Multiple Budget Functions
Reduce the Size of the Federal Workforce Through Attrition
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
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This option would take effect in October 2017.
About 20 percent of the savings reflect intragovernmental transfers and thus would not reduce the deficit.
In 2015, the federal government employed about 2.2 million civilian workers, excluding Postal Service employees. About 45 percent worked in the Department of Defense or Department of Homeland Security, and roughly 15 percent were employed by the Department of Veterans Affairs. The rest of the civilian workforce worked in agencies that provide a variety of public services—regulating businesses, investigating crimes, collecting taxes, and administering programs for the elderly, poor, and disabled, for example. The largest costs that the federal government incurred for those employees were for salaries, future retirement benefits, and health insurance.
This option would reduce the number of federal civilian employees at certain agencies by 10 percent by prohibiting those agencies from hiring more than one employee for every three workers who left. The President would be allowed to exempt an agency from the requirement under certain conditions—because of a national security concern or an extraordinary emergency, for instance, or if the performance of a critical mission required doing so. On the basis of the portion of employees that continued working during the two most recent government shutdowns, the Congressional Budget Office estimates that about two-thirds of the federal civilian workforce would be exempt. Thus, given recent rates of employee separation, CBO estimates that under this option, the workforce would be reduced by about 70,000 employees by 2021. Agencies would be limited in their ability to replace those employees with contractors because appropriations would be reduced accordingly. Discretionary outlays would be reduced by $50 billion from 2018 through 2026, CBO estimates.
An argument for this option is that some agencies could continue to provide crucial services with a smaller workforce by working more efficiently and by eliminating services that are not cost-effective. The number of management and supervisory positions has increased in many agencies as the workforce has aged, and research suggests that, in some cases, the additional layers of management hamper performance. This option could encourage agencies to reduce the number of managers and supervisors through attrition as people in those positions retired over the next few years. Research also suggests that federal workers earn more in occupations that do not require a college degree than do their counterparts in the private sector. If private-sector compensation is indicative of the value of those positions, then the savings generated by trimming that part of the workforce would exceed the value of the services that those jobs produce.
An argument against this option is that trends in federal employment suggest that the federal workforce may already be under strain from cost-cutting measures and that further reductions could impair the government’s ability to fulfill parts of its mission. The federal civilian workforce is about the same size as it was 20 years ago, although both the number of people the government serves (as measured by the population of the United States) and federal spending per capita have grown substantially since that time. After declining throughout most of the 1990s, federal employment has increased moderately over the past 15 years. That growth largely reflects the establishment of the Department of Homeland Security and the increase in the volume of service that the Department of Veterans Affairs provides to veterans. Workforce reductions at those or other agencies would probably reduce the quality and quantity of some of the services provided and could have other negative effects, such as increasing the amount of fraud and abuse in some government programs. Moreover, because this option would be phased in as workers left their positions, federal agencies would have little control over the timing of the workforce reduction.