Revenue & Spending
Is the Federal Civilian Workforce Really Growing? Some Important Context
by Nick Schwellenbach, 2/11/2014
Congress's investigative arm, the Government Accountability Office (GAO), recently released its latest analysis of the executive branch's civilian government workforce, and it shows a modest increase between 2004 to 2012. However, the GAO's analysis does not take into account workforce reductions of around 70,000 in 2013, according to the Bureau of Labor Statistics (BLS). When the 28,000 full-time equivalent reductions from 2011 to 2012 are included, there has been a contraction of the federal civilian workforce of around 100,000 in the last three years.1 The report also leaves out significant context, which might lead readers to draw somewhat different conclusions about how the federal workforce has changed over time.
While the report makes it clear that only three agencies are responsible for the lion's share of growth, significant context is missing, namely: longer-term trends suggest a different picture of public-sector growth, and for-profit federal contract employees are not counted in these numbers. In particular, the picture can change significantly when contractors are included. One also has to dive into GAO's report to discover that most of the modest federal civilian workforce growth occurred between 2007 and 2009 and that numerous government agencies shrunk.
Wars and Emphasis on Border Security Have Led to Growth, But Many Agencies Shrunk
GAO's topline finding shows the federal government has been growing in size. From 2004 through 2012, the number of executive branch civilian employees grew 14 percent, from 1.88 million to 2.13 million, or by almost 257,000. Most of the increase occurred between 2007 and 2010; employment flattened between 2010 and 2011 and declined in both 2012 and 2013.
Just three of the 24 agencies studied by GAO explain 94 percent of the increase in government employees from 2004 through 2012: the Defense Department (DOD) added about 105,000 employees; the Department of Veterans Affairs (VA) added 90,000 employees; and the Department of Homeland Security (DHS) grew by about 47,000 employees. These departments make up about 60 percent of the federal civilian workforce.2
This growth in employment reflects major policy decisions. The conflicts the U.S. has been in since 9/11 have led to employment growth in the DOD and VA. The DOD added more civilians in part to avoid spending more on uniformed military and contractor personnel. Greater emphasis on border security and other aspects of security explains the personnel growth at DHS.
But even with these increases, DOD has fewer civilian employees than it had in the mid-1990s, when 350,000 civilian positions were eliminated. And as the war in Afghanistan draws to a close, it would be reasonable to see some reduction in the overall total force size, both civilian and uniformed, at the agency.3
Numerous Government Agencies Have Shed Employees Since 2004
In contrast to the three national security agencies that added substantial employees since 2004, 10 out of 24 agencies analyzed by GAO had fewer civilian employees in 2012 than in 2004. The decreases are no more than an average of two percent each year, according to GAO, but over several years, the decreases add up. The Center for Effective Government dove deeper into the data on the Office of Personnel Management's website and looked at the period of September 2003 through September 2013 for the agencies GAO identified as shrinking.
A Decade of Shrinking Workforces at Several Agencies
|Department of Agriculture||113,155||97,231||-14.1%|
|Department of Education||4,679||4,232||-9.6%|
|Department of Housing and Urban Development||10,534||8,747||-17.0%|
|Department of the Interior||78,315||71,766||-8.4%|
|Department of the Treasury||110,366||98,499||-10.8%|
|Environmental Protection Agency||18,923||16,950||-10.4%|
|General Services Administration||12,605||11,824||-6.2%|
|Social Security Administration||64,903||62,543||-3.6%|
|Source: Office of Personnel Management's Fedscope Database. Note: While GAO states that the Small Business Administration saw a shrinking workforce from 2004 to 2012, OPM data shows a substantial increase from September 2003 to September 2013.|
The Department of Transportation was unchanged. Aside from the big three agencies that saw increases – DOD, VA, DHS – the remaining 14,258 employee increase was divided between 10 other agencies.
Given that the large increases at the three agencies are the result of policy decisions as GAO states, one must consider whether the declines at the ten agencies and mild increases elsewhere also represent explicit policy decisions, made as a result of laws or other changing organizational mission, or whether these workforce cuts were just responses to austere budget realities since 2011.
Over the Decades, the Federal Workforce is a Declining Share of the Employed Population
The overall 14 percent growth in federal government employees from 2004 through 2012 should be put in context: the U.S. population grew by about 7.2 percent during this time. When 2013 reductions are factored in, along with continued population growth in 2013, the difference between the two is even smaller, somewhere around 10 percent government workforce growth to 8.4 percent population growth. If you take out DOD, DHS, and VA, there was only 4.4 percent growth in the federal workforce during the 2004 through 2013 period.
BLS projects a substantial drop of hundreds of thousands in the federal workforce (including the Postal Service, which was not examined by GAO) by 2022. While decisions on workforce size should not be made on what fraction of the population it represents, it's important to realize that over the last several decades, the federal workforce is a shrinking portion of those employed overall in the economy.
The point here is not just jobs – but needs. The federal workforce serves the nation – it needs to be appropriately sized to deal with the challenges we face. For instance, when the number of inspectors falls while an industry grows in size – everything else being equal – it's not unreasonable to expect more problems to arise.
The GAO report and this analysis generally refer to the federal workforce as the part of the federal sector excluding the Postal Service and the uniformed military. Whether including the uniformed military and the Postal Service or not, federal employment has shrunk in absolute terms over the last several decades. Total public employment as a share of the population is at its lowest level since the late 1960s.
Taxpayers Spend More on Contractors than on Federal Government Employees
While the number of federal government employees outside the three national security departments has been relatively flat, the number of employees of government contractors and subcontractors has grown sharply in recent years.
The federal government spends more on contract employees than it does on public employees. In fiscal year 2011 alone, GAO stated that non-DOD agencies spent $126 billion on service contractors and DOD spent $184 billion, for a total of $310 billion. In contrast, the total cost of federal civilians (excluding the Postal Service), including pay and benefits, was about $240 billion that same year.
While the federal government has always contracted out to the for-profit sector for services, it is being done on a scale never before seen.
Contractors provide both goods – such as tanks, paperclips, fuel, etc. – and others provide services from laundry to management assistance to food services. In 2011, DOD's service contractor workforce was estimated to be 710,000 – nearly as large as its government civilian workforce, and this may be understated.4 The last detailed attempt to come up with a federal government-wide estimate of the service contractor workforce was in the mid-2000s. New York University Public Policy Professor Paul Light estimated that in 2005, the number of contracted employees providing services to the government "increased by almost 2.5 million, up from 3 million in 2002 to more than 5.4 million in 2005."
An important note: Light's estimate includes indirect-contract generated employment (such as at subcontractors), which explains why his numbers are so large.
Another one of his now nearly decade-old findings: "most non-defense departments and agencies lost small numbers of contract-generated jobs between 2002 and 2005, while several others gained...The [Department of Homeland Security] produced 140,000 contract jobs during the period, most due to the war on terrorism." It is currently unclear what has transpired in the decade since Light's analysis.5
Indeed, as GAO and others have noted in numerous reports, lack of quality information on service contractors in particular has led to at least a decade of poorly informed decision making regarding federal spending, workforce levels, and the ability of federal agencies to perform their missions.
The GAO report suggests the number of federal government employees grew modestly between 2004 and 2012. And most of the growth in the size of the federal workforce can be explained by policy decisions that expanded the role and function of three government agencies charged with national security, especially between 2007 and 2009.
It is unclear whether employee reductions at other federal agencies were related to policy decisions or were simply driven by the need to cut the federal budget somewhere. Future agency staffing levels should be based on assessments of whether an agency is sufficiently staffed to meet its statutory responsibilities to the American public.
The dramatic increase in outsourcing of government jobs and functions merits a robust public debate, too. Unfortunately, we don't have quality data with which to evaluate whether our increased reliance on government contractors delivers cost-effective services and adequate public accountability. Until we have this data, decision makers will not be able to make informed decisions about staffing and budgets – especially at agencies where contractors are heavily used.
For an expanded analysis, stay tuned for an upcoming briefing paper, "Federal Civilian Workforce Trends: The Big Takeaways and Context," from which this article is derived.
1 Notes: BLS relies on a different measure for counting employees than GAO – i.e., people employed versus full-time equivalents, although the numbers are close. GAO's analysis does not include postal workers, employees of the judicial or legislative branches, intelligence agency workers, uniformed members of the armed services, or contractors. In general, the numbers can vary somewhat by source and how they are counted – however, for the purposes of this analysis, trends are the most important consideration, rather than absolutely precise numbers.
2 "Departments" and "agencies" are used interchangeably in this article.
3 Personnel cost is just one consideration in determining the future personnel mix at DOD; capability, flexibility, risk, and control are also considerations that DOD and other agencies that utilize substantial numbers of contractors to provide services that could be provided by government employees will need to take into account.
4 The estimates by DOD and other agency "inventories of contracted services" are typically considered substantially inaccurate, although there have been efforts, especially within DOD, to improve their accuracy.
5 As the Congressional Research Service stated in 2011 after recounting Light's work, "It is unclear whether the number of federal contractors has increased, decreased, or stayed the same since 2005." See http://assets.opencrs.com/rpts/RL34685_20110419.pdf.