely to be tax delinquent compared to federal employees. According to data from a 2013 report by the Internal Revenue Service (IRS), employees in the federal government have a delinquency rate of 3.27 percent, compared to an 8.7 percent delinquency rate for the entire U.S. population.
The Treasury Department, which includes the IRS, has the lowest delinquency rate of all departments, at 1.1 percent. The House of Representatives has a tax delinquency rate of 4.9 percent, while the Senate’s rate is 3.2 percent. Those numbers refer to the tax delinquency rate of congressional staffers and some representatives and senators.
Myth: Private-sector employees are better educated than federal workers.
Reality: On average, federal employees are better educated. More than 25 percent have a master’s degree or above, compared to about 10 percent in the private sector. More than half are in the nine highest paying private-sector occupations, including lawyers, engineers and scientists, compared to about a third of the private sector. In fact, the federal government is the country’s largest employer of doctors.
Myth: The federal government doesn’t need a paid parental leave policy because employees can use a combination of their sick and annual leave, or forgo pay for 12 weeks.
Reality: It is true that federal employees can use a combination of accrued sick and annual leave after the birth or adoption of a child, or take 12 weeks of unpaid leave as allowed under law. However, based on their years of federal service, these parents may not have accrued 12 weeks of sick or annual leave. Additionally, it is not wise to deplete accrued sick leave. In order to compete for top talent, the federal government must offer paid parental leave, as most large private-sector companies do.
Myth: The federal workforce is larger than ever and growing.
Reality: A 2014 Bureau of Labor Statistics jobs report reveals the federal workforce is the smallest it has been since 1966. Meanwhile, according to U.S. Census data, the population in the United States has increased from about 197 million people in 1966 to approximately 320 million today, a 62 percent increase. While the U.S. population continues to grow, federal employment has been decreasing. In 2015, the government employed about 2.06 million workers.
Myth: Declining mail volume and increased competition have forced the U.S. Postal Service (USPS) to operate at a financial loss.
Reality: The USPS would be earning a profit if it were not required to prefund retirement health benefits at an accelerated rate. In 2006, as a way for the Congressional Budget Office to declare (“score”) a bill “deficit neutral,” Congress began requiring the USPS to prefund future retirement health benefits 75 years into the future over a 10-year period. Forcing the USPS to pay billions of dollars for a benefit for workers who have not yet been born is the single biggest reason for the deficit. No other public or private organization has such a mandate.
Myth: Members of Congress receive free health care for life.
Reality: Members of Congress have never received free health care. They pay a portion of their health insurance premiums and receive an employer contribution from the government, similar to other federal employees. Prior to the Affordable Care Act, members of Congress accessed their health insurance through the Federal Employees Health Benefits Program (FEHBP). However, unlike all other federal employees, who remain in FEHBP, members of Congress and their staff now receive health care through the Health Insurance Marketplace, also known as exchanges, which were created by the health care reform law. The employer contribution they receive is calculated in the same manner as for all other federal employees.
When members of Congress retire from the government, they are subject to the same rules of participation in FEHBP as other federal annuitants.
Myth: The two increases in retirement contributions for new federal employees hired in 2013 and 2014 will help shore up the Civil Service Retirement and Disability Fund (CSRDF).
Reality: The $21 billion that new federal employees will lose over 10 years from these increases in retirement contributions will not go toward bolstering the CSRDF.
When Congress forced federal employees to pay more toward their retirement the first time, they used the money to offset the cost of extending unemployment insurance. The second time, the money was used to offset sequestration budget cuts, which were instituted as a result of Congress and the White House failing to achieve a budget agreement.
According to the Congressional Research Service, “under the financing arrangement set out in current law, the system is not now and never will be ‘insolvent’ or without adequate budget authority for payment of benefits.”
A bill to repeal these two increases, the Federal Employee Pension Fairness Act (H.R. 5338), was introduced in the House by Rep. Donna Edwards, D-MD.
Myth: Federal employees are substantially overpaid compared to the private sector, with the average federal employee making well over $100,000.
Reality: In 2013, the Office of Personnel Management reported that the average salary for a full-time, permanent federal employee was roughly $79,000.
Comparing private-and public-sector wages proves difficult, as there are many factors that affect pay. In general, federal jobs are more likely to involve high levels of education and responsibility and require specialized training or a high-security clearance. For example, 44.3 percent of federal employees hold bachelor’s degrees, versus just 18.7 percent in the private sector.
A 2012 Congressional Budget Office report found that when benefits are weighed, America’s most educated and experienced federal workers earn about 18 percent less in total compensation than they would if they worked in the private sector. The report also found that federal workers with less experience and education earned slightly more than their counterparts in the private sector. However, the Federal Salary Council, which analyzes data from the Bureau of Labor Statistics, says that feds are underpaid by 35 percent when comparing jobs.
Myth: Senior Executive Service (SES) employees receive pay and retirement benefits that are not available to General Schedule (GS) employees.
Reality: Retirement benefits for SES employees are calculated in the same manner as non-SES employees. Their annuities are based on their highest three years of salary and subject to the 80 percent rule, as are those of other federal employees. The only difference in benefits is the lump-sum payment for unused annual leave, as SES employees may carry over 720 hours, compared to 240 for other employees.
Of note: SES employees do not receive locality pay, received years of smaller pay increases than GS employees and had their pay frozen for several years in the 1990s. On average, nearly a quarter of the SES earn the same as or less than GS employees.
Myth: In the end, federal employees furloughed in 2013 did not face any financial hardships as they all received back pay.
Reality: Federal employees furloughed as a result of sequestration budget cuts did not receive any back pay. Government data show roughly three-quarters of a million federal employees were affected, resulting in more than $1 billion in lost take home pay in 2013.
Those who were furloughed as a result of the 16-day government shutdown in October 2013 eventually did receive back pay. Still, during the shutdown, hundreds of thousands of federal employees did not receive their full paychecks, including many employees who were legally required to work during the lapse, causing significant anxiety and uncertainty.
Myth: The Federal Employees’ Compensation Act (FECA), which provides compensation benefits to civilian employees disabled or injured on the job, provides more income for recipients than they would have received if they had been able to keep working.
Reality: In fiscal year 2014, the program provided $2.9 billion in benefits to approximately 278,000 workers and survivors for work-related injuries or illnesses. Of these benefit payments, $1.8 billion was for wage-loss compensation, $951.3 million for medical and rehabilitation services, and $113.1 million for death benefit payments to surviving dependents. Using these numbers, the average wage-loss replacement was less than $6,500 annually.
FECA provides disability compensation based on the illness or injury. If the employee has no dependents, compensation is generally payable at the rate of two-thirds of predisability gross wages, tax-free; if the employee has one or more dependents, compensation is three-fourths of predisability gross wages, tax-free. FECA payments grow with the annual cost-of-living adjustment (COLA), while federal salaries are increased by Congress, typically at an amount greater than the COLA.
Myth: Most federal employees perform clerical tasks that do not require much skill and can be described as “paper pushers.”
Reality: Today’s federal workforce requires advanced skills to serve a knowledge-based economy. Federal employees must manage highly sensitive tasks that require great skill, experience and judgment. Professionals such as doctors, nurses, engineers, scientists, statisticians and lawyers now make up a large and growing portion of the federal workforce. For example, 2013 government data show that 18.5 percent of federal employees work in these fields, compared to only 9.3 percent of the private sector.
Myth: Members of Congress can retire and receive their full salary after serving just a single term.
Reality: Under current congressional retirement plans, members of Congress are eligible for a pension at age 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of services, or at any age after completing 25 years of service.
The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a member’s retirement annuity may not exceed 80 percent of his or her final salary. The average Civil Service Retirement System annual pension for members of Congress in 2013 was $72,660, and the average Federal Employees Retirement System annual pension for members of Congress in 2014 was $41,652.
Myth: Government shutdowns help save the United States money.
Reality: Government shutdowns actually cost the United States billions of dollars. Putting contingency plans in place, forfeiting user fees and other charges, paying higher contractor premiums, getting the government running again, and issuing back pay for federal employees not working during the shutdown result in a financial loss. Even without back pay for federal employees, the government would still lose money.
The Office of Management and Budget estimated that the 16 day government shutdown in 2013 cost taxpayers over $2.0 billion.
Myth: The USPS is funded by taxpayers and now must be bailed out by them.
Reality: The USPS receives no tax dollars for operating expenses. It relies solely on the sale of postage, products and services to fund its operations. The USPS does not need a bailout. Rather, the USPS needs to be relieved of some of the mandates Congress has imposed. This includes requiring it to prefund retiree health benefits over an accelerated, 10-year period, which costs the USPS billions of dollars for retirement benefits for workers who have not yet been born.
Myth: Federal employees enjoy generous, taxpayer funded health insurance.
Reality: Like most American workers, federal employees pay a share of their health insurance premiums, and their employer, the government, pays a share. The government’s share of premiums paid is set by law. For most federal employee annuitants, the government contribution equals the lesser of: 72 percent of the weighted average of premiums in effect each year for the entire Federal Employees Health Benefits Program, or 75 percent of the total premium for the particular plan an enrollee selects. In private industry, the employer share of self-only premiums average 79 percent according to the Bureau of Labor Statistics (BLS) National Compensation Survey, March 2013. For family coverage in the private sector, employer share averages 68 percent, according to the BLS.
Myth: Most federal employees work for social programs addressing health, education and welfare.
Reality: Roughly two-thirds of federal employees work for the Departments of Defense, Veterans Affairs and Homeland Security, protecting our country and supporting our military.
Myth: Members of Congress don’t pay into Social Security but collect benefits.
Reality: Under Public Law 98-21, Social Security coverage was required for all federal employees, including members of Congress, who entered federal service after 1983. The law also required all incumbent members to be covered regardless of when they entered Congress. Social Security tax is withheld from their paychecks at the same rate as all covered workers (6.2 percent).
Myth: Federal employees don’t pay Social Security payroll tax but receive its benefits.
Reality: Civil Service Retirement System employees do not pay into Social Security and, accordingly, do not receive any Social Security benefits for their government service. If they paid into Social Security for a job held in the private sector, their Social Security benefits are greatly diminished under the Windfall Elimination Provision. Employees under the Federal Employees Retirement System have Social Security withheld from their paychecks at the same rate as private-sector employees - 6.2 percent - and receive the same benefit.
Myth: The fiscal year 2015 funding bill passed in December 2014 allows the government to cut federal retiree pensions.
Reality: That bill does not include any provisions that would cut federal retiree pensions. It only affects pensions of individuals who are in failing private multi-employer pension plans that are insured by the Pension Benefit Guaranty Corporation, a government entity. Multi-employer plans (often negotiated by unions with multiple employers in a single industry) spread the risk of failure among many and were thought to self-insure against the risk of business failure. But when an entire industry fails or declines, it leads to underfunding of the pension plan. The budget bill included a provision that could result in cuts to current retirees’ benefits, but only if they are in a failing private multi-employer plan.
Myth: The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which the Bureau of Labor Statistics (BLS) uses to calculate cost-of-living adjustments (COLAs), does not take into account gas, housing and medical care.
Reality: The BLS divides the several hundred items it analyzes into eight groups to calculate the CPI-W. These groups are: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Within these groups, the prices of gas, housing and medical care are all considered.
Households included in the CPI-W meet two requirements: More than half of the household’s income must come from clerical or wage occupations, and at least one of the household’s earners must have been employed for at least 37 weeks during the previous 12 months.
NARFE contends that this population is not appropriate to determine seniors’ spending. For example, health care accounts for 13 percent of expenditures by Americans over age 65, compared to 5 percent for the general population. A switch to the Chained CPI would be an even less accurate reflection, while the CPI-E, which NARFE supports, would provide the most accurate calculation.
The Washington Post also detailed “5 Myths about Federal Workers”, which can be read here.
NARFE (National Active and Retired Federal Employees Association)
606 N. Washington St., Alexandria, VA 22314, Phone: (703) 838-7760, Fax: (703) 838-7785.
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