[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]








                FEDERAL EMPLOYEE COMPENSATION: AN UPDATE

=======================================================================

                                HEARING

                               BEFORE THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 18, 2017

                               __________

                           Serial No. 115-25

                               __________

Printed for the use of the Committee on Oversight and Government Reform






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              Committee on Oversight and Government Reform

                     Jason Chaffetz, Utah, Chairman
John J. Duncan, Jr., Tennessee       Elijah E. Cummings, Maryland, 
Darrell E. Issa, California              Ranking Minority Member
Jim Jordan, Ohio                     Carolyn B. Maloney, New York
Mark Sanford, South Carolina         Eleanor Holmes Norton, District of 
Justin Amash, Michigan                   Columbia
Paul A. Gosar, Arizona               Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee          Stephen F. Lynch, Massachusetts
Trey Gowdy, South Carolina           Jim Cooper, Tennessee
Blake Farenthold, Texas              Gerald E. Connolly, Virginia
Virginia Foxx, North Carolina        Robin L. Kelly, Illinois
Thomas Massie, Kentucky              Brenda L. Lawrence, Michigan
Mark Meadows, North Carolina         Bonnie Watson Coleman, New Jersey
Ron DeSantis, Florida                Stacey E. Plaskett, Virgin Islands
Dennis A. Ross, Florida              Val Butler Demings, Florida
Mark Walker, North Carolina          Raja Krishnamoorthi, Illinois
Rod Blum, Iowa                       Jamie Raskin, Maryland
Jody B. Hice, Georgia                Peter Welch, Vermont
Steve Russell, Oklahoma              Matthew Cartwright, Pennsylvania
Glenn Grothman, Wisconsin            Mark DeSaulnier, California
Will Hurd, Texas                     John Sarbanes, Maryland
Gary J. Palmer, Alabama
James Comer, Kentucky
Paul Mitchell, Michigan

               Jonathan Skladany, Majority Staff Director
                    William McKenna General Counsel
                 Kevin Ortiz, Professional Staff Member
                    Sharon Casey, Deputy Chief Clerk
                 David Rapallo, Minority Staff Director
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 18, 2017.....................................     1

                               WITNESSES

Mr. Joseph Kile, Assistant Director for Microeconomic Studies, 
  Congressional Budget Office
    Oral Statement...............................................     7
    Written Statement............................................     9
Mr. Andrew Biggs, Resident Scholar, American Enterprise Institute
    Oral Statement...............................................    32
    Written Statement............................................    34
Ms. Rachel Greszler, Research Fellow in Economics, Budget and 
  Entitlements, The Heritage Foundation
    Oral Statement...............................................    40
    Written Statement............................................    42
Mr. Robert Goldenkoff, Director of Strategic Issues, U.S. 
  Government Accountability Office
    Oral Statement...............................................    52
    Written Statement............................................    54
Ms. Jacqueline Simon, Public Policy Director, American Federation 
  of Government Employees
    Oral Statement...............................................    72
    Written Statement............................................    74

                                APPENDIX

Senior Executives Association Statement submitted by Mr. Connolly   132
The National Treasury Employees Union Statement submitted by Mr. 
  Connolly.......................................................   134
National Association of Active and Retired Federal Employees 
  Statement submitted by Mr. Connolly............................   141
Center on Budget and Policy Priorities Report submitted by Mr. 
  Sarbanes.......................................................   146
Response from Mr. Kile, CBO, to Questions for the Record.........   151
Response from Mr. Biggs, AEI, to Questions for the Record........   154
Response from Ms. Greszler, Heritage Foundation, to Questions for 
  the Record.....................................................   160
Response from Mr. Goldenkoff, GAO, to Questions for the Record...   166

 
                FEDERAL EMPLOYEE COMPENSATION: AN UPDATE

                              ----------                              


                         Thursday, May 18, 2017

                  House of Representatives,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The committee met, pursuant to call, at 9:00 a.m., in Room 
2154, Rayburn House Office Building, Hon. Mark Meadows 
presiding.
    Present: Representatives Meadows, Duncan, Issa, Jordan, 
Amash, Gosar, Farenthold, DeSantis, Ross, Walker, Blum, Hice, 
Russell, Grothman, Hurd, Palmer, Mitchell, Cummings, Maloney, 
Norton, Clay, Lynch, Connolly, Kelly, Lawrence, Watson Coleman, 
Plaskett, Demings, Krishnamoorthi, Raskin, Welch, Cartwright, 
DeSaulnier, and Sarbanes.
    Mr. Meadows. The Committee on Oversight and Government 
Reform will come to order. And without objection, the chair is 
authorized to declare a recess at any time.
    The United States Federal Government plays an important 
role in the lives of its citizens, and it needs a world-class 
workforce for maximum effectiveness. The government must 
acquire and retain top talent, especially in mission-critical 
occupations such as cybersecurity experts and economists.
    However, the current Federal pay and benefits structure is 
really not conducive in my opinion to this goal. The general 
schedule, the pay schedule for the white-collar workers rewards 
tenure rather than performance, and the problem with this 
system is that it creates a two-fold problem: One, taxpayers 
are stuck paying for overly generous compensation packages in 
comparison to private sector salaries for a comparable job; and 
two, the Federal Government is unable to adequately recruit and 
compensate top talent in other fields.
    Additionally, we need a Federal retirement system that is 
responsive to the needs of a transient millennial workforce. 
And in an era when employees are highly mobile and can 
frequently change jobs, it makes no sense to have an archaic 
pension system that is designed for a workforce that stays in 
place for decades.
    Simply put, the current system is expensive and does not 
incentivize the best and brightest to join and stay in the 
Federal workforce. According to the Office of Management and 
Budget, in fiscal year 2015 more than two million full-time-
equivalent non-postal individuals were employed in the 
executive branch, and the cost to the Federal Government for 
these employees was nearly $256 billion in direct compensation 
and benefits.
    According to the Congressional Budget Office's recently 
updated Private Sector Compensation Comparison Report, Federal 
employees earn 17 percent more in total compensation than a 
comparable private sector employee. The CBO analysis might not 
tell the entire story either. Other analyses conducted by the 
Heritage Foundation, which we will hear from today; the 
American Enterprise Institute additionally who we will hear 
from found that Federal employees are compensated at even 
greater rates than private sector workers. Interestingly, the 
CBO report found that compensation differs higher among higher 
workforce than with lower levels of education and lesser among 
those workers with advanced degrees.
    So we need to have a fiscally sustainable pay and benefits 
system that allows the Federal Government to reward performance 
and compensate others based on the importance of their position 
and not simply on tenure.
    And I will want to make one other further comment. These 
hearings can many times be construed as taking one direction or 
another, and I have committed not only to my colleagues to my 
right to make sure that we get it right for the Federal 
workforce. One of the most illuminating aspects that I have had 
is I have gone from workforce place to workforce place, some 
very large and some very small that I was the first Member of 
Congress to ever visit them. I have found that we have an 
incredibly dedicated Federal workforce.
    So today, I would like to use this hearing to not only get 
at the facts but also get an action plan where we can work in a 
bipartisan way to make sure that people are fairly compensated, 
but also to make sure that there is an incentive there to not 
only attract new Federal workers but also to make sure that the 
very thing that we are working for does not become a 
disincentive. What I have heard over and over and over again is 
that you have people who work very hard and you have those who 
don't, and yet the compensation doesn't seem to be commensurate 
with that. And it has a chilling effect on those hard workers 
that I know Mr. Connolly and I and certainly Mr. Cummings both 
agree that we need to recognize great performance because we 
have some great Federal workers.
    Mr. Meadows. And with that, I would now like to recognize 
the distinguished ranking member and my good friend, Mr. 
Cummings, for his opening remarks.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    As I listen to you, I cannot help but think about the many 
Federal employees who work so hard and have been committed, 
many of them since they were children, to make things better 
for a wide range of people. I have often said that the people 
that I meet, the ones, many of them we see in the halls, the 
guard when we came in the garage; the researchers at NIH; the 
people that have given their blood, sweat, and tears at EPA to 
keep our water and our air clean, and I could go on and on and 
on, the ones that do the dirty jobs that nobody else will do. 
And at every instant that I have to speak to our employees, I 
tell them thank you.
    Today's hearing, we will review the compensation of Federal 
workers compared to the compensations of workers in the private 
sector. The Congressional Budget Office recently issued a 
report on this topic, and it provides a lot of detailed 
information. Not surprisingly, the CBO report shows that some 
Federal workers make more than their private sector colleagues 
while others make less. Unfortunately, I fear that my 
Republican colleagues will try to use this report to argue that 
we are paying Federal employees too much. Please. And then they 
may try to use this hearing as a basis to continue attacking 
the pay and benefits of Federal workers.
    Since I have been in the Congress, one of the things that 
hurt me more than anything else is when the Congress was trying 
to deal with unemployment benefits, they said they had to be 
taken out of the purses of Federal employees. I will never 
forget that. Hello? Unemployment benefits taken out of the 
purse of the Federal employee.
    And this is exactly the wrong lesson to draw from this 
report. The real lesson for today's hearing is not that middle 
class Federal workers are making too much. It is that private 
sector workers, especially those with the lowest incomes and 
educations are making too little.
    Over the past several decades, the productivity of American 
workers has grown higher than ever before. At the same time, 
corporations, shareholders, CEOs have been exploiting these 
workers and hoarding more and more of the wealth that these 
workers produce. And they do produce. From 1979 to 2013, the 
total income for the top 1 percent of households grew by an 
astonishing 188 percent. But over the exact same time frame, 
total income for the bottom 80 percent of households grew by a 
paltry 18 percent. Let's stick that in the DNA of every cell of 
our brains.
    It is not just wages that are stagnating. The Bureau of 
Labor Statistics reports that inequality in total compensation 
is worsening even more rapidly than wages alone. In other 
words, inequality is getting even worse when we take into 
account health insurance, retirement and savings plans, paid 
leave, and disability and life insurance.
    The other day I had breakfast with one of my constituents, 
and one of the things she said that whenever you all are 
talking about health care, remember this. She said when you are 
sick, you can't work. And if you can't work, you can't earn. 
And if you can't earn, you can't pay a policy. A lady suffering 
from stage 4 colon cancer, 26 years old, just married, wanted 
to have a baby, young lawyer, just passed the bar.
    So when we examine the lowest-quarter wage earners, nearly 
60 percent had no access to sick leave. Nearly 70 percent had 
no access to employer-provided medical care as of March 2016. 
Yet our friends on the other side of the aisle refuse to help 
these workers.
    And you are right, Mr. Chairman; we ought to applaud those 
who give their blood, their sweat, their tears, but no matter 
what office we go in, no matter where we go, there are going to 
be people that work real, real, real, real hard, and then there 
are going to be some that are going to work maybe just to get 
by. For years, they have refused to allow Congress to vote on 
democratic legislation to raise the minimum wage. The minimum 
wage is only $7.25 per hour, and it has not been raised in 
eight years. Try it. Try living on $7.25 an hour. At the same 
time, our Republican friends keep attacking Federal workers.
    And I am so glad that you, Mr. Meadows, Mr. Chairman, have 
been a constant--you kept a balance with regard to this trying 
to look at both sides of it. And it is so important. It is so 
important because when I talk to Federal workers, they watch 
these hearings and they say, well, why are we so demonized? We 
are just trying to do our job. And so they force new Federal 
employees to pay more for their retirement benefits in 2012 and 
2013, and now, they are threatening to take away their 
pensions.
    They want to follow the lead of private sector corporations 
in eliminating traditional defined benefit plans in exchange 
for less generous 401(k)-style plans. And they cloak these cuts 
in the language of, quote, ``reform,'' unquote. The truth is 
that this will hurt their own constituents. This will hurt 
nearly 8,000 Federal workers with only high school diplomas who 
live in Kentucky, 18,000 Federal workers with high school 
diplomas in Georgia, and 31,000 Federal workers with high 
school diplomas in Texas.
    We should be trying to lift up all workers, including both 
middle class Federal workers and low-income private sector 
workers. I hope that our witnesses today will shed some light 
on this.
    As I close with that, I would like to offer a special 
thanks to Jacqueline Simon, the public policy director of the 
American Federation of Government Employees, and all of our 
witnesses. She agreed to testify at our request under extremely 
short notice, and we thank her tremendously for being here.
    Related to that, Mr. Chairman, I want to note my very 
strong objection to this committee's refusal to allow Senator 
Bernie Sanders to testify here today. I submitted my request 
for Senator Sanders to testify last week, and my request was 
denied for no reason other than certain Republicans on our 
committee claiming that Senator Sanders is not qualified to 
testify about challenges facing workers in our nation. Of 
course, that is ridiculous. Senator Sanders is a champion of 
workers' rights, and he is a nationally renowned expert on 
these matters.
    This is not the first time the committee has refused to 
invite a witness we requested. Chairman Issa refused a request 
when we wanted to invite Sandra Fluke because he claimed she 
was not qualified to speak about the issues affecting women 
such as birth control.
    However, this is the first time I can remember in being on 
this committee 21 years that the committee tried to silence a 
United States Senator, who is also a former member of this 
esteemed committee. As a matter of fact, he used to sit right 
beside me. He certainly deserved more respect than he was 
given, and I extended my apologies to him. He had made 
arrangements to try to be here, and he said perhaps he will 
have another invitation at another time.
    With that, I yield back.
    Mr. Meadows. I thank the good morning.
    Mr. Issa. Mr. Chairman, point of personal privilege.
    Mr. Meadows. Well, hold on just a minute.
    The ranking member knows very well my personal feelings 
towards him. The ranking member also knows very well my 
personal feelings towards the Federal workforce. And I 
expressed in no uncertain terms that this hearing would not be 
political. And Senator Sanders in my opinion representing less 
than 3,000 Federal workers in his State, was not the best 
person to address this in a nonpolitical way. And I shared that 
with you personally.
    I also wanted to, for the record, make it known that I 
offered other potential avenues for you to have people here. 
You were given 17 days' notice about this, and Senator Sanders 
brings a different element to a very important topic that we 
must fix on behalf of the Federal workers. I don't believe you 
nor I want to sacrifice that for a political statement that 
potentially could be made based on a Senator who represents 
less than 1 percent--in fact not even that, .15 of a percent of 
the Federal workforce in his State.
    And so my good friend needs to understand that when it 
comes to this, if we want to make a political statement, we can 
do that. And I am doing my very best to make sure that what we 
do is we protect the Federal workers. I know you and I agree on 
that.
    Mr. Cummings. Yes, Chairman.
    Mr. Meadows. I know Gerry Connolly and I agree on that. So 
let's make sure that we keep it where it is. And you know that 
I offered to have Steny Hoyer to come in because he represents 
a whole lot of other Federal workers. And Gerry Connolly comes 
to me each and every day on behalf of the Federal workers. This 
is a Republican complimenting a Democrat on his advocacy for 
the Federal workforce. You do the same. And here is what I want 
to say. Let's not make this political. And the denial for 
Bernie Sanders to come in here was one that was done in private 
between you and I, and so let's make sure that we keep the main 
thing the main thing.
    Mr. Cummings. Chairman, I just need one minute.
    Mr. Meadows. Sure.
    Mr. Cummings. You know, all of this is political. We are in 
a political climate. And ----
    Mr. Meadows. But it doesn't have to be.
    Mr. Cummings. No, I am not finished.
    Mr. Meadows. It doesn't have to be.
    Mr. Cummings. Thank you. Thank you for yielding.
    No, it does not have to be, but I think we set a dangerous 
precedent when we say to a United States Senator for the first 
time since I have been here, 21 years, that what he has to say 
he can't say in this forum. Normally, I mean, we have had 
Senators come and speak from both sides of the aisle. They 
come, they speak, we don't ask them questions, and they move 
on. But I understand, and I appreciate--I want to make it 
clear, and I tried to say it, that you have been fair. And I 
tried to say it. Now, maybe I didn't say it as clear as you 
wanted me to say it, but all I was saying is I think sometimes 
we can set a precedent that is dangerous. And I don't know if I 
will ever get on the other side to get over to the Senate, but 
I would hope you all will welcome me back to talk about 
anything I want to talk about.
    I yield back.
    Mr. Meadows. We will welcome you back. I don't know about 
talking on anything that you would like to talk about. How 
about that?
    Mr. Issa. Mr. Chairman?
    Mr. Meadows. Yes.
    Mr. Issa. Point of privilege simply to correct what I think 
was an omission of some of the characteristics of a previous 
hearing because I, too, like you, Chairman, could not always 
allow every possible witness but did make an effort to make 
sure that we never had a panel that was inappropriate to the 
balance.
    In the case of the particular hearing that the ranking 
member is referring to, they offered two witnesses. We had two 
panels. I had no problem with one witness, and I selected 
between the two they offered, an ordained minister to be on a 
panel with other ordained ministers, priests, and rabbis. The 
ranking member refused that and demanded that a college student 
not in any way a religious leader testify on the first panel. I 
offered that she could testify on the second panel, which 
included other if you will laypeople who were specialists. He 
refused.
    So it was always about who was appropriate for panel one, 
which was priests, ministers, and rabbis, versus panel two, 
which were other people knowledgeable on the area. And I think 
that it is important, just as you are doing here today, that 
each panel represent a common thread of knowledge, experience, 
and testimony. And so I applaud you for appropriately balancing 
your panel.
    It is interesting that when the shoe was on the other foot 
and I was in the minority, I was often denied even one witness, 
and I never made quite the claim that is being made here today. 
But I was unhappy but I never denied an appropriate panel to 
the ranking member, and I hope in the full discussion he 
appreciates that.
    Mr. Meadows. Well, I thank the gentleman. I also want to 
say this. We are going to keep the main thing the main thing, 
and this is about the Federal workforce and proper 
compensation. There are good and valuable inputs that can come 
from both sides of the aisle, and I hope the ranking member 
realizes that there is no one willing to listen more intently 
than me on this particular issue. It is important. As a 
businessperson, the best and most valuable asset you have is 
not a building, it is not a vehicle, it is not even a computer. 
It is the asset of your workforce and their contribution.
    And certainly our Federal workforce, if you hear nothing 
else if you are watching this, the asset of our Federal 
workforce is one that should be applauded, rewarded 
appropriately based on merits and performance, and certainly 
hopefully this hearing will get here.
    So with that, I will hold the record open for five 
legislative days for any members who would like to submit a 
written statement. We will now ----
    Mr. Connolly. Mr. Chairman?
    Mr. Meadows. We will now recognize ----
    Mr. Connolly. A unanimous consent request simply before you 
swear them in.
    Mr. Meadows. Go ahead.
    Mr. Connolly. Yes, I ask unanimous consent that the 
statements from the Senior Executive Association, National 
Treasury Employees Union, and the National Association of 
Active and Retired Federal Employees be entered into the 
record.
    Mr. Meadows. Without objection.
    Mr. Connolly. I thank the chairman.
    Mr. Meadows. We will now recognize our panel of witnesses. 
I am pleased to welcome Mr. Joseph Kile, assistant director of 
microeconomic studies of the Congressional Budget Office. 
Welcome.
    Mr. Andrew Biggs, resident scholar of the American 
Enterprise Institute, welcome.
    Ms. Rachel Greszler, research fellow in economics and 
budget and entitlements at the Heritage Foundation, welcome.
    Mr. Robert Goldenkoff, director of strategic issues at the 
Government Accountability Office, welcome.
    And Ms. Jacqueline Simon, policy director of the American 
Federation of Government Employees of the AFL-CIO, welcome.
    Welcome to you all. And pursuant to committee rules, all 
witnesses will be sworn in before they testify, so if you will 
please rise and raise your right hand. And I apologize; it is 
Ms. Simon.
    [Witnesses sworn.]
    Mr. Meadows. Thank you. Please be seated. Let the record 
reflect that all witnesses answered in the affirmative.
    In order to allow time for discussion, we would ask that 
you limit your oral testimony to five minutes, but your entire 
written statement will be made part of the record.
    So, Mr. Kile, you are recognized for five minutes.

                       WITNESS STATEMENTS

                    STATEMENT OF JOSEPH KILE

    Mr. Kile. Thank you. And good morning, Chairman Meadows, 
Ranking Member Cummings, and members of the committee. Thank 
you for inviting me to testify about CBO's recent report that 
compares the compensation with Federal employees with those in 
the private sector.
    To provide some context for that comparison, my testimony 
focuses on the 2.2 million civilians who work for the Federal 
Government. Last year, the Federal Government spent $215 
billion to compensate those people.
    CBO analyzed how the Federal Government's compensation 
costs would change if the average cost of employing Federal 
workers was the same as that of the private sector. That's 
important because the government competes with the private 
sector for people who possess the mix of attributes needed to 
do its work. But a complete evaluation of the Federal 
Government's compensation system would require more information 
on recruitment and retention.
    Comparing compensation between the sectors is complicated 
because the workforces differ in characteristics that affect 
compensation, for instance, experience, education, and 
occupation. On the whole, Federal workers tend to be older, 
more educated, and more concentrated in professional 
occupations than workers in the private sector. For instance, 
about 60 percent of Federal employees have a bachelor's degree 
or more. By contrast, about 35 percent of private sectors 
worker--private sector workers have that much education.
    CBO's analysis accounts for those differences and for other 
factors that we could observe, but compensation for individuals 
in both sectors also depends on factors that we could not 
observe. For instance, other traits such as motivation or 
effort are not easy to measure, but they can matter a great 
deal for compensation at an individual level. So our results 
are best interpreted as average differences between the sectors 
rather than an assessment of whether any individual would be 
paid more or less in the other sector.
    Turning to the results of our work, I want to focus on 
total compensation. That is the sum of wages and benefits. 
Between 2011 and 2015, the differences in total compensation of 
Federal civilian employees with those of similar workers in the 
private sector vary widely depending on employees' educational 
attainment. Among workers with a high school diploma or less, 
total compensation costs were 53 percent more on average for 
Federal employees than for their private sector counterparts.
    Among workers whose education culminated in a bachelor's 
degree, which is the most common level of education in the 
Federal workforce, total compensation costs were 21 percent 
more for the Federal workers than for workers in the private 
sector. By contrast, total compensation costs among workers 
with a professional degree or a doctorate were 18 percent less 
for Federal employees than for workers in the private sector.
    Let me make a brief observation on both components of 
compensation. Focusing for a minute on wages, the ranges of 
wages between high- and low-paid employees was narrower in the 
Federal Government than in the private sector. That narrower 
range of wages among Federal employees might reflect 
constraints of the Federal pay systems, which make it harder 
for managers to reward the best performers or to limit the pay 
of poor performers.
    Turning briefly to benefits, the most important factor in 
contributing to the difference between the two sectors is the 
defined benefit plan that is available to most Federal 
employees. Such plans have become less common in the private 
sector.
    I'd like to close by touching briefly on the effects of two 
significant policy changes in recent years. First, lawmakers 
eliminated across-the-board salary increases for Federal 
employees in--from 2011 to 2013. That limited the total 
increase during the period of our analysis to 2 percent. 
Because salaries in the private sector increased by more during 
that period, that change reduced the average wage of Federal 
employees relative to the private sector. However, at the same 
time, the Federal Government also reduce hiring and there was a 
temporary reduction in the number of hours worked by Federal 
employees. Both of those factors had the effect of increasing 
the average compensation of Federal workers relative to the 
private sector.
    The second policy change involved increasing the share of 
wages that Federal employees who were hired after 2012 must 
contribute to Federal defined benefit retirement plans. That 
change will gradually reduce the cost to the Federal Government 
of the program beginning this year.
    Thank you again for your time, and I'd be happy to answer 
any questions that you might have.
    [The statement of Mr. Kile follows:]
    
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    Mr. Meadows. Thank you, Mr. Kile.
    Mr. Biggs, you are recognized for five minutes.

                   STATEMENT OF ANDREW BIGGS

    Mr. Biggs. Chairman Meadows, Ranking Member Cummings, 
members of the committee, thank you for the opportunity today 
to discuss how Federal pay and benefits compare with what 
similar workers will be likely to receive in the private 
sector.
    The Congressional Budget Office has conducted a highly 
professional state-of-the-art analysis which produces the 
headline figure that on average Federal salaries and benefits 
are 17 percent above private sector levels. And that is the 
figure that deserves headlines. Total compensation for full-
time equivalent Federal employee in 2015 was about $123,000. A 
17 percent Federal pay premium implies that similar private 
sector workers would receive total pay and benefits of around 
$105,000, an annual difference of about $18,000.
    When averaged over 2.2 million Federal employees, the 
Federal compensation premium adds up to about $38 billion per 
year, equal to what the Federal Government spends on energy and 
the environment and substantially exceeding Federal spending on 
transportation.
    One could have technical quibbles with the CBO's approach. 
My own view again for technical reasons is that the CBO 
somewhat underestimates the salary premium paid to Federal 
employees, as well as underestimating the compensation paid to 
Federal employees through their defined benefit pensions. My 
written testimony provides details on these technical 
disagreements. But to be clear, I doubt that any analyst would 
find the CBO's methods or results to be unreasonable.
    At this point we should consider the technical debate over 
Federal pay to be basically settled. Some Federal workers may 
be underpaid relative to the private sector, but the vast 
majority are not. Some Federal employees, particularly those 
with less education, receive far more in Federal employment 
than they would likely receive outside of government.
    My own view is that across-the-board changes like wage 
freezes aren't the best approach. Instead, Congress and the 
administration should work to make Federal agency pay-setting 
more flexible to the needs of the labor market. If an agency 
finds that it cannot hire, it should be able to increase 
salaries. But the fact that the Federal Government receives so 
many applicants for each job opening that it has to cap the 
number of applicants it even considers is evidence that most 
Federal jobs are considered attractive relative to 
opportunities outside of government.
    The Federal Government should look to move away from the 
one-size-fits-all general schedule which tries to equate 
dramatically different jobs onto a single pay scale. Other 
developed countries use more decentralized pay-setting 
approaches in which individual agencies are given more 
discretion to set pay for different jobs. Given the diverse 
range of occupations in the Federal Government, that seems an 
appropriate next step in ensuring that Federal employees are 
paid fairly and efficiently.
    Thank you for your time and attention, and I'm happy to 
answer any questions.
    [The statement of Mr. Biggs follows:]
    
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    Mr. Meadows. Thank you, Mr. Biggs. And you have got a good 
namesake here in Congress from Arizona that shares your name.
    So, Ms. Greszler, you are recognized for five minutes.

                  STATEMENT OF RACHEL GRESZLER

    Ms. Greszler. Thank you for the opportunity--sorry. Thank 
you for the opportunity to be here today. I'd like to focus my 
testimony on three different points. The first is differences 
in compensation that are not included in the CBO study or 
either of our studies here. The second is the government's 
faulty business model. And the third is some recommendations I 
have to bring Federal compensation more in line with the 
private sector.
    So, first, there are a lot of benefits that cannot be 
measured very easily or for which there's not significant data 
available or that might not be available to all workers equally 
across the board. So some of those benefits that are available 
to Federal employees include significant student loan 
repayments, up to $10,000 per year, or $60,000 in total, as 
well as student loan forgiveness after 10 years of on-time 
payments.
    Then, there's up to $3,000 per year in Federal 
transportation subsidies, as well as another $3,500 per year 
value of employees' retirement health benefits. Federal 
employees also have greater access to things like on-site 
childcare, and some can receive as much as $35,000 per year in 
childcare subsidies. And lastly, Federal workers enjoy 
preferable work schedules and significantly greater job 
security.
    My second point is that the Federal Government's bad 
business structure hurts productivity and it unnecessarily 
drives up taxpayer costs. The government provides a big 
compensation premium. That should help the government function 
like a well-oiled machine. Instead, it's rusty and sluggish. 
One reason is that the government has a skewed compensation 
structure. It provides the biggest premium to the workers that 
it faces the least competition to attract, and it provides the 
smallest premium to those that it needs to entice the most. 
Compared to the private sector, the Federal Government employs 
almost three times as many workers with a master's degree or 
more but only about a third as many with a high school diploma 
or less.
    Another one of the government's bad business practices is 
that it over-weights an undervalued benefit. Federal employees 
receive about three times as much in retirement benefits. Most 
of that comes from the government's defined benefit 
contribution plan. But workers don't fully value this pension 
plan because they don't know how much it will ultimately 
provide them in retirement, and oftentimes, they need money in 
their paycheck more than they need a future promise for 
benefit. A study of Illinois public teachers found that they 
valued additional pension benefits at only 19 cents on the 
dollar. It makes no sense for the Federal Government to provide 
a benefit that is worth only a fraction of the cost to its 
employees.
    And lastly, the government stifles productivity by failing 
to reward high performers and also failing to penalize low 
performers. Federal workers receive two effectively automatic 
pay increases. The first is an annual cost-of-living 
adjustment, and then second, 99.9 percent of all Federal 
employees receive a so-called performance-based pay increase. 
While virtually all Federal employees receive these 
performance-based pay increases, almost none are penalized or 
fired.
    According to a study by the OPM, 80 percent of all Federal 
managers have managed a poorly performing employee, yet fewer 
than 15 percent have rated those poor performing employees 
anything less than fully successful, and fewer than 8 percent 
of them attempted to do anything about it. Among those who did 
attempt to take action, 78 percent that their efforts--said 
that their efforts had no effect. This is a recipe for driving 
out the most productive employees and retaining the least 
productive ones. That is the opposite of what business schools 
teach and what private and successful businesses practice.
    So finally, I'd like to propose a few changes to bring 
Federal employee compensation more in line with that of the 
private sector. This should help improve productivity, 
accountability, and efficiency. First, Congress should make 
dismissing Federal employees less difficult by extending the 
probationary period from one year to three years, by limiting 
dismissal appeals, by lowering the burden of proof necessary to 
fire Federal workers, and by expediting the dismissal process 
for certain employees.
    Next, Congress should reduce the level of within-grade pay 
increases that cause Federal employees to climb the pay scale 
more quickly than those in the private sector. Some of those 
savings should go towards truly performance-based pay 
increases. Employees who don't receive performance-based pay 
increases should have limited options for appeal, and Federal 
managers should not have to institute a performance improvement 
plan for employees that it rates anything less than fully 
successful.
    Finally, the biggest change that can be made is in the 
defined benefit contributions for the pensions. This could 
actually be a win-win for taxpayers and for Federal employees. 
As I propose it, workers would have options as to the type of 
plan. They would not be kicked out of their defined benefit 
pensions. They wouldn't lose anything that they've already 
accrued, and less of their total compensation could be tied up 
in future benefits. This would give workers actual dollar 
contributions that they own and control, and it would force the 
Federal Government to recognize the costs that it promises 
immediately instead of passing them on to future taxpayers.
    Other changes would include reducing the amount of paid 
leave from roughly 43 days to 35, as well as limiting the 
retiree health benefit to current employees.
    Thank you.
    [The statement of Ms. Greszler follows:]



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    Mr. Meadows. Thank you so much for your testimony.
    Mr. Goldenkoff, you're recognized for five minutes.

                 STATEMENT OF ROBERT GOLDENKOFF

    Mr. Goldenkoff. Chairman Meadows, Ranking Member Cummings, 
and members of the committee, I am pleased to be here today to 
discuss the Federal employee compensation system and ways to 
modernize it.
    Currently, Federal employees are compensated through an 
outmoded system that, one, rewards length of service rather 
than individual performance and contributions; and two, 
automatically provides across-the-board annual pay increases 
even to poor performers. At the same time, skills gaps in 
mission-critical occupations across government are putting 
agencies and programs at risk while high levels of employees 
eligible for retirement create both challenges and 
opportunities for agencies to transform their organizations to 
better meet mission requirements and also address budgetary 
pressures.
    These trends point to the fact that a careful consideration 
of Federal pay is necessary for both sound fiscal stewardship, 
as well as to support the cost-effective recruitment and 
retention of a high-performing and agile Federal workforce.
    In my remarks today, I will discuss key lessons learned in 
creating a more market-driven results-oriented approach to 
Federal pay and opportunities in addition to Federal pay that 
OPM and agencies could leverage to be more competitive in the 
labor market. The bottom line is that, while the Federal 
compensation may need to be re-examined, agencies must also 
make better use of the tools and flexibilities already 
available to them.
    Congressional policy calls for Federal workers' pay under 
the general schedule to be aligned with comparable non-Federal 
workers' pay, but while implementing a more market-based and 
performance-oriented pay system is both doable and desirable, 
it certainly won't be easy. The experiences of public, private, 
and nonprofit organizations in rolling out their own results-
oriented pay systems provide useful lessons learned for the 
Federal Government.
    Among other things, they told us that it was important to 
examine the value of employees' total compensation to remain 
competitive in the labor market; provide training on 
leadership, management, coaching, and feedback to facilitate 
effective communication and to link individual performance to 
organizational results; and third, build meaningful stakeholder 
consensus to gain ownership and acceptance for any pay reforms.
    In addition to competitive compensation, high-performing 
organizations have found that the full lifecycle of personnel 
management activities, including workforce planning, 
recruitment, onboarding, engagement, and training need to be 
fully aligned and focused on the cost-effective achievement of 
an organization's mission. In many instances, improvements in 
these areas are within the control of Federal agencies.
    Among other things, our work has shown that the tone starts 
from the top. Agency leaders and managers should set an example 
that human capital management is directly linked to 
performance, and it is not simply a transactional function. 
Moreover, time and again, our work has shown how a breakdown in 
one or more personnel functions can erode the performance of 
Federal agencies and threaten their ability to cost-effectively 
carry out their missions.
    Going forward, key focus areas for OPM and agencies include 
improving the hiring process by, among other actions, refining, 
consolidating, or eliminating less-effective hiring 
authorities; modernizing the classification system so that it 
keeps pace with the government's evolving requirements; and 
strengthening performance management and agencies' ability to 
deal with poor performers through such steps as lengthening the 
probationary period. Opportunities also exist to improve the 
capacity of agency human resource offices to better support an 
agency's requirements.
    In conclusion, Federal compensation should enable agencies 
to cost-effectively attract, motivate, and retain a high-
performing and agile workforce necessary to meet their 
missions. At the same time, our work has also shown that 
agencies already have a number of tools and flexibilities 
available to them that can significantly improve executive 
branch personnel management. Going forward, it will be 
important to hold agencies accountable for fully leveraging 
those resources.
    Chairman Meadows, Ranking Member Cummings, this completes 
my prepared statement, and I'll be pleased to respond to any 
questions that you may have.
    [The statement of Mr. Goldenkoff follows:]
    
    
    
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    Mr. Meadows. Thank you.
    Ms. Simon, you are recognized for five minutes.

                 STATEMENT OF JACQUELINE SIMON

    Ms. Simon. Thank you for the opportunity to testify today.
    The CBO's study answers a very peculiar question: How much 
could the government save if it paid its workforce the average 
of what private employers pay broken down by demographic 
criteria? It's a strange question. It's more the kind of thing 
that might be asked on a graduate school midterm in labor 
economics but only to find out whether the students get the 
idea behind human capital theory.
    The human capital approach CBO takes is basically a capital 
asset pricing model that applies the logic of finance to human 
beings. Wages, salaries, and benefits are the price, and 
workers are the asset. The asset's attributes are the race, 
sex, education, industry, and whatever else might be a source 
of value.
    When you compare the compensation the government provides 
to averages in the private sector measured through a human 
capital lens, you find the government both overpays and 
underpays depending on demographics, not surprising because the 
government employs people to work in an enormous range of jobs.
    The human capital approach has been used successfully to 
show how jobs that mainly employ women and racial minorities 
pay less than jobs that mainly employ white men even though the 
jobs require similar levels of education. But here we are using 
the human capital approach to complain about pay and benefit 
systems that do not discriminate.
    When CBO assessed the accuracy of the capital asset pricing 
of the conglomeration of human capital known as the Federal 
workforce, it was clear they'd find the price too high. This is 
because on average the private sector pays men more than women, 
whites more than blacks, old more than young. The Federal 
Government does not reproduce all these inequities because in 
its pay systems demographic traits are irrelevant. Federal pay 
is an attribute of the job, not the traits of the individual 
holding the job. As a result, men and women with the same 
Federal job are paid roughly the same amount.
    The demographic traits that comprise a human capital 
model's independent variables are completely irrelevant to the 
salary and benefit package the Federal Government applies to 
any given Federal job. Had CBO used the proper method for 
making the comparison, the one used by the Federal Salary 
Council, its conclusions would have lined up with the Council's 
findings: that Federal employees are underpaid, whether they're 
top professionals like doctors and lawyers, technical experts 
like engineers and scientists, healthcare providers like VA 
nursing assistants and dietitians, or administrative workers 
who handle claims for Social Security or veterans' benefits.
    My written statement describes the inappropriateness of the 
human capital approach for comparison of non-cash compensation. 
Here, I will focus on the failures of the CBO study with regard 
to retirement costs.
    The Federal Government finances its employees' retirement 
benefits by setting aside funds in the Civil Service Retirement 
and Disability Fund, CSRDF. All agency and employee 
contributions are assigned to this trust fund, and its assets 
are invested exclusively in U.S. Treasury bonds. These bonds 
are budget authority and thus can be redeemed to pay earned 
annuities to Federal retirees. The rate of return on these 
assets--on the assets of the fund is just like the Social 
Security trust fund, a combination of all the interest rates of 
the treasury bonds held by the fund.
    Historically, the rate of return on treasury bonds has been 
lower than the rate of return on private equities. Private 
sector and some state and local governments are free to invest 
the assets of their pension plans in a mix of public and 
private equities. Because the law prohibits the government from 
investing the trust fund's assets in any form of equity other 
than treasuries, it costs more to produce each dollar of 
Federal retirement benefit. The Federal Government must spend 
more for each employee's benefit regardless of the employee's 
salary, education, race, age, or occupation.
    CBO's updated report makes no useful contribution to the 
discussion on Federal pay and benefits. Frankly, it's 
implications are horrid. If the government were to compensate 
its employees so that its cost reflected average private sector 
costs by demographics, it would reproduce all the inequities we 
deplore in the private sector. Compensation for women and 
racial minorities would decline immensely.
    Regardless of the relative complexity, difficulty, and 
responsibilities of different jobs, what would matter would 
simply be the educational attainment of the person doing the 
job. A bachelor's degree from Trump University would merit the 
same rate of return as a bachelor's degree from Duke or Chapel 
Hill. The salary of a Border Patrol agent whose job requires 
only a high school diploma would have to match the abysmal pay 
of retail workers whose jobs also only require a high school 
diploma.
    The Federal Government should be proud of its pay system. 
Few in the private sector can match its fairness and internal 
equity. Its principle of market comparability and its authority 
for managers to reward high performers and punish poor 
performance are more than adequate. All that's missing is 
funding. The government should never adopt any kind of pay 
system that allows discrimination on the basis of demographics. 
Market comparability, adherence to the merit system principles 
for--of equal pay for substantially equal work and fairness 
must continue to be the principles on which Federal pay is 
based.
    Thank you.
    [The statement of Ms. Simon follows:]
    
    
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    Mr. Meadows. I thank you for your testimony.
    The chair recognizes the gentleman from Ohio for five 
minutes.
    Mr. Jordan. Thank you, Mr. Chairman.
    Mr. Goldenkoff, I am looking at a chart, and I have some 
graphs from your 2016 Federal Employees Performance Rating 
Report, and it is a pie chart, pie graph I should say. It says 
38.8 percent of Federal employees were fully successful, 27.4 
percent exceeded fully successful, and 33.1 percent were 
outstanding. It said only .1 percent of all Federal employees 
were unacceptable performance. Are you familiar with this 
chart, this pie chart?
    Mr. Goldenkoff. Sure. The--so the Lake Wobegon approach to 
performance management where everybody is strong and above 
average ----
    Mr. Jordan. Not everybody--well, yes, you are right, 
everybody. Ninety-nine-point-nine percent of all Federal 
employees got--I mean, if you think about back in school, it 
looks like, you know, got an A-, an A or an A+. I mean, I have 
never seen a classroom like that ever.
    Mr. Goldenkoff. Exactly. And we have so that that is 
problematic and certainly inconsistent with some leading 
practices on performance management that we have developed. One 
of them is making meaningful distinctions in performance. And I 
think, you know, the root cause of this and what's so important 
is that, you know, you could make it easier to fire poor 
performers, and obviously, there needs to be some improvements 
there. But on the front end, the performance management process 
need to be improved. Supervisors need to do their jobs for one 
thing. They need to be able to realistically rate employees --
--
    Mr. Jordan. Well, I ----
    Mr. Goldenkoff.--based on their performance.
    Mr. Jordan. Yes, and I am just looking from the practical 
constituent kind of perspective that I would think the good 
folks in the Fourth District of Ohio would look at it. If you 
have got 99.9 percent of the workforce getting an A, I think 
our constituents want to know why they have to wade eight weeks 
to get their passport or why when they call the IRS only 30 
percent ever got to talk to an actual person when they called 
into the call center. I mean, if we have got the greatest 
workforce in history, you would think the taxpayers would get a 
little better treatment than they do.
    Let me turn to Ms. ----
    Mr. Goldenkoff. Sure.
    Mr. Jordan.--Greszler. Ms. Greszler, is it true that--so if 
I got the gist of what you guys said, overall pay for Federal 
employees is higher than that in the private sector. Is that 
accurate?
    Ms. Greszler. Yes.
    Mr. Jordan. Significantly higher, like 17 percent? Wasn't 
that what someone said, one of the studies, one of your 
studies?
    Ms. Greszler. The CBO compensation was 17 percent total.
    Mr. Jordan. Seventeen percent. All right.
    Ms. Greszler. I believe we found about 22 percent just for 
the pay component. We found about 30 to 40 percent for total 
compensation.
    Mr. Jordan. So they get paid better. Are their benefits 
better for the folks that work in the Federal Government?
    Ms. Greszler. The benefits are the significant part of the 
compensation bonus, yes.
    Mr. Jordan. Right. So ----
    Ms. Greszler. A lot of that is the healthcare and the 
pensions.
    Mr. Jordan. Yes, so they get cheaper health insurance than 
the average American gets?
    Ms. Greszler. Yes, and significantly greater pension 
benefits.
    Mr. Jordan. They get paid better, better pension, cheaper 
healthcare, better overall benefit package, sick leave, all 
those kind of things, right? And you can't fire them, right?
    Ms. Greszler. Yes.
    Mr. Jordan. And 99.1 percent of them get an A-, an A, or an 
A+ ----
    Ms. Greszler. Yes.
    Mr. Jordan.--in their performance? Wow. That is amazing. 
And yet ----
    Ms. Greszler. And that's one of the reasons that you see 
the quit rate among Federal employees is one-fifth that from 
the private sector.
    Mr. Jordan. Yes.
    Ms. Greszler. Once they're in there, they're not going to 
leave.
    Mr. Jordan. Well, yes. You can't blame them for that I 
guess, but this is just phenomenal for me to think--and then it 
to add insult to injury, all that, better pay, better benefits, 
better and cheaper health insurance, they can't get fired. My 
guess is the reason you got 99.9 percent getting these 
successful, you know, more than fully successful and these 
ratings is because that allows them to jump up in pay quicker, 
right? You have got to ----
    Ms. Greszler. That's the biggest thing we found is that 
moving up those with those effectively ----
    Mr. Jordan. You need that ----
    Ms. Greszler.--automatic pay increases, they move up more 
quickly.
    Mr. Jordan. Exactly. And all that is going on and at the 
same time you had an agency I would like to cite from time to 
time, the IRS, which, again, targeted people. I mean, so the 
folks like Lois Lerner were getting all this and targeting 
Americans exercising their First Amendment liberties. And just 
on a practical side, people calling in trying to get customer 
service trying to get answers to their questions during tax 
season, only a third of them could even talk to a real person. 
Yes.
    Ms. Greszler. And I would just add that for Federal 
employees, yes, they have a big compensation premium but 
they're not all just sitting there happy and taking in this 
premium. I think a lot of them are really frustrated with the 
structure because ----
    Mr. Jordan. Sure.
    Ms. Greszler.--it's not rewarding those good performers. 
And because it's so difficult for Federal managers to get rid 
of a poor performer or to even demote them or do anything to 
improve their performance, those people sit there, and it's the 
high performers that are having to do their job. You know, 
they're doing the work of two people to make up for that fact, 
and they're not rewarded for it.
    Mr. Jordan. Yes. Yes. All right. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentleman from Massachusetts, Mr. 
Lynch.
    Mr. Lynch. Thank you, Mr. Chairman.
    This committee has a long and strong history of really 
delving into some of the most important issues facing the 
American people, and it just mystifies me that we have chosen 
this topic. You know, we could be investigating, you know, the 
Russian interference in the democratic elections. We could be 
investigating whether the FBI Director was fired because he 
actively was investigating that Russian connection. We could be 
investigating whether the President asked the former FBI 
Director for a pledge of loyalty a few weeks back. We could 
have looked at whether the President specifically asked the 
former FBI Director to quash the investigation of the former 
NSA advisor Mr. Flynn.
    So rather than keeping the politics out of this committee, 
I think the leadership of this committee is actually 
suppressing a lot of the important issues that really should 
and in history have been grappled with by this committee. 
Instead, we are trying to figure out why the Federal employees, 
the ones with the bachelor's degree, are getting paid less than 
their counterparts in the private sector and why the lowest-
paid Federal employees are being paid a little bit more than 
their counterparts in the private sector.
    I think we have got misplaced priorities, we really do, on 
this committee, and I think there is a hell of a lot more we 
could be doing about issues that are real.
    Now, I know this hearing comes up once every year basically 
or once every two years to look at the wages of Federal 
employees, but what I have got from the testimony so far is 
that Federal employees are treated better because they get 
tuition reimbursement. But as far as the Federal Government as 
an employer, we should be doing that. We should be encouraging 
private sector to provide tuition reimbursement so we can 
educate our workers. That is a good thing.
    They get childcare. You know, that is an advantage that 
some Federal employees have. They have a childcare facility 
right in the building, and that is a good thing. But we are 
being told you should take that away so that they would be more 
like the private sector or you should take the tuition 
reimbursement away because that would make them more like the 
private sector and close that gap. Or they have flexible hours, 
and we can't have people have flexible hours, so take those 
flexible hours and make those Federal employees more like the 
private sector.
    Or take away their pensions. So let me get this straight. 
We have got a pension crisis. We have a retirement crisis in 
this country because everyone is on a 401(k). And after working 
for 30 years or 35 years, at the end of their working lives 
they don't have enough money in their retirement to have a 
decent living, so they go on Federal benefits, and they have 
the taxpayer have to support them because they have to have 
Meals on Wheels. They have to have all kinds of subsidies 
because they weren't allowed to accrue enough benefits in their 
retirement plan during their working lives that they have to 
rely on government. They qualify for government benefits.
    So we are supposed to make Federal employees more like 
that, take away their pensions, take away their pensions and 
just give them 401(k)'s so at the end of their lives they won't 
have enough money to retire with dignity and they can go on 
government benefits and we will pay them that way. That is 
ridiculous. That is ridiculous.
    And the COLAs that we give people have been pitiful. Wages 
are flat in this country. So with all we have got going on, 
with everything we have got going on at the White House, we are 
focusing on this. You have got to be kidding me.
    So I have got docs at the VA that are making about 75 
percent what they could be making in the private sector. I got 
nurses at the VA that have way too many patients, and they are 
making about 60 percent what they could be making at a private 
hospital. I have got therapists at the VA that have way too 
many patients, and they are making about half of what they 
would be making if they went over to the Mass General or Tufts 
or one of the private hospitals in my district. And so we are 
going after these people.
    I think our priorities are misplaced, Mr. Chairman, and I 
thank him for his indulgence, and I yield back the balance of 
my time.
    Mr. Meadows. I thank the gentleman. I would remind the 
gentleman on some of those issues he and I are not apart. And 
----
    Mr. Lynch. No. Let me just make that clear. I have worked 
with the chairman on many, many issues, and we are in harmony 
with much of what I just said.
    I yield back. Thank you.
    Mr. Meadows. All right. I thank the gentleman.
    The chair recognizes the gentleman from Alabama, Mr. 
Palmer.
    Mr. Palmer. Thank you, Mr. Chairman. I just want to make a 
couple points about wage stagnation since our colleagues have 
brought that up.
    Wage stagnation has--there are many causes for that, and I 
would like to point out the National Small Business 
Association's annual survey of their members, employers 
reported the average cost of their monthly health insurance 
premiums per employee increased from $590 in 2009 prior to the 
Affordable Care Act to $1,121 in 2014. And I would like to 
point out that is before the major increase in premiums that we 
have seen in the last year or so. And in addition to that, they 
paid out another $458 a month just in other healthcare-related 
costs per employee. So when you are spending that kind of money 
on increases in health insurance premiums and healthcare costs, 
it will necessarily reduce the amount that you have to pay in 
wages. And it still is compensation.
    The other thing I want to point out is the American Action 
Forum, which tracks the cost of regulation, reported that the 
Obama administration levied $181.5 billion in regulatory costs 
just in 2014. That is $692 per capita for each American, which 
drives down people's spending power. And that is a hidden cost.
    Ms. Greszler, get back to the topic--and by the way, if we 
want to have a discussion about stolen elections, I think it 
would be appropriate to bring Senator Sanders in. Thank you, 
Mr. Chairman.
    What would shifting to a defined contribution retirement 
system look like for Federal Government workers, Ms. Greszler?
    Ms. Greszler. So the way that I've envisioned it is anybody 
with 25 years or more service would be grandfathered into the 
current system. Nothing's going to change for them. For all new 
hires or anybody that has fewer than five years of service, 
those people who have not yet become vested in their pensions, 
they'd be shifted to defined contribution system just playing 
on the existing Thrift Savings Plan that Federal employees 
already have. And so the contribution to that for the 
government currently is between 1 percent and 5 percent. That 
would increase to between 4 percent and 8 percent.
    Existing Federal employees with between 5 and 25 years of 
service would have three different choices. They can do the 
same thing that the new hires are doing and they can shift 
entirely to that defined contribution system with a much higher 
match and overall contribution, and they can choose to take 
essentially a lump sum benefit. Everything that they've accrued 
in their pension, they take that value and it goes into their 
Thrift Savings Plan.
    Alternatively, they could choose to basically freeze their 
defined benefit pension as it is. They keep everything that is 
accrued. They'll still have a defined benefit pension in 
retirement, but going forward, they're in that new system and 
they have the higher contribution to their Thrift Savings Plan. 
Or they can stay in the existing system, you know, can keep the 
same level of defined benefit but there will be some changes 
going forward only, nothing taken away because this was part of 
their compensation, and I would never argue that we should take 
away something that was really a past--it was essentially in 
their paychecks. So we don't take that away, but going forward, 
they would probably pay a little bit higher percentage of their 
overall contribution, the retirement age may increase, and some 
other small changes along those lines.
    Mr. Palmer. Can you give me a fairly brief answer on what 
kind of cost savings we could expect for making those changes?
    Ms. Greszler. Well, the pensions is the biggest component. 
Adding in everything altogether, we've estimated $330 billion 
over 10 years.
    Mr. Palmer. Mr. Kile or Mr. Biggs, one of you, if you could 
answer this. Do you have any way to measure productivity in the 
Federal workforce as you would, say, in the private sector? I 
mean, when you have 99-point-something percent of people who 
are excellent, wouldn't that indicate that productivity is off 
the charts?
    Mr. Biggs. It is difficult--when I was at the Social 
Security Administration, we made efforts to measure 
productivity but it tended to be a measure of outputs, the 
number of cases handled. A true measure of productivity 
measures the cost of inputs, the labor costs, the compensation 
costs, in order to then figure out the improvement of the 
outputs. I don't think the Federal Government does a 
particularly good job of measuring productivity, although I 
will say it is not an easy thing.
    Mr. Palmer. Can you answer it in the context of the point 
Mr. Jordan made about they were only responding to 30 percent 
of the calls? I think that was the number he gave. Wouldn't 
that indicate a productivity problem?
    Mr. Biggs. What you want to know is how productivity grows 
over time and how many calls they're getting in. It's not a 
straightforward thing to answer. And I'll admit I don't know 
the IRS very well so I don't want to act as if I know more than 
I do.
    Mr. Palmer. All right. Mr. Kile, last question. What effect 
does the outdated nature of the current GS schedule have on 
hiring?
    Mr. Kile. So that's actually one of the things that we 
would like to know more about. We don't have a very good sense 
of the data on hiring and retention and recruitment, and I 
think that in understanding the--both the current compensation 
system and others that might take its place, we would need to 
look further into that.
    Mr. Palmer. Okay. Thank you, Mr. Chairman. I yield back.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes Mrs. Watson Coleman.
    Mrs. Watson Coleman. Thank you, Mr. Chairman. I think I 
want to concentrate a little bit on the issue of benefits, 
particularly healthcare benefits.
    An article published in New York Times last year found, and 
I quote, ``The first full year of the Affordable Care Act 
brought historic increases in coverage for low-wage workers and 
others who have long been left out of the healthcare system.'' 
The New York Times also found, and I quote, ``Part-time workers 
gained insurance at a higher rate than full-time workers, and 
people with high school degrees gained it at double the rate of 
college graduates.'' Unfortunately, Republicans now want to 
take away health care from the most vulnerable citizens, 
including working Americans who gained health care thanks to 
the Affordable Care Act. And the latest Trumpcare bill would do 
just that.
    Mr. Kile, House Republicans forced the revised Trumpcare 
bill through the House before the CBO could even come up with 
the score. However, CBO's score of Trumpcare as it was first 
introduced found that under that bill, and I quote, ``In 2018 
by CBO and JCT estimates, about 14 million more people would be 
uninsured relative to the number under current law. That 
increase would consist of about 6 million fewer people with 
coverage obtained in the nongroup market, roughly 5 million 
fewer people with coverage under Medicaid, and 2 million fewer 
people with employer-based coverage.''
    I know you didn't work on the score, but am I understanding 
this correctly? In addition to ripping away health care from 
the millions of people who buy coverage in their individual 
market and rely on Medicaid, that the Trumpcare bill, as 
originally proposed, would also reduce the number of working 
Americans who get their health care through their employers by 
2 million by 2018? Yes or no?
    Mr. Kile. Congresswoman, I'm afraid that you've left my 
area of expertise. I'd have to refer you back to both CBO's 
cost estimate of that bill and my colleagues back in the 
office.
    Mrs. Watson Coleman. Good. Good thing we have a record of 
it.
    CBO also found that the number of people obtaining health 
care through their employers would fall by, and I quote, 
``roughly $7 million by 2026.'' And some of this reduction in 
employer-based health coverage in the U.S. would occur because 
employers would simply stop offering healthcare insurance. 
Trumpcare also reduces the amount of tax credits people receive 
to help them pay for insurance, so in addition to losing their 
employer-provided health care, these workers may be left with 
less financial support to purchase insurance on their own.
    Finally, I think it is important to keep in mind that 
repealing the ACA would harm all Americans, including those who 
get insurance through their employers, by doing away with 
important consumer protections like no annual and lifetime 
limits on benefits, free preventive care, and out-of-pocket 
spending limits.
    Ms. Simon, is it true that all workers have benefited from 
the Affordable Care Act?
    Ms. Simon. I believe the answer is yes, but I can really 
only talk about Federal employees and the Federal Employees 
Health Benefits Program. Immediately, the Federal Employee 
Health Benefits Program adopted all the benefits of Obamacare 
that you've just listed and others, including coverage of 
dependent--or not dependent children, children up to age 26, 
the essential benefits package, and lifetime maximums and the 
requirement that ultimately limited the profits that insurance 
companies can take from premium payments.
    Mrs. Watson Coleman. Well, I ----
    Ms. Simon. So Federal employees ----
    Mrs. Watson Coleman. Thank you.
    Ms. Simon.--certainly benefited.
    Mrs. Watson Coleman. Thank you. And certainly, Federal 
employees seem to be the target of this discussion today, and I 
believe that this proposal that we are under right now is both 
harmful to them, as well as to employees in the private sector.
    I think it is also important to note that we should be 
creating good jobs. We should be encouraging better 
distribution of all of the sort of revenue that streams through 
private sector. We should be concerned that lower-wage workers 
who are working out in the private sector are getting a livable 
wage. We should be concerned in this country that we have a 
minimum wage that is a living workable wage. We should not be 
looking to dummy down. We should be looking to elevate.
    And we should also look to the fact that those who 
represent the very wealthiest and the smallest percentage of 
people in this country have had no problem with their revenue 
streams increasing exponentially. And the difference between 
what a worker gets paid, a good educated worker, an uneducated 
worker, and a CEO is just un-American.
    Thank you, and I yield back.
    Mr. Meadows. I thank the gentlewoman.
    Ms. Simon, I want to make sure that you can hopefully 
clarify. You didn't mean to say that everybody benefited from 
the Affordable Care Act. I think that is what you told her, but 
I wouldn't think that you actually meant that, did you?
    Ms. Simon. I believe--I did mean that, and that's how I 
understood her question.
    Mr. Meadows. So your recommendation ----
    Ms. Simon. She asked if ----
    Mr. Meadows.--then would be that we ought to move all 
Federal workers into the Affordable Care Act?
    Ms. Simon. That was not my recommendation. I answered the 
broad question ----
    Mr. Meadows. But if everybody benefits, wouldn't it be best 
that everybody is on it?
    Ms. Simon. Obamacare--the law that established what we now 
call Obamacare ----
    Mr. Meadows. Well, I am going to recognize the gentleman 
from Georgia, Mr. Hice ----
    Ms. Simon. Okay.
    Mr. Meadows.--because he is next, but I will come back to 
that.
    Ms. Simon. Sure.
    Mr. Meadows. I will give you some time to think about it.
    Mr. Hice. Thank you, Mr. Chairman. I appreciate it. And 
yes, I would say the previous questioning was totally 
misguided, realizing that Federal workers are not on Obamacare 
while the rest of Americans have been forced on that. The 
Federal Employees Health Benefit Program is quite a bit 
different, and we can't compare that at all.
    I want to shift gears. Mr. Kile, I want to come over to 
you. I am sure you are familiar with official time, which 
enables Federal employee union members to be hired by whatever 
agency they may be hired for, but instead of doing the work 
they were hired to do, they work for the union in multiple 
ranges, some 100 percent and some quite a bit less. My question 
to begin with is did the CBO analysis take official time into 
consideration?
    Mr. Kile. So we didn't measure that specifically. We--our 
data was from what's known as the current population survey and 
----
    Mr. Hice. Okay. Why not? Why was official time not 
considered?
    Mr. Kile. In those--data on those types of activities are 
not available in that data set.
    Mr. Hice. Okay. So not available because of reporting 
problems or what?
    Mr. Kile. It's a measurement issue, yes.
    Mr. Hice. Okay. So bringing that up, our friend Mr. Ross is 
not here, but he has a bill that would--that in fact hopefully 
we are going to be voting on this relatively soon, perhaps even 
next week, H.R. 1293, that would require some reporting of 
official time. Are you familiar with that legislation?
    Mr. Kile. I'm not, Congressman.
    Mr. Hice. Okay. Twelve ninety-three would be worth getting 
familiar with that. If we have proper reporting requirements 
for those on official time, if that were available, would that 
change the CBO's analysis in looking at it?
    Mr. Kile. I don't know. We'd have to do that analysis in 
order to get an answer to that question.
    Mr. Hice. Okay. Well, according to CBO's own described 
definition of official time, it is, quote, ``paid time off from 
assigned government duties to represent a labor union.'' Now, 
that is CBO's definition. So how can paid time off not be 
considered compensation?
    Mr. Kile. That--our--the time off is a measure of the 
benefits that we provide in our analysis.
    Mr. Hice. The paid time off is but not when it relates to 
official time, which many Federal employees are using 100 
percent of the time.
    Mr. Kile. And what we're measuring is--what we're taking is 
what's in the data, hours worked, and in that data they don't 
report the activities that they were doing when they were 
working.
    Mr. Hice. Okay. Well, I am not worried about the 
activities. The fact is, though, if they are using official 
time--if official time is not considered compensation, what is 
it considered?
    Mr. Kile. Official time would be considered compensation.
    Mr. Hice. Okay. But it is not analyzed because of reporting 
issues.
    Mr. Kile. Well, what we don't have is the breakdown of--the 
employees report the hours that they work, the number of hours 
that they work. They don't report what they were ----
    Mr. Hice. That is official time. Okay. Well, hopefully, we 
are going to be able to get that corrected, and I look forward 
to--I have a bill myself, H.R. 1364, that would prohibit 
Federal employees who are using 80 percent or more of their 
time on official time in any given year, that they would not--
that year would not be counted as creditable service for 
retirement benefits at 80 percent or more. I would appreciate 
you looking at that. And I look forward to CBO including 
official time, future compensation studies, as part of the 
analysis. I think all of this is skewed if we are not taking 
this into consideration.
    Mr. Biggs, let me come to you real quickly. It has come up 
multiple times already, the problem with firing Federal 
employees, bad actors in this thing. They have multiple avenues 
of appeal all through the process. There is no way this cannot 
be considered a job security benefit, is that correct?
    Mr. Biggs. That's correct. If you look at surveys of 
employees done by human resources consultants, pay benefits and 
job security are the three most important things ----
    Mr. Hice. And if you can't fire someone, that is pretty 
good job security, or if you make it so difficult that it 
literally is an act of Congress to fire someone, that is pretty 
significant job security.
    Mr. Biggs. Sure. And it's--there's two components to it. 
One is it's very unusual for a Federal employee to be fired for 
cause. The second is it's very unusual for there to be layoffs. 
So you can look at unemployment rates for Federal Government 
employees. They are probably half those of similarly educated 
and experienced private sector workers.
    Mr. Hice. Okay.
    Mr. Biggs. So that's a benefit that's not included in this 
sort of analysis.
    Mr. Hice. Besides lengthening the probationary period, what 
else can be done to address this problem?
    Mr. Biggs. Well, there--I mean, there's a variety of 
things. One is, as Mr. Goldenkoff said, of encouraging Federal 
managers to use the powers that they already have, to not be 
afraid to use what rights they do have. I think it's also in 
terms of--I mean, employees deserve due process, but due 
process should not be so lengthy and costly that it is cheaper 
to keep on an employee who is not performing than it is to try 
to fire them. And this is a problem you find throughout the 
public sector. It is not worth the time and the money and the 
effort to fire an underperformer. Rather, you simply move them 
aside so that they don't--or they're not an impediment to the 
vast majority of workers who are doing a good job.
    But, you know, it is--the private sector manages to do 
this--private sector firms don't want to fire good performers. 
They don't want to scare their workforce. So I think there's 
reason the Federal Government can do this, and it's really a 
question of putting in the effort and really being dedicated to 
it.
    Mr. Hice. Thank you. I wish we had time to hear from each 
of you on this, but I appreciate your indulgence.
    Mr. Chairman, I yield.
    Mrs. Watson Coleman. Mr. Chairman? Mr. Chairman, I have a--
I seek a right of personal privilege.
    Mr. Meadows. Okay.
    Mrs. Watson Coleman. Thank you very much. I just want to 
sort of acknowledge my colleague's comments regarding my line 
of questioning that I have to question his ability to question 
my line of questioning because he cannot determine for me what 
is or is not relevant but to discuss the issues of ----
    Mr. Meadows. The gentlewoman will state ----
    Mrs. Watson Coleman.--salaries ----
    Mr. Meadows. The gentlewoman will state her point of 
personal privilege.
    Mrs. Watson Coleman. This is my point of personal 
privilege. My point of personal privilege is that the 
discussion of this ill-advised Trumpcare healthcare initiative 
as it represents a component of benefits to both employees in 
Federal Government and outside Federal Government is a line of 
questioning that is worthy of pursuing and that if my 
colleagues just feel a need to be able to run away from that 
whole issue of that ill-conceived Trumpcare bill, I can 
certainly understand it.
    Mr. Meadows. Okay. The ----
    Mrs. Watson Coleman. But I shan't accept anyone's 
characterization ----
    Mr. Meadows. Okay. The chair will ----
    Mrs. Watson Coleman.--of the appropriateness of my 
questions.
    Mr. Meadows. The ----
    Mrs. Watson Coleman. Thank you. With that, I yield back. 
Thank you, Mr. Chairman.
    Mr. Meadows. The chair will remind all members on both 
sides that they are to keep personalities out of their line of 
questioning. They are to direct their questions to the 
witnesses without personalities involved.
    Ms. Plaskett from the Virgin Islands is recognized.
    Ms. Plaskett. Thank you, Mr. Chairman.
    First, I think it is interesting, Mr. Biggs, the notion 
that job stability is a benefit. It seems to be a very anti-
American notion that you are counting as a benefit of a job the 
fact that someone has the job and is assured of a job when we 
as Americans are trying to keep our economy stable so that all 
people can be assured of work. That seems to me a very unusual 
position for you to be equating and wrapping into data analysis 
of job benefits.
    Mr. Biggs. If you--you can literally go back to Adam Smith 
who is the--you know, the first ----
    Ms. Plaskett. Yes, I know who he is.
    Mr. Biggs.--the founder ----
    Ms. Plaskett. Economics.
    Mr. Biggs.--of economics, and what he noted is that certain 
jobs will have more stability than other jobs. And what he 
noted then is that jobs that have less stability to them will 
pay a premium to the worker to compensate them for that risk. 
You find the same thing, jobs that are more dangerous or more 
unpleasant pay a compensating differential for that risk. So--
and there is research showing that jobs that are in the private 
sector that are more secure, that have less risk of being fired 
or laid off will pay slightly less than jobs that have more of 
that risk. It's a compensating payment for that risk.
    Ms. Plaskett. I don't know if steelworkers would 
necessarily agree with that, with the amount of pay that 
they've received, or cotton pickers would agree that that was 
baked into the analysis of the job ----
    Mr. Biggs. What I--the way ----
    Ms. Plaskett.--skills that they were getting.
    Mr. Biggs.--I'd respond to you is if you were to go looking 
----
    Ms. Plaskett. I don't need you to respond ----
    Mr. Biggs. Okay. Then ----
    Ms. Plaskett.--but thank you.
    Mr. Kile, CBO recently found that on average Federal 
employees receive more generous benefits than private sector 
workers. Your analysis showed that the cost of benefits 
provided to Federal workers was 47 percent higher than the cost 
of benefits provided to private sector workers, and benefits 
for Federal employees with no more than a high school education 
were 93 percent higher than for similarly educated workers in 
the private sector. Is that correct?
    Mr. Kile. Yes.
    Ms. Plaskett. And CBO also found that the higher cost of 
the benefits Federal workers receive compared to the benefits 
private sector workers receive can be attributed mostly to the 
differences in retirement benefits. Was that how the analysis 
went?
    Mr. Kile. Yes, that's correct.
    Ms. Plaskett. Okay. Your report states that Federal 
Government provides both defined benefits and defined 
contribution plans to its employees. And it is my understanding 
that a defined benefit plan is like a traditional benefit plan, 
and a defined contribution plan is more similar to a 401(k) or 
in the case of Federal employees, the Thrift Savings Plan. Do I 
have that right?
    Mr. Kile. Yes.
    Ms. Plaskett. All right. In contrast to the Federal 
Government, in the private sector employers no longer offer 
defined benefit plans or pensions. They've been replaced 
primarily with 401(k) plans?
    Mr. Kile. Primarily. There are still some places that offer 
defined benefit plans, but they're ----
    Ms. Plaskett. Is that percentage ----
    Mr. Kile. I don't ----
    Ms. Plaskett.--significant?
    Mr. Kile. It's--it--I don't have that number in front of 
me.
    Ms. Plaskett. Okay. It is my concern and fear of many of us 
that many of my colleagues, my Republican colleagues will be 
using CBO's report in this hearing to justify eliminating 
pensions for Federal employees. I know that our Chairman 
Chaffetz has said in the past that he wants to get rid of 
Federal pensions by shifting to a 401(k)-type plan for new 
employees in the Federal Government. We have information that 
retirement experts have warned that the vast majority of 
Americans are not saving enough for such a savings plan.
    Ms. Simon, do you agree that the Economic Policy 
Institute's findings, which state that the shift from pensions 
to account-type savings plans have been a disaster for lower-
income, black, Hispanic, non-college-educated, and single 
workers who together add up to the majority of American 
population, but even among upper-income, white, college-
educated married couples, many do not have adequate retirement 
savings. What are your feelings about that conclusion?
    Ms. Simon. I think it's entirely accurate, and it's 
warranted. The most recent data I've seen is that less than 
half of all private sector workers are covered by any kind of 
employer-sponsored pension plan or retirement plan at all. And 
among those who have some kind of a 401(k)-type savings plan as 
part of their employment get no employer match or no employer 
contribution at all to their 401(k).
    So of course this is a horrible retirement crisis in the 
making, as Representative Lynch was describing earlier. At the 
same time that private employers have abandoned providing any 
kind of financial subsidy for their employees' retirement, 
wages and salaries have stagnated for the vast majority of 
workers, bottom 80 percent ----
    Ms. Plaskett. Thank you.
    Ms. Simon.--of the income stream. So absolutely, the EPI's 
findings are accurate and ----
    Ms. Plaskett. And concerning to you as an organization ----
    Ms. Simon. Absolutely.
    Ms. Plaskett.--representing Federal employees?
    Ms. Simon. Absolutely.
    Ms. Plaskett. Thank you. And with that, I yield back. Thank 
you.
    Mr. Meadows. I thank the gentlewoman.
    The chair recognizes the gentleman from Tennessee, Mr. 
Duncan.
    Mr. Duncan. Well, thank you, Mr. Chairman. And I did get to 
hear your opening statement and the opening statement of the 
ranking member, but I had some other meetings I had to go to so 
I apologize if I get into an area that has already been 
covered.
    But I will say this. I agree with the chairman and the 
ranking member and others that we have many good, dedicated, 
wonderful Federal employees. I will say, though, that I saw a 
statistic not long ago that said 58 percent of the people in 
this world have to get by on $4 or less a day. We have got 
hundreds of millions who would like to come here and get 
minimum wage jobs, so all of us are very blessed to live in 
this country.
    And I was asked by a school group last year one time, did I 
like my job? And I said yes, I have always felt very lucky to 
have my job. And I said I had read a brief Bible study the day 
before that said if you don't feel very lucky to have your job, 
just think how you would feel if you were fired that day.
    And so what I see as sort of unfortunate, almost everybody 
wants to make themselves to be some kind of victim today. And 
so I have heard and seen articles about the low morale of 
Federal employees and so forth and how tough they have it, yet 
compared to the great majority of the people, they are pretty 
well off.
    So let me ask you this. So we have some stuff in the 
briefing material that says there are too many appeal options. 
And I noticed that Mr. Hice had just I think gotten into that 
maybe it being too difficult to get rid of a bad employee, says 
``too many appeal options lead to unearned pay increases and 
poor performer retention.'' Is that accurate, do you think? 
Does anybody have a comment about that? Do you think we have 
too many appeal options and that that does lead to some 
unfairness?
    Ms. Simon. I'd like to answer that question.
    Mr. Duncan. Yes, ma'am. Go ahead.
    Ms. Simon. I think that there are numerous ways that 
Federal managers can get rid of poor performers or employees 
who engage in misconduct. The GAO, OPM, the MSPB have all done 
very comprehensive studies of those questions and found that it 
is not legal authority that's lacking; it's willingness to take 
on the responsibility that Federal managers have to their 
agencies, to taxpayers to document evidence to make sure that 
people who are--that the allegations of poor performance or 
misconduct are valid. That's all that's required.
    If we don't have the protections as taxpayers to know that 
our Federal agencies are being staffed by people who have their 
jobs on the basis of their objective qualifications rather than 
their political affiliation or any other kind of non-merit 
factor are, then we'll have a corrupt government. These 
protections that Federal managers whine and complain about 
actually protect the public from corrupt government, from 
agencies hiring people ----
    Mr. Duncan. Well, before I ----
    Ms. Simon.--for non-merit reasons.
    Mr. Duncan. Before I run out of time, let me ask you this. 
Does anybody know what--can anybody tell me what percentage of 
Federal employees are fired or removed in any one year? Ms. 
Greszler?
    Ms. Greszler. Yes, I believe it's .3 percent ----
    Mr. Duncan. Point three percent.
    Ms. Greszler.--are dismissed or fired.
    Mr. Duncan. What percentage of Federal employees leave each 
year to go into the private sector? Do we know that figure?
    Ms. Greszler. I don't know that one. I would add, though, 
on here that a big impediment here is the performance 
improvement plan process. And yes, I recognize that managers 
are choosing not to follow a lot of these procedures that they 
would need to do in order to fire or even to demote or write an 
employee less than fully successful. They're choosing out of 
experience. I've had Federal managers call me and say, yes, 
there are some avenues we can do here, but the legal hurdles 
are so high, such a high burden of proof.
    On average, it takes a year-and-a-half to fire a Federal 
employee. Now, if you're running a private business, that's 
absurd to have an employee there that is a poor performer or 
actually sometimes impeding the mission of the organization or 
harming it, and yet you can't get rid of them for a year-and-a-
half? I mean, that's ridiculous.
    Mr. Duncan. Let me go in one more direction ----
    Ms. Simon. That is not true.
    Mr. Duncan. My time is up, but just let me ask this. I have 
heard for years that Federal agencies spend 60 percent of their 
money in the first 11 months, and then they scramble around and 
try to spend the rest of it so that their budgets will be cut. 
Do you think that--in fact, I have introduced a bill to give 
bonuses to Federal employees if their department or their 
agency saves money, we would split half the money for bonuses 
and half the money would go back towards the deficit. Does 
anybody have an opinion as to that type of--a bill similar to 
that? Do you think that would be feasible or would work?
    Ms. Greszler. I think that you definitely need greater 
ability and greater performance-based budgets to factor in 
there. The one thing you just want to be careful of is, is 
there going to be a push for those managers to get a higher 
budget next year so that he can ----
    Mr. Duncan. Right.
    Ms. Greszler.--then use some of that towards the 
performance-based bonuses.
    Mr. Duncan. Well, the problem ----
    Ms. Greszler. But certainly, they do need more ----
    Mr. Duncan. The problem is that people get paid the same 
whether they work hard or whether they work easy, so you need 
to have some incentives or pressures that--they don't have the 
same pressures that are out there in the private sector.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes the gentleman from Virginia for a very 
generous five minutes.
    Mr. Connolly. I thank the chair. And I do want to say--I 
want to compliment the chairman. I hope this doesn't hurt him, 
but he has gone way beyond ideology on Federal employee issues. 
And we have worked together. He has made it his business to 
visit places of employment and listen to employees, to listen 
to what is happening in the workplace. And I think he would say 
it has informed him and given him some perspective. I wish more 
of our colleagues would take--I have done the same, and I 
really salute him. He has taken his job here seriously. I have 
got to get to know the territory, you know, the old line from 
The Music Man. You have got to know the territory. And I salute 
Mr. Meadows for that effort.
    Ms. Greszler, I take your point that sometimes we have got 
a troubled employee, may be ethically challenged, behaviorally 
disruptive, whatever it may be, and it takes a year-and-a-half, 
a process that seems never-ending, an appeal may restore them, 
drives all of us crazy, but isn't there another side to the 
coin and the balance is what we are trying to get at? We want 
to streamline that, but we also want to be fair. There is 
something called due process. Courts have upheld it, that 
Federal employees are entitled to due process even though 
sometimes that may aggravate us in terms of how long it takes 
or even the end result. And we need to respect that, too, do we 
not?
    Ms. Greszler. No, we do, and they need due process. But I 
think what we have now is an overly burdensome hurdle. The 
proof required for firing Federal employees exceeds that of the 
private sector, and I think there are things that we can do to 
streamline and make that possible. I mean ----
    Mr. Connolly. Yes, I understand, and I am not 
unsympathetic, but I will tell you as someone who represents a 
lot of Federal employees and Federal contract employees, there 
is still a lot of discrimination, favoritism, nepotism, 
outright outrageous discriminatory behavior, sexual harassing 
behavior, racially hateful behavior that goes on in a workforce 
as large as the Federal Government.
    And trying to make sure there are some protections for the 
victims of that and trying to hold people to account are really 
important because sometimes the perpetrators make the victims, 
you know, the employees who get discharged or demoted or exiled 
to, you know, Nome, Alaska, or someplace where they are sort of 
out of sight and out of line. I don't mean to pick on Alaska; 
it is a beautiful State.
    So I just want to suggest to you that it is a complicated 
picture, and some of the protections, though they have become 
may be more brittle than we would like over time and very 
juridical on the other hand are there for a reason.
    Ms. Simon, I wondered if you wanted to comment on that? 
Because I see both sides of this in the job I have got.
    Ms. Simon. First of all, it doesn't take a year-and-a-half 
to fire a Federal employee. In most cases, certainly in cases 
of misconduct, an employee is off the payroll in 30 days or, 
you know, an even shorter period of time depending on the 
circumstances. If it takes a year-and-a-half and if the agency 
fails in its efforts to remove a poor performer or someone who 
has been proven to have engaged in misconduct, that is not a 
problem with the process. That is not a problem with the 
evidentiary burden. That is a problem with the agency and its 
managers and their own abilities to document what they allege. 
They make procedural errors. They do all kinds of things that 
are wrong. They propose a penalty that does--is not 
commensurate with the alleged offense.
    Mr. Connolly. And if I may interrupt because I have 
experienced this. And sometimes people who are sort of a 
problem are in positions of power and they just stonewall ----
    Ms. Simon. Well ----
    Mr. Connolly.--which takes time.
    Ms. Simon. As--we had a Senate hearing yesterday in the VA 
Committee, and our national president asked rhetorically if 
anyone thought that the firing that's been in the news this 
last week was an unusual occurrence, if they thought it never 
happened in other Federal agencies where people were fired in 
order to--an executive fired a subordinate in order to cover up 
that executive's own misdeeds. There are all kinds of 
miscarriages of justice that would occur in the absence of 
high--the current evidentiary standards for allegations of 
misconduct. And it is very, very foolish to consider lowering 
those standards so that people can just be fired willy-nilly. 
We'll get a very, very bad and corrupt Federal Government if we 
do so.
    Mr. Connolly. I thank you. Is the Chairman going to give me 
one more minute? I thank the chair. See, if you compliment the 
chair, you get extra time, a wonderful chair, have you all 
noticed?
    So I just have one more. Thank you both.
    Mr. Goldenkoff, you stated the Federal compensation system 
should allow the government to cost-effectively attract, 
motivate, and retain high-performing agile workforce necessary 
to meet these missions. You know, my impression from years of 
working in and with the Federal Government and representing so 
many Federal employees is that we are nowhere near that 
standard. We have got a long way to go in streamlining hiring 
process, making it easier, less bureaucratic, less paper-
dominated, and frankly figuring out how do we attract that new 
generation that is going to replace a third of the Federal 
workforce that is eligible for retirement in the next three or 
four years? How do we appeal to millennials? I mean, how do I 
say to Ms. Greszler I see a 30-year Federal career in your 
future, you know? And we are part of the problem up here.
    And I just wonder if you could expand on that a little bit. 
What we need to do to be more flexible and to attract and 
retain the talent of the future, which is the immediate future 
I might add, not far away.
    Mr. Goldenkoff. It's--well, as you mentioned, I think 
flexibility is the key. It's not a one-size-fits-all approach 
so, you know, I know the focus of this hearing is pay, but pay 
is not the only thing. You know, even if we could assume for 
the moment that we could come up with the ideal pay system, it 
still does no good if your onboarding processes are inadequate, 
if you don't make effective use of their talents, if you don't 
aggressively recruit them, if once they do come on board if you 
don't develop them, if they're not given effective supervision, 
and it's also a matter of work-life balance programs. And it 
needs to be tailored to individual labor markets. It needs to 
be tailored to individual occupations. So--and we're just not 
doing that effectively right now.
    Mr. Connolly. I thank the chair for his indulgence. Thank 
you all so much for being here today.
    Mr. Meadows. I thank the gentleman for his kind remarks, 
and I would let the record reflect that his additional time was 
really in the spirit of fairness because Mr. Duncan went over 
and not because of any wonderful embellished remarks to my 
benefit.
    Mr. Connolly. Well, yes, and for the sake of the media back 
home in North Carolina, I wish we could work with Mr. Meadows. 
He is just too conservative for all of us.
    Mr. Meadows. I thank the gentleman.
    The chair recognizes Mr. Grothman for five minutes.
    Mr. Grothman. Okay. First of all, I would like to thank Mr. 
Connolly for the comments. I don't have a lot of Federal 
employees in my district. I haven't heard complaints from him, 
but if he says Federal Government is a hotbed of racism and 
sexual harassment, I will take him at his word. I mean, it is 
something you have got to look out for.
    Mr. Connolly. Would my friend yield just for a second?
    Mr. Grothman. Sure.
    Mr. Connolly. I know my friend knew I was simply pointing 
out that in a big workforce, you know, there are some bad 
apples. I in no way was characterizing or meant to characterize 
that as the Federal workforce. My experience is the opposite. 
The Federal workforce is a dedicated group of workers, as the 
chairman said at the beginning of the hearing.
    I thank my friend for yielding.
    Mr. Grothman. Okay. Okay. I just wanted to clarify that. 
Okay. I went a little bit overboard.
    Okay. Now, I have got a question for you guys to lead off, 
and I don't really see it in here, but one thing that I always 
find when I deal with government employees, obviously, many of 
them are regulatory and many of them seem to just be--I assume 
they are nice people in their own lives, but they seem to be 
completely out of touch with dealing with the public, be it 
individuals or businesses, you know, putting burdens on them 
that they would never think to put on themselves. And I always 
wish more of them had spent some time in the private sector so 
they would realize how they look when they come across to the 
public.
    Does anybody have any information, say, on the number of--
particularly on the regulatory agencies the number of 
government employees who spend, say, at least five years in the 
public sector before being hired or how many just came straight 
out of college, which would lead to the lack of common sense 
that you sometimes see in the Federal Government?
    Mr. Biggs. I don't have data on that directly, but I 
completely agree with you that there is not very much flow from 
the private sector to government and back. And I think that 
leads to some of the bigger misperceptions that we sometimes 
see here. Ms. Simon cited some statistics claiming that Federal 
employees are underpaid by 34 percent. If you were to ask most 
Federal employees, most believe they can make more money in the 
private sector than they do in government.
    I have done some work where we tracked the--you know, the 
relatively small number of people who shift from Federal 
employment to private sector jobs. Rather than getting a big 
pay increase, most of them actually got a pay reduction. We 
also tracked people who went from Federal--from private sector 
jobs to the Federal Government. Most of them got pay increases.
    I think the lack of shifting between the two, though, leads 
to an insularity where you're not aware of what's going on in 
jobs outside the private sector but also the concentration of 
Federal employees within the Washington, D.C., area may lead 
to, you know, lack of understanding or knowledge of what's 
going on outside of Washington, D.C. The--five of the 10 
richest counties in the United States are in the Washington, 
D.C., suburbs, and that's not to say anything bad about people 
who live in Washington, D.C., but you may not understand 
exactly what's going on in the rest of the country.
    Mr. Grothman. Yes.
    Mr. Biggs. But most of the Federal workforce is outside of 
D.C.
    Mr. Grothman. Right, right. Maybe I will ask Ms. Simon. You 
see what I am getting at. Okay. If you work for a company and 
somebody from the EPA comes in and says, oh, here, you know, I 
know you just put in this new equipment four years ago, but the 
rules have changed, times have changed, you know, spend another 
$10 million or whatever, you know, and that is maybe an 
exaggeration. But that is the sort of thing you hear. And you 
wonder, my goodness, do you know what it feels like to be on 
the other end of the phone?
    Is there any effort made to say before we hire a new person 
in a regulatory agency to see if they spent, you know, five or 
10 years on the other end of the phone? I think particularly 
older people, people in their 50s, sometimes it's harder to 
find a job but they have a lot of experience, they get 
downsized, is an effort being made to hire those people above 
somebody who just came out of college and may have no point of 
reference as to how the real world works?
    Ms. Simon. I don't have any data that would indicate one 
way or another how--the percentage of the current Federal 
workforce that has spent time working in the private sector or 
for employees in a regulatory agency that have worked in the 
same industry that their agency regulates.
    I would tell you that it is always expected that Federal 
employees act in a courteous manner with any member of the 
public that they are dealing with. Obviously, in--when you're 
in a law-enforcement context and the law enforcement may be--
the laws that people in the Environmental Protection Agency are 
paid to enforce, businesses might not like the, you know, 
restrictions on their ability to use ----
    Mr. Grothman. Yes.
    Ms. Simon.--certain chemicals or ----
    Mr. Grothman. Yes, I don't mean to cut you off, but they 
limit us on time ----
    Ms. Simon.--equipment ----
    Mr. Grothman.--so may I just make one comment for my good 
buddies in the think tank world? You know, I think in the 
future when they hire people, I am sure they have a scale and 
there might be a test that people take and blah, blah, blah. I 
would hope time spent in the private sector is a big part of 
that scale, and that is something you guys could work towards 
because I think you would get a lot better quality out of the 
regulatory agencies if you had people that dealt on the other 
side of things.
    Can I ask one more question ----
    Mr. Meadows. I beg your pardon?
    Mr. Grothman.--since I'm the only guy--the only Republican 
down here?
    Mr. Meadows. Okay. The gentleman is recognized for 30 more 
seconds, and we will do the same for the other side.
    Mr. Grothman. Super. We have numbers here that were given 
us. I mean, I just find them hard to believe. We have 108,000 
Federal employees making more than $150 grand a year, and where 
I come from, that is like, you know, the upper crust. And it 
just keeps skyrocketing up more and more and more. And I don't 
begrudge anybody making $150 grand a year, but holy cow. I 
mean, wow.
    Ms. Simon. The vast majority of Federal employees who make 
salaries like that are physicians and scientists.
    Mr. Goldenkoff. And you have to understand, too, that the 
jobs that the Federal Government avails himself--for example, 
they're doctors, they're engineers. They are higher skilled 
because the nature of the work is higher skilled than in the 
private sector, and so that needs to be considered, too. You 
cannot just look at the salaries alone.
    Mr. Grothman. Well, I wonder if we can get for us--I mean, 
we have got $400,000, $150 and other--over $150, that's $500. I 
mean, that is just--I wouldn't know if I would have guessed 
that many people made that much in the country as a whole, but 
maybe I come from an area that doesn't make as much money. If 
we could someday get a breakdown by agency and find out, you 
know, from somebody ----
    Mr. Meadows. Yes, the gentleman time is expired. If you 
will try to respond to the gentleman's request to the 
committee, that would be greatly appreciated.
    The gentleman from Maryland, Mr. Raskin, is recognized for 
a very generous five minutes.
    Mr. Raskin. Mr. Chairman, thank you very much for your 
flexibility. And I do want to associate myself briefly with the 
remarks of the gentleman from Massachusetts, Mr. Lynch, who did 
observe that a time when we just experienced the firing of the 
FBI Director by the President for apparently refusing to quash 
the investigation of a paid Russian asset Michael Flynn, the 
timing of this hearing is at least a bit unusual. But as the 
Representative of the Eighth Congressional District in Maryland 
where I have 88,000 Federal employees, this is an issue of 
great interest and concern to me.
    Now, I take the general point to be that high-ranking 
public employees like doctors at NIH or the Center for Disease 
Control or lawyers at the Department of Justice or maybe on 
Capitol Hill or engineers or IT people in the Pentagon are 
underpaid compared to what they could be making in the private 
sector. And certainly we know that anecdotally to be true. You 
talk to people all the time in government who are either 
leaving to go make double or triple their salaries in the 
private sector that they could be making or are tempted to do 
it and complain about the pay and benefits being too low.
    And then the suggestion that there are, quote, ``lower-
ranking employees'' who are overpaid compared to their private 
sector counterparts, and I want to focus on that for a second 
to figure out who we are really talking about because I don't 
know to what extent you can really equate particular public 
sector positions with private sector positions. I think of some 
people who are lower paid, for example, as soldiers, but, you 
know, you think back to the Iraq War, there were soldiers 
leaving the Army when they could and then making double or 
triple what they could as military contractors in Iraq or in 
Afghanistan.
    Maybe climate scientists, researchers could be making a lot 
more working in the private sector or maybe they are making 
more than--but I can't visualize who we are talking about as 
being overpaid within the government workforce, and I am just 
wondering if anybody can help me out on that.
    Ms. Simon. I'd like to take a stab at that. I think your 
comments point to why the CBO study is particularly 
inappropriate as the basis for a conversation about whether 
Federal employees are overpaid or underpaid. In my testimony I 
talked about Border Patrol agents who have a very complex, 
difficult, and dangerous job. Their job requires only a high 
school diploma. They receive additional training from the 
Federal Government before they start their jobs, but their 
formal education, their educational attainment is ----
    Mr. Raskin. Got you. So basically, when they say ----
    Ms. Simon. All they need is a high school diploma.
    Mr. Raskin.--they are overpaid, we are equating a Border 
Patrol agent who just has a high school degree to that person 
taking their high school degree and getting a job at the 
McDonald's across the street ----
    Ms. Simon. Well, we're ----
    Mr. Raskin.--from the border or something like that.
    Ms. Simon. In the CBO study, we're comparing it with all 
private sector workers with a--high school education is their 
highest educational attainment who might work in security 
services, broadly defined, which could include all kinds of 
security guards, mall cops, you know ----
    Mr. Raskin. Okay.
    Ms. Simon.--anything in that ----
    Mr. Raskin. Let me ask this. So if that public-private 
juxtaposition isn't exactly useful to us in terms of thinking 
about the pay, what about--does anybody have any information on 
either an international perspective on what workers make in 
national governments abroad or historically? And the historical 
context I think is important because I do know that the Federal 
Government historically has been a place that has been open to 
people facing serious discrimination in the private sector like 
women, like African Americans who were able to get jobs their 
first when they were experiencing rampant discrimination. And 
so the fact that, you know, a woman or an African American 
could get hired in the 1920s or '30s at the Post Office or at 
the Department of Labor but not get hired in the private sector 
without facing extreme discrimination, that doesn't surprise me 
that they might be making a little bit more, and that might be 
something we would celebrate.
    But I wonder if anybody has got either any historical 
perspective or international perspective on it. Mr. Biggs?
    Mr. Biggs. From the international context, the OECD, which 
is a group of developed countries, has done surveys of 
government pay for different positions in those developed 
countries, so the, you know, U.S., UK, Canada, France, 
whatever. And for a variety of positions they look at the U.S. 
Federal Government pays more. Just as an example, economists 
are paid an average of about $150,000 a year in the U.S. 
Federal Government, about $87,000 per year in other OECD 
countries. Somebody who's a secretary in the U.S. earns an 
average about $69,000 in the Federal Government, about $47-
48,000 in other OECD countries. So this is not--this is 
government-to-government among other developed countries.
    Mr. Raskin. Okay. I would love to get that information from 
you. You are telling me that a secretary in the Federal 
Government makes an average $69,000 a year?
    Mr. Biggs. For secretaries, it's listed as an average of 
$69,476. For executive secretaries, it's listed as $98,786.
    Mr. Raskin. Okay. Did anybody have any historical data to 
see--because of course one of the things we have seen is a 
decline in unionization for people who would be in high school 
graduate jobs in a lot of places in the private sector, but an 
improvement in unionization in the public sector. So that might 
account for some of the disparity. And I wonder to what extent 
unionization does help explain it. And, Ms. Simon ----
    Ms. Simon. One of the places you see the impact of the 
decline in unionization is in the data that are used for the 
Federal Government's pay system for its hourly workforce, 
people who work in the skilled trades. They're mostly employed 
by the Department of Defense in depos and arsenals, and they--
on paper anyway we have a prevailing rate system that collects 
data from all over the country, private sector data on what 
people are paying--what private employers are paying for 
similar jobs. And you can see month to month when an auto plant 
closes in a community, wages in that community go down by 35, 
40 percent because the wages paid in a union manufacturing 
plant are so much higher than the nonunion ----
    Mr. Raskin. So on that theory we would not want to allow --
--
    Ms. Simon.--wages.
    Mr. Raskin.--extreme inequality in the private sector to 
become the justification for driving wages down further in the 
public sector, which I take it is ----
    Ms. Simon. No, but I would say that that is a nice way to 
describe the subject of this hearing.
    Mr. Raskin. Yes. All right. I think my time is up, Mr. 
Chairman. Thank you for your indulgence.
    Mr. Meadows. I thank the gentleman. And in light of the 
number to my right of potential questioners, instead of 
recognizing myself, I am going to go to Ms. Kelly and recognize 
her for a strict five minutes. I am just kidding.
    Ms. Kelly. That is all I will need. Thank you, Mr. Chair, 
and thank you to the witnesses.
    When I saw what this topic was, I was really surprised 
because I have worked on every level of government and outside 
of government, and when I became a Member of Congress, so many 
of the people that came to work for me had to take pay cuts. 
And also their health care wasn't as good as what they had 
otherwise, so I find that very interesting.
    The other thing is--and you don't have to answer the 
question--but it always seems like people think that if you do 
government work or you are a public servant or social service 
that you should make less even though you go to college, you 
may have your undergrad degree, your master's degree, in some 
cases your Ph.D., but people think that you should not make 
more because you are just a government worker or in social 
service.
    Also the other thing is--and I know we talked about 
Washington versus outside, but how many of our staffers have 
two, three, four, five, six, seven, eight, nine, yes, nine 
roommates so they can live off the salaries that we pay them. 
And they don't work just straight nine-to-five jobs. So to the 
very staffers in this room, it is shameful that some people 
make $25,000 and $30,000 despite whatever, you know, the school 
loans you are saying that they get paid back, but it is still 
horrific in my opinion.
    Ms. Simon, your testimony states that the Federal pay 
system promotes internal pay equity and prevents 
discrimination. You state in your testimony that this is 
because a system, and I quote, ``assigns salaries to the 
position, not the individual.'' Can you explain how you believe 
the Federal pay system advances gender and race equity?
    Ms. Simon. Yes. I also in the testimony cite a 2014 study 
by the Office of Personnel Management that really does focus 
exclusively on the question you asked, pay equity in the 
Federal Government. The best number in that study is that well 
over 90 percent of--or women who are part of the Senior 
Executive Service on average make almost exactly the same 
salaries as men in similar jobs, but that's true throughout the 
Federal Government.
    And Representative Raskin was asking about--or asking about 
historically the Federal Government was the place that was open 
to hiring women and members of racial minority groups when the 
private sector refused. Not only did it hire people based 
solely on skills, but it pays based solely on the job. So if 
the holder of the job is female or male, black or white, old or 
young, it doesn't matter. It matters only what the job is. And 
that's the way that the Federal Salary Council compares private 
and Federal pay and measures its pay gap, and that's the proper 
way to take a look at comparisons between Federal and private 
pay because the attributes of the individual, which is what the 
CBO study focused on, should always be irrelevant.
    Ms. Kelly. Thank you. You also wrote, ``One appalling 
result of Heritage's approach is the interpretation of the fact 
that the Federal Government is less likely to discriminate 
against women and minorities in terms of pay than the private 
sector. It is viewed as evidence that the government overpays 
relative to the private sector rather than the other way 
around.'' Are you saying that the Heritage study found a 
compensation premium for Federal workers because the private 
sector is more likely to discriminate against workers than the 
Federal Government?
    Ms. Simon. If you look at data on, say, African American 
women with bachelor's degrees in the private sector and what 
they make on average, an African American woman who hold jobs 
in the Federal sector that require bachelor's degrees, on 
average, the Federal Government pays more because it doesn't 
reproduce the discriminatory pay practices that we find in the 
nonunion private sector.
    Ms. Kelly. And actually, there was a study done in Chicago 
that reports for African American women in the private sector 
that the more education you have, the bigger the pay gap grows 
so ----
    Ms. Simon. In the private sector.
    Ms. Kelly. Right, in the private sector. Right. Can you 
just talk about--I want you to describe the most harmful 
proposals and explain how they would affect Federal workers 
when you look at what may be in President Trump's budget.
    Ms. Simon. Well, we have not been privy to what's in 
President's--President Trump's budget except for one phone call 
I got earlier this week that described the many, many proposed 
cuts we can expect to see to Federal retirement. They want to 
change the basis in which annuities would be calculated. They 
want to eliminate COLAs altogether for people on FERS and just 
a quarter of a percent for people in CSRS. They want to 
eliminate the FERS supplement that would affect law enforcement 
agents who are--have mandatory early retirement. And--but the 
biggest and worst and most consequential would be to charge 
Federal employees who participate in FERS anywhere from 7 to 9 
percent of their salaries for their defined benefit. This is a 
massive pay cut.
    It's important to note, although we've been discussing here 
today that too few private sector employees have access to a 
defined benefit pension anymore, for those who do in the 
private sector, about 97 percent of private sector employees 
with a defined benefit plan don't pay anything toward their 
pension. The employer pays the entire cost. Federal employees 
already pay far, far more for their pension benefit than 
comparable private sector employees.
    Ms. Kelly. Okay. Thank you. And I know I went over, but I 
did want to make a comment that as the ranking member of the IT 
Subcommittee, and you have been very involved with us, that we 
can't keep Federal employees in that division and with 
cybersecurity because we don't pay enough. So thank you for 
your indulgence.
    Mr. Meadows. I thank the gentlewoman.
    The chair recognizes the gentlewoman from Michigan, Mrs. 
Lawrence, for five minutes.
    Mrs. Lawrence. Thank you so much.
    This discussion to me is very troubling on a lot of levels. 
The arrogance of individuals to target Federal employees where 
the criticism of Federal employees is, one, that you are a 
public servant, I am paying your salary; therefore, you should 
make less, but you have to uphold to so many restrictions when 
you take that oath of office. And Federal employees are 
required to take an oath of office for ethics, for the Hatch 
Act, for so many things that are different from the private 
sector that you don't even have an expectation or requirement.
    There are some plusses that I wanted to go through. When we 
talk about career employees and why they stay there, most 
people go into the Federal Government, unlike the millennials 
of today, thinking that it is a career because there is upward 
mobility built into Federal employment, so therefore, you can 
actually grow and get promotions based on education and 
experience within the agency and it is rewarded.
    The highest enforcement of civil rights, employment rights 
are in the Federal Government. Ladies and gentlemen, the 
diversity that has historically been demonstrated in Federal 
Government--and I will say from those who despise the fact that 
minorities are advancing in salary and the Federal Government 
is the catalyst to that is some of this displaced minimalism 
that we see happening with Federal employees. I remember 
hearing my older relatives saying that when you got a job at 
the post office, you were considered elite in the community 
because it was a paid job that you were going to be paid the 
same amount of money as your white counterparts, that you would 
be able to have a career, your job was protected, and guess 
what, they would enforce civil rights laws. So I am a little 
sensitive when I hear this blanket conversation about Federal 
employees.
    The fact that--why would we not have an appeal system in 
the Federal Government for employees? You expect that if you 
are arrested or if you are accused of something, that you would 
have appeal rights. And instead of saying this is a model that 
private industry should use, we want to dummy down the Federal 
Government who are the keeper of our Constitution and our laws 
and we want to say pay them less, make them be the lowest-paid 
employee.
    And for the life of me I am going to try to find a 
secretary in the Federal Government that is making $67,000 or 
$90,000 that you have. As an employee who has been employed for 
30 years, moved up in the ranks, but I am sorry, the starting 
pay--and I want to give you an example. The starting pay of a 
registered nurse--and this is according to VA. A practical 
nurse or a medical technician in VA makes about $45,000 a year. 
Nursing assistants make $35,000 a year.
    Now, many of you know I worked for one of the Federal 
agencies and I was in H.R., and the biggest problems we had 
were hiring professionals. We needed doctors, and we could not 
get an active doctor in the system. It was always a retired 
doctor that would come in because the pay was so low. It was 
not one that was reflective of the industry but a retired 
doctor could come and make this lower pay. And we struggled 
with that.
    We struggle with engineers, we struggle with those, and it 
is nowhere that you can say that a skilled professional makes 
more money in the Federal Government. They may have career 
status protection and they may have opportunities within this 
agency.
    The last thing I want to say, and then I am going to get a 
question in, is this issue about official time. It comes up 
consistently. And we are dealing with this right now in the 
military where we have women who are being subjected to sexual 
harassment in the military. So you are telling me in order for 
a person who is being discriminated against--and I was an EEO 
investigator--you are being discriminated against, you are 
being harassed in the workplace, guess what, take your own 
personal time, take time off the clock because you are being 
abused in the workforce to address your complaint.
    When we say official time, you cannot go in there and have 
a cup of coffee and sit there for the whole day. You have to 
have a complaint. And to protect the rights of individuals in 
the workforce with official time so that if I feel aggrieved, I 
have a process to go through. It is something that is--we keep 
talking about this as we are trying to find a problem.
    One thing that you all are saying and I hope we all agree 
on this, I want every Federal employee to earn their salary. I 
want efficiencies. I cannot stand fraud. I take the work of a 
Federal employee--I do place them at a higher level. And I do 
want to compensate them with a wage that is reflective of their 
skills, but I don't want, I don't want our employees to be able 
to disregard the responsibilities that they take an oath to do.
    Thank you.
    Mr. Meadows. I thank the gentlewoman.
    The chair recognizes the gentlewoman from Florida, Mrs. 
Demings, for five minutes.
    Mrs. Demings. Thank you so much, Mr. Chairman.
    You know, a few minutes ago I heard a comment that too many 
Federal employees, particularly those coming in, don't have a 
point of reference of how the real world works. well, I would 
venture to say many times Congress acts as if it does not have 
a point of reference of how the real world works.
    As we all know, there have been growing inequality in wages 
with the highest earners keeping more of the total wages that 
are paid in this nation. This is likely why the CBO has found a 
disparity in wages between the public and private sectors, 
particularly for the least educated workers.
    Mr. Kile, workers in the Federal Government, including by 
our calculations, about 31,700 people in Texas and more than 
36,000 people in California with no more than a high school 
education were paid just about 34 percent more than similarly 
educated workers in the private sector. Is that correct?
    Mr. Kile. We did not look at the breakdowns by State, but 
we do find on average the differences in compensation by 
education that we have been talking about today.
    Mrs. Demings. So is the percentage based on--the 
percentage, would you say generally that percentage is correct?
    Mr. Kile. I'm--so the percentage difference in total comp 
for people with a high school diploma or less was 53, and 
that's a national average.
    Mrs. Demings. The Bureau of Labor Statistics and other 
experts have observed that in some cases benefits inequality 
between the highest and lowest earners has been even starker 
than wage inequality. According to the Bureau of Labor 
Statistics, only 33 percent of private sector workers whose 
earnings put them in the lowest 25 percent of wage earners had 
access to employer-provided health care. However, Ms. Simon, 
every full-time Federal employee has access to the Federal 
Employee Health Benefits Plan, even the lowest-paid, least-
educated employee in the Federal Government. Is that correct?
    Ms. Simon. That's correct, but it also--I just want to add 
to what was just said. It's not--the problem with the CBO study 
is not that the employer provides the benefit; it's the 
differences in the cost of the benefit provided. It costs the 
Federal Government more to provide the benefit, the same 
retirement benefit, than it costs a private employer. And that 
is a necessary piece of information that--to be included in any 
financial comparison of the cost of benefits. It's not the 
benefits but the cost of benefits, the employer ----
    Mrs. Demings. So the retirement ----
    Ms. Simon.--cost of providing the benefit ----
    Mrs. Demings.--health insurance, paid leave ----
    Ms. Simon. The Federal Employee Health Benefits Program 
also costs the government more than it should, given the 
benefits it provides. There are structural flaws in FEHBP that 
make it more expensive than it should be. The actuarial cost of 
the benefit versus what the premiums are, there is--there's a 
big--there are flaws in the structure of FEHBP that make it 
much more expensive than it should be. And I wouldn't call the 
restriction on the investment of the assets in the Civil 
Service Retirement Trust Fund a flaw, but it makes it more 
expensive than a similar private pension plan that would 
provide the exact same benefit.
    Mrs. Demings. CBO found that benefits for Federal employees 
with no more than a high school education costs about 93 
percent more than benefits for private sector employees with no 
more than a high school education. In other words, the 
difference between public and private sector benefits for 
employees with only a high school education were larger, as you 
have just said, Mr. Kile, than the difference in the wages paid 
by the public and private sector to these employees. Is that 
correct, Mr. Kile?
    Mr. Kile. Yes, that's correct.
    Mrs. Demings. If Republicans cut benefits for Federal 
workers with no more than a high school education so that they 
are comparable to benefits paid by the private sector with 
comparable levels of education, according to your findings, the 
Federal workers would get to keep about 7 percent of their 
benefits.
    Mr. Kile, has the CBO examined what medical benefits, 
retirement benefits, and leave Federal workers with no more 
than a high school education would actually have if they 
receive only 7 percent of the benefits that they currently 
receive? Have you examined that?
    Mr. Kile. No, that's something we have not examined.
    Mrs. Demings. Ms. Simon, would you like to comment on 
whether the benefits earned by Federal workers with no more 
than a high school education are 93 percent too generous?
    Ms. Simon. The benefits are not too generous ----
    Mr. Meadows. Ms. Simon ----
    Ms. Simon.--they're too expensive.
    Mr. Meadows.--her--Ms. Simon, her time has expired but 
please answer the question.
    Mrs. Demings. Thank you so much, Mr. Chairman. Don't treat 
me differently.
    Mr. Meadows. No, I would never treat you differently. Go 
ahead.
    Mrs. Demings. Ms. Simon?
    Mr. Meadows. No, please answer.
    Ms. Simon. I said I--the benefits are hardly too generous. 
They are--I think the health insurance benefits are too 
expensive. I think that we would benefit from self-insured 
program in FEHBP.
    As far as the cost to the employer and cost to the 
government of providing the retirement benefit, it's--there's 
very, very good reason for that, as I described in my 
testimony, because of the rate of return on treasury bonds 
compared to private equities. And so the provision of benefits 
can't--has to take into consideration the cost of providing the 
benefits, not the benefits themselves.
    Mrs. Demings. Thank you so much, and thank you so much, Mr. 
Chairman. I yield back.
    Mr. Meadows. I thank the gentlewoman.
    Ms. Simon, let me make sure I can clarify one thing in 
following up on her testimony there--or your testimony, her 
questions. Are you saying that the benefits that Federal 
workers get are not better; they are just more poorly 
administered on behalf of the Federal Government? Because you 
said the Federal Government was not efficient I guess in doing 
that? I am trying to understand where she was going with and 
you said it is not better benefits; it is just they are not--it 
is more costly to administer it in the Federal Government?
    Ms. Simon. Yes. I didn't say because--and it's structural 
issues. The FEHBP has problems with risk segmentation. It 
doesn't have one benefits package. It squanders the purchasing 
power of what is the largest employer-provided plan ----
    Mr. Meadows. So you are saying the Federal Government is 
not administering their retirement program as well as the 
private sector?
    Ms. Simon. No, I was just talking about the Federal 
Employee Health ----
    Mr. Meadows. Well, that is what it sounded like.
    Ms. Simon. I was talking about the Federal Employee Health 
Benefits Program.
    Mr. Meadows. So they are not ----
    Ms. Simon. I think there are structural ----
    Mr. Meadows.--implementing it ----
    Ms. Simon.--flaws in that plan. I'm not saying that OPM --
--
    Mr. Meadows. So this gets back to the ----
    Ms. Simon.--implements it poorly.
    Mr. Meadows.--previous question. You think they ought to go 
all on Obamacare?
    Ms. Simon. No, sir.
    Mr. Meadows. Okay. Well, we will follow up on that.
    Mr. Sarbanes, you are recognized for five minutes.
    Mr. Meadows. Oh, I am sorry.
    Mr. DeSaulnier. It is close enough, Mr. Chairman. We are 
both physically close to one another here. And I do want to say 
the chairman and I share something in common. It is my 
understanding you started off in the restaurant business, Aunt 
D's?
    Mr. Meadows. Boy, you know, you Googled me pretty well 
there, yes.
    Mr. DeSaulnier. Well, we have something in common. I always 
admire somebody who has owned restaurants, having managed and 
owned them for 35 years. My mistake was, as opposed to you, I 
stayed in it. I wished I had gone into real estate because 
there is more money in real estate than there is in the 
restaurant business.
    But I really think this is too bad. I think it is a 
reasonable question to ask from my perspective, having been in 
the private sector in a very competitive field where I needed 
to compensate and treat my employees well, owning restaurants 
in the San Francisco Bay area, which was very competitive, low 
profit margin. If I didn't treat my employees well, I was out 
of business in no time. And I saw lots of people who invested 
in lots of businesses who were out of time, particularly the 
retail business.
    So I think the question should be how do we as Americans 
clearly in this day and age get wages and benefits up for all 
working Americans? I perceived the last election as being 
argument about that, that both parties had left that behind.
    Today, according to Forbes magazine, the 20 wealthiest 
Americans possessed as much wealth as 152 million Americans. We 
have never had that concentration of wealth in this country. 
There is plenty of good arguments as to why we need to fix 
that. And I have never understood as a manager of people how 
blaming rank-and-file people for operational problems is going 
to solve your management problems. My experience in the public 
sector, having served at every level of government, usually our 
problems were cultural or management level. And I have heard 
that in this committee over and over again.
    So forgive me for indulging in that little editorial 
comment, but I really do think it would serve this committee--
and I know a lot of us on this side of the aisle would like to 
talk about how we get greater efficiencies in government. For 
those of us who believe in government, we want excellence in 
government. So the Heritage Foundation, I heard you earlier 
talk about the good employee who feels trapped. I think that 
happens in public and private organizations, and I am sure you 
understand that as well.
    So how do we change that? And I really think this committee 
would be better served trying to figure out what is it we could 
do based on peer-reviewed, analytical analysis to improve 
customer service. I think it is really difficult when Members 
complain about the IRS customer service at the same time when 
you cut your revenues by almost a third. And I am sure the GAO 
has done studies on what the appropriate level in each 
workforce in terms of what wages and compensation should be and 
what the revenues should be and what that would equate to in 
terms of customer service. And maybe the GAO can respond to 
that.
    But first, I would like Ms. Simon to respond to that from 
your experience. How do you get Federal employees from your 
experience to get compensated well in a competitive market? In 
the bay area, it is hard to keep Federal employees. I know my 
district office, I am losing a great person who worked for 
Google and is going to go back to work for them because he can 
get paid three times the amount of money in an area of the 
country that if you make $105,000, you are considered poor vis-
?-vis the housing market.
    So maybe you could respond to that. What is the right 
compensation in your view, understanding that you argue as 
appropriately for your members?
    Ms. Simon. Well, I'm also a member of the Federal Salary 
Council, and we are given the opportunity to look at large 
quantities of data that show disparities between Federal pay 
and non-Federal pay on a locality-by-locality basis. And we see 
these disparities. We see it by occupation; we see it by 
location.
    My colleagues here today are talking about low quit rates. 
One of the things that we're--I've seen in my long career 
representing Federal employees is that salaries--you know, 
people who go into Federal service expect to have fair 
compensation but they don't do it to get rich. It's because 
they are very, very committed to the mission of their agencies. 
You've got people working in health care in the Department of 
Veterans Affairs, over a third of whom are veterans themselves, 
and they have devoted their careers to that kind of work. 
You've got people working in EPA who care deeply about the 
future of this planet and care about public health and clean 
air and clean water. And they have committed their lives to 
working in those kinds of agencies. Border Patrol agents who 
put their lives on the line, Federal corrections officers who 
put their lives on the line every day, but they're very 
committed to public safety, they also have to raise their 
families.
    And we in the last 10 years or so but really the last nine 
years have suffered horrendous cuts in compensation, big 
retirement cuts, three years of pay freeze followed by 
minuscule pay adjustments, and no other group of Americans has 
had to bear such a huge burden for the politics of budget 
austerity. About $189 billion and counting have come out of the 
pockets of Federal employees partly because they're demonized 
routinely, partly because of these ridiculous studies that turn 
into misleading headlines about Federal employees being 
overpaid. We had reference earlier today to Federal employees 
who make over $100,000 as if that were some kind of scandal 
when most of those professionals who are earning that kind of 
salary, as you point out, could make much, much more in the 
private sector.
    So it's really a matter of funding and changing the 
conversation in this country away from the idea that only the 
very, very wealthy deserve to live a decent life.
    Mr. DeSaulnier. Thank you.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank you.
    The chair recognizes the gentleman from Pennsylvania, Mr. 
Cartwright, for five minutes.
    Mr. Cartwright. Thank you, Mr. Chairman.
    Mr. Kile, thank you for being here. I want to drill down on 
some of the figures noted in the CBO report comparing the pay 
of Federal and private sector workers if I may. Your report 
finds that Federal workers with a bachelor's degree or less 
receive more total compensation than their private sector 
counterparts ranging from 21 percent more for employees with a 
bachelor's degree to as high as 53 percent more for employees 
with no more than a high school diploma. Am I correct in that?
    Mr. Kile. Yes, that's correct.
    Mr. Cartwright. So according to data from OPM, more than a 
million Federal employees have no more than a bachelor's 
degree. That is about half of all executive branch employees. 
And I know that CBO analyzed data from the current population 
survey. However, assuming CBO's study is correct, we would have 
to conclude that the compensation of more than one million 
Federal employees is higher than compensation provided to their 
private sector counterparts with similar education levels. If 
our Republican colleagues insist that Federal compensation be 
realigned with private sector compensation, that would mean 
that the compensation of more than one million Federal 
employees would need to be cut. Many employees would see their 
total compensation cut in half.
    But OPM data show also that veterans comprise about 30 
percent of the Federal workforce. So if you take those numbers 
together, it appears that of the one million Federal employees 
who make more than their private sector counterparts, as many 
as 300,000 of them may be veterans of the United States 
military.
    Ms. Simon, nice to see you again. What do you think? Do you 
think veterans in the Federal Government are overpaid?
    Ms. Simon. I think for the most part veterans who serve in 
the Federal Government are underpaid. And I think that it's--
some of the discussion that has occurred in this hearing 
earlier talking about taking away appeal rights from Federal 
employees for adverse actions will fall most heavily on 
veterans and veterans with service-connected illnesses and 
disabilities because that really has been the focus of attempts 
to punish Federal employees. They want to punish by taking away 
their ability to defend themselves when they're--when--against 
allegations that they haven't performed well enough at their 
job in spite of their disabilities, and now they want to take 
away some of their pay.
    Mr. Cartwright. Well, I want to stay on the veterans theme. 
Unlike the vast majority of the private sector, the Federal 
Government has made it a priority to hire veterans by giving 
them a statutory preference in hiring. As a result, nearly one-
third of new hires in the Federal Government are United States 
military veterans. Let's take a look at the VA, for example. 
About one-third of its employees are veterans. Psychiatric 
practical nurses and medical technicians in the VA make about 
$45 grand a year, and nursing assistants make about $35,000 a 
year.
    Ms. Simon, do you believe that these individuals are 
overpaid by 52 percent or even 21 percent?
    Ms. Simon. They're definitely not overpaid. They're 
underpaid. And as we talked about before, what seems to raise 
the ire of some people who look at these data is that in the 
nonunion sector people who are performing similar jobs or have 
similar educational attainment receive no health insurance 
benefits from their employer, receive no retirement benefits 
from their employer, and they think the Federal Government 
ought to follow that race to the bottom. And of course that is 
not something that AFGE supports.
    Mr. Cartwright. Well, now some Members of Congress intend 
to use CBO's report to justify slashing Federal employee pay 
and benefits, but I just want to caution that we proceed 
cautiously in this area because we are all good little 
capitalists here, and we know that in a free market economy and 
also wherever you hire people, you get what you pay for.
    And if you continue to do, as you mentioned, Ms. Simon, 
beating up on Federal employees, beat up on your employees, 
beat them up, beat them up, cut their pay, make them feel bad 
about themselves, the best ones are going to wander off, and 
you are going to be left with what is left. And do we really 
want to do that when we run the Federal Government?
    Mr. Chairman, I thank you for your indulgence ----
    Mr. Meadows. I thank the gentleman.
    Mr. Cartwright.--and I yield back.
    Mr. Meadows. The gentleman's closing sentence would 
indicate that you don't always get what you pay for.
    I will recognize Mr. Cummings, the ranking member, for a 
line of questioning.
    Mr. Cummings. Let me--first of all, to all the Federal 
employees who may be watching today, I want to take a moment to 
thank you for what you do. I want to thank you for giving your 
blood, your sweat, and your tears to all of us to make our 
lives better. I have talked to many of you many times and asked 
why, why is it that you got into Federal employment. And over 
and over and over again I hear words like I wanted to do 
something that would last forever. At the end of my day they 
would say--many of you said it is not the pay I get; it is the 
deeds I do for other people.
    And, you know, every time I hear those words--and then we 
have people that have come to us many times and I will say, you 
know, where are you working? Well, I am working at this law 
firm. They tell me how much they are making, and I will say, 
well, this job doesn't even pay near that. And this happens to 
me almost every other month. What are you doing here? You are 
not going to make that kind of money. And you know what they 
say? They say, you know what, I have been doing this other job 
for 15 years, 20 years. I will take a pay cut. I will take a 
pay cut because I want at the end of my day and at the end of 
my life to be able to say I gave.
    And so I take my moment to thank all of you who may be 
watching here today.
    The other thing that I would say to our Federal employees 
is something that somebody said to me a long time ago. I know 
many times you get your paychecks and then you listen to this 
hearing and you listen to the people who have spoken here 
today, and you get your paychecks and you go to the 
supermarket, and you are the ones who have to get the subtotal. 
You are the ones who are sitting there with your calculator. 
You are the ones that leave those groceries behind because you 
don't have enough money.
    You are the ones who get up at 4:00 and 5:00 in the 
morning, dress the baby, and then try to race to work. And then 
you are worried all day. And then you hear people talking about 
it is a big bonus because you got some babysitting services. 
Please.
    You are the ones that worry. You are the ones at NIH that 
when we had the government shutdown, you are the ones who were 
worried. The nurses I talked to at NIH, she said I am so upset 
when we had the government shutdown. And I said why are you so 
upset? She said, because when they did the shutdown, what that 
does is it stops us from being able to continue some 
experiments or some research that could have saved lives. It is 
not about the money. It is bigger than that.
    And so I can spend all my time asking a lot of questions, 
but I am not going to do that. I want to just thank you because 
you don't get thanked enough. You don't get thanked enough. 
Over and over again you hear criticism, over and over again you 
hear people talk about what you are not doing, and I thank you 
for what you are doing.
    Now, before Mr. Meadows--he may think I am talking about 
him because I am not--Meadows is a good guy. I mean, really. I 
really believe that he wants balance, and I understand that. He 
and I have talked many times about whatever we are doing being 
effective and efficient, period. And in order to be effective 
and efficient, you have got to have good people. I was telling 
him a few minutes ago it is very rare that I fire anybody 
because I try to hire the right people.
    And so, you know, I just wanted to take that moment 
because, you know, this program that they do every year--I 
forget the name of it--where they honor Federal employees, and 
every time I go to that program, I have got to tell you, it 
gets very emotional because usually it is somebody who is 
unseen, unnoticed, unappreciated, and unapplauded. And somebody 
took time to recognize what they did or do.
    And, you know, I just want Federal employees to know that I 
think it was Mrs. Lawrence that said all of us want the best. 
All of us want employees that go the extra mile. All of us want 
to be--by the way, we are Federal employees. We need to go the 
extra mile, too. And I think when you look at Members of 
Congress and the time that we put in, I don't know a Member of 
Congress that has a nine-to-five job. I don't know any of them. 
If they do, they are not in office, that is for sure. Or even 
a--it is usually seven days a week. And so we are all here to 
serve.
    But you know what, your name may never appear on the front 
page of the Washington Post. Federal employees, your name may 
never appear in WTOP or even your local gazette. But I want to 
thank you on behalf of a Congress, a grateful Congress for what 
you do every day to make our lives better. Thank you for 
teaching us, by the way, the power of sacrifice. Thank you for 
giving us examples of people who are not selfish but are about 
the business of making people's lives better.
    And with that, I will yield back, Mr. Chairman.
    Mr. Meadows. I thank the gentleman for his kind comments 
and for his diligence in trying to make sure that our Federal 
workforce is indeed efficient and effective, to use your words.
    The chair recognizes himself for five minutes for a 
series--all right.
    Mr. Sarbanes, we are going to go ahead and let you pop in 
for a very strict five minutes if you would.
    Mr. Cummings. Sarbanes from Maryland.
    Mr. Meadows. From Maryland.
    Mr. Sarbanes. Thank you, Mr. Chairman. I appreciate it.
    Before I move to my comments, I just wanted to ask 
unanimous consent to enter a document into the record. This is 
a report from the Center on Budget and Policy Priorities on 
wage stagnation faced by middle- and lower-wage workers in 
recent decades.
    Mr. Meadows. Without objection.
    Mr. Sarbanes. Thank you. I thank the panel for your 
testimony today. I want to associate myself with the comments 
of Ranking Member Cummings, and I also want to salute the 
chairman because I know that he has brought close attention to 
the situation faced by our Federal employees. We are all trying 
to get to the right place in terms of providing the support and 
resources that are needed. This comparison I think we do on an 
annual basis between the kind of private sector workforce and 
the compensation and benefits and so forth that are available 
in the private sector and how that compares to what is offered 
to the Federal workforce.
    It seems the frame is always reversed from the position 
that I think makes most sense. We look at the comparison. We 
get this testimony, which obviously is subject to debate about 
the fact that the Federal employees have access to a broader 
set of benefits and compensation and overall have higher 
compensation in certain categories than what is in the private 
sector. And oftentimes, the conclusion that people want to draw 
from that is that we should take something away from the 
Federal employees, that we should in a sense degrade the 
package of benefits and compensation that is available to them.
    But I think that in fact what we offer our Federal 
employees is a model and a standard that we ought to be 
thinking about how we can get the private sector to raise its 
standards up to that level. I think, Ms. Greszler, you talked 
about the fact that Federal employees have access to some 
daycare benefits and some assistance with student loan 
repayment. Well, okay. If I am somebody working in the private 
sector and I am listening to this hearing and I am hearing that 
there is some benefits available to the Federal workforce that 
help with daycare, the answer to the fact that there is a 
discrepancy there between the Federal workforce and the private 
sector shouldn't be to invite the private sector person to say, 
well, the way to solve the discrepancy is to take it away from 
the Federal employee. The way to address the discrepancy is for 
that private sector person to say, well, I would like to have 
that benefit, too. That is a valuable benefit. How can I add 
that to the compensation package? And we ought to be trying to 
promote with private sector employers that that is a legitimate 
benefit that ought to be offered to people.
    When you look at the pensions, and Representative Lynch 
talked about this at the outset, we ought to be trying to find 
ways to strengthen and lift up and really in some ways 
completely overhaul the private pension system in this country 
so it reflects more of the characteristics of what we have been 
able to achieve with respect to the Federal workforce. We need 
to bring up the standards that are out there in the private 
sector, not knock down the standards of what is a model in 
terms of the Federal workforce.
    A decent wage not subject to bias, as you pointed out, Ms. 
Simon, is something we ought to be reaching for in the private 
sector. That is why many of us argue for a national minimum 
wage. Let's bring up what is happening out there for all of the 
workers in America, not degrade what is available to the 
Federal workforce.
    And then the last comment I just wanted to make is there is 
this suggestion that is made that because the phones aren't 
being answered in a timely way in this agency or there is a 
casework backup in some other agency, that that reflects a 
substandard Federal employee. But the fact of the matter is 
that hiring freezes or the threatening of that or other cuts to 
resources that should support our Federal workers are often the 
reason that that is happening. So we have got to be very 
careful about putting that kind of narrative out.
    So as I close, I just want to thank our Federal workforce 
for the great work that they do, and let's see if we can be 
enlightened enough to go out and work to get the private sector 
to embrace some of these standards and benefits that the 
Federal workforce has.
    And I yield back.
    Mr. Issa. [Presiding] I thank the gentleman for yielding 
back.
    I now recognize the chairman, the good morning from North 
Carolina, Mr. Meadows.
    Mr. Meadows. I thank the chairman. I thank him for his 
willingness to fill in in his old seat that is certainly one 
that has seen a lot of great work from his perspective and the 
perspective of many others.
    So let me go ahead and follow up. I apologize. I have got 
somebody--actually, I have got someone from the continent of 
Africa that is here who came for surgery here in America 
because as much as we are dealing with problems here, it is 
still the greatest country on the face of this globe. And as we 
look at this, it is critically important. So I have got to run 
right after that, but let me go ahead and follow up on a few 
things.
    Mr. Biggs, we are going to have civil service reform. And 
so the testimony that all of you have here today will play a 
factor in that. And yet I am at a point of where I have got Ms. 
Simon saying one thing. I have got the CBO, Mr. Kile, saying 
another. I have got you and Ms. Greszler saying different 
things. So I need you to help me understand why, from your 
perspective, Ms. Simon is wrong. And all I am wanting to get at 
are the facts.
    Mr. Biggs. If you need to know one thing about the figures 
that come out of the Federal Salary Council, they claim that 
Federal employees are--on average receive salaries 34 percent 
below those of non-Federal employees. Non-Federal doesn't just 
mean private sector. Non-Federal means state and local 
government workers. If you look at the BLS data they use, those 
data show that state and local government workers receive about 
the same salaries as private sector workers with similar 
skills, similar job demands.
    So what the Federal Salary Council is telling you is that 
Federal employees on average receive salaries that are 34 
percent below those of state and local government workers. Go 
to anybody in state and local government; they will laugh if 
you say that. I mean, I've been in similar hearings. We've had 
people who worked in state government. They say we can't keep 
employees in state government because they'll go to the Federal 
Government if they have the chance.
    Mr. Meadows. All right. So you say ----
    Mr. Biggs. It's just a wrong ----
    Mr. Meadows.--that you will go to anybody and laugh. I 
appreciate that. She can come up and go to anybody and laugh 
with your testimony as well. So here is what I need. I need 
some facts. Why is it wrong in terms of the comparison? I need 
data points ----
    Mr. Biggs. Okay.
    Mr. Meadows.--as we look at this.
    Mr. Biggs. The technical reason that is wrong is a problem 
we call over-grading in the Federal Government, which both the 
CBO and the GAO have documented, which means that you have a 
position that has the skill demands of, say, a GS-8, but you'll 
be assigned, say, a GS-9 or a GS-10. That's a way of raising 
pay for the employee. When--the data they use from the BLS to 
compare to private sector state and local government workers, 
the BLS itself looks at the job and says by our judgment we 
think this job is equal to a GS-8 on the Federal Government 
scale. The BLS does not look at Federal Government jobs and do 
their own assessment of what the skill demands the job is. They 
take it for granted that the Federal pay scale is correct, that 
the job is correctly assigned ----
    Mr. Meadows. So they come from an assumption that the scale 
is the benchmark, not the duties that are performed ----
    Mr. Biggs. Yes.
    Mr. Meadows.--is that correct?
    Mr. Biggs. So what you need to do is have the BLS go look 
at Federal positions, do their own assessment of the skill 
demands of the jobs, just like they do with private sector 
positions, just like they do with state and local government 
positions. I guarantee you that 34 percent figure will be--
shrink considerably.
    Mr. Meadows. All right. So would AEI and Heritage, would 
you be willing to look at both the CBO score and Ms. Simon as 
she has put forth from a Federal workforce and point out both 
the valid--from your perspectives valid and nonvalid 
assumptions so that we can hopefully make a more informed 
decision. Are both of you willing to do that?
    Mr. Biggs. I'd be happy to.
    Mr. Meadows. All right.
    Ms. Greszler. I would like to point out one place that I 
have agreement with Ms. Simon here and that's in the pensions 
and the fact that the Federal Government is not effectively 
managing them because that's going into treasuries. Treasuries 
do not earn the average rate of return that other things do, 
and so I agree wholeheartedly. And by shifting employees taking 
that government contribution that's into a defined benefit plan 
that's not actually invested anywhere; it's used to pay for 
current government spending. Instead of shifting that that 
guarantees the lowest possible rate of return into a Thrift 
Savings Plan, you can actually get greater returns, greater 
pension or retirement benefit with a smaller contribution 
there. And so ----
    Mr. Meadows. But we need to be careful there because as we 
go into that, if you take that scenario out further and you 
apply it to other things like Social Security, we run into a 
number of things that potentially--her argument doesn't hold 
weight because of--the counterargument that is made in the 
exact opposite paradigm for Social Security, quote, 
``privatization.'' Would you not agree with that?
    Ms. Greszler. I don't think that the government should be 
investing the money themselves, but that's why you take it out 
of a defined benefit plan and you give ownership to the 
individual because you can look at the state and local pension 
plans and say, yes, they have the ability to invest in whatever 
they want. And what they've done with that in large part is 
play politics with pensions, promise ----
    Mr. Meadows. Okay.
    Ms. Greszler.--far more than they can afford to pay.
    Mr. Meadows. All right. I am running out of time. So let me 
say this. Mr. Kile, I would ask you to do the same and say--you 
know, there has been a lot of accusations that CBO is not 
accurate on this, which I find really interesting because when 
CBO says something that we like, we use it; when they don't, we 
really condemn it. Both sides do that. I find that they are 
condemning you today, but yet, they use the CBO to justify 
their arguments on the Affordable Care Act at the same time. So 
I find it a little bit--a little hypocrisy in that. So here is 
what I would ask you to do is look at your study as it relates 
to the charges that Ms. Simon made in terms of what you didn't 
consider. And I heard you loud and clear. And I want you to see 
if you can address that. I can probably instruct you a little 
bit more to get back to this committee than I can as a request 
for the others. What would be a reasonable time period to do 
that, in 60 days?
    Mr. Biggs. Let me talk to my colleagues and figure out when 
we can get back to you on that, but ----
    Mr. Meadows. Okay. If you can give us an update with a time 
frame within the next 14 days so that way we know what to 
respond to, that would be great.
    Mr. Biggs. Yes, we can do that.
    Mr. Meadows. All right. I want to thank all of you, and Mr. 
Chairman, I will yield back to you.
    Mr. Issa. I thank the gentleman. Thank you for yielding 
back.
    I am going to be brief. I don't anticipate a full second 
round, but the ranking member may have some additional 
questions. But I want to just try to bring this to some 
summation of some things that I hope we agree on. Ms. Simon, I 
will go to you first. There has been a lot of discussion. If 
this committee, which certainly has the jurisdiction, the 
capability, did a modernization of the pension and allowed 
people, let's say, at their fifth year when they vest under the 
current system to opt into a rollover to a TSP, all the funds 
including our portion, would that be something that you believe 
could be in their best interest if they decide it is in their 
best interest?
    Ms. Simon. No, absolutely not. The current Federal 
retirement system really was created in the era of Ronald 
Reagan. It was a bipartisan compromise ----
    Mr. Issa. No, I understand ----
    Ms. Simon.--and ----
    Mr. Issa. I understand how we did away with the 2.5 percent 
and no Social Security, went into this ----
    Ms. Simon. That's correct.
    Mr. Issa.--defined benefits, but I would like you to answer 
the question ----
    Ms. Simon. But the ----
    Mr. Issa.--as to why you would object to essentially people 
taking control of the entire amount that would otherwise be 
held by the government for decades and putting it into 
something that they could borrow against, they could invest 
against, and they could use as they please, as they do more 
often in the private sector?
    Ms. Simon. The reason we would oppose that and we would 
advise our members strongly not to do that, God forbid if 
Congress did vote to take away people's defined benefit plan is 
because ----
    Mr. Issa. Ma'am, I don't mind your using a lot of terms, 
but let's just agree to one. We are saying if Congress decided 
to give them the option at their option and their option only 
to opt out so please don't use the word ``take away.''
    Ms. Simon. Oh, I ----
    Mr. Issa. When we give an option, it is not a taking away 
of a right.
    Ms. Simon. I was referring to a proposal that would 
grandfather in people--the option would only be available to 
existing employees and new employees would have no ----
    Mr. Issa. Right. No, and I am simply ----
    Ms. Simon.--opportunity ----
    Mr. Issa.--asking a question that I think Heritage and AEI 
were referring to, which is--and I think CBO and GAO would 
score it as likely neutral in the long run. It might cost us in 
the 10-year window because the money would disappear even 
though technically it isn't ours. But leaving all of the 
technical stuff, simply the question of, as a representative --
--
    Ms. Simon. Yes, I ----
    Mr. Issa.--of these employees, do you believe that they 
should have that choice, and if not, why?
    Ms. Simon. The arguments, as Mr. Meadows said, are the same 
arguments against Social Security privatization. These 
retirement savings vehicles put all the risk of future 
retirement income adequacy onto the worker. If the stock market 
happens to decline by a substantial amount at the moment that a 
particular worker is--has chosen or is forced to retire, that 
will have a huge ----
    Mr. Issa. Okay. I ----
    Ms. Simon.--impact on their ability ----
    Mr. Issa. I have your answer ----
    Ms. Simon.--to support themselves in retirement ----
    Mr. Issa. Thank you.
    Ms. Simon.--yet if they have a ----
    Mr. Issa. Thank you.
    Ms. Simon.--defined benefit ----
    Mr. Issa. Thank you.
    Ms. Simon.--that won't happen to them.
    Mr. Issa. I understand your answer. But I want to ask from 
a standpoint of CBO particularly. Is it reasonably easy for you 
to--or maybe GAO would study it, and then there is Heritage, 
who is so kind to study us. The performance of TSPs on behalf 
of the workforce over any given period and the performance of 
their pension plan over the same period of time, 5 years, 10 
years, 20 years, I am going to suspect that you can come back 
to us and show that TSP--which is not an invest in just 
anything; it is a broad investment base--has outperformed the 
defined benefit plan and every single Federal worker, given 
that same amount of dollars moved into the other plan, would 
get more money over any period of time we could study going 
back to Reagan. Ms. Greszler?
    Ms. Greszler. Yes, that's absolutely what you would see. 
And by definition, if you're giving workers the choice to have 
this money, the exact same amount, there's really not a way 
that they would have less. All they have is a choice. As Ms. 
Simon pointed out, those funds are ineffectively invested in 
the Treasury. They could be ineffectively invested in Treasury 
by that worker's own option, and that's the lowest return they 
would get. If they make other choices, they would have higher 
returns.
    Mr. Issa. Mr. Kile, I am not going to ask you the same 
question; I am going to add to it for a moment. And I am not 
asking you to shoot completely from the hip, but as you know, 
the Federal workforce has a disincentive to stay past their 
pension vesting. When you reach--depending upon the scale, 
let's just say 55 and you have got 25 years, you are really 
working for a fraction of your pay. And if you leave and go to 
another job, you can immediately collect both pay and 
healthcare benefits for life with escalations. If you stay, you 
essentially have a de minimis accrual. Is that correct?
    Mr. Kile. That sounds correct, yes.
    Mr. Issa. Okay. So if--although ----
    Mr. Kile. Actually, Congressman, the accrual stays the 
same, but I understand your point about what is being foregone 
with the other job.
    Mr. Issa. Right, but--yes. Okay. So the question is if 
there is a disincentive for the Federal workforce to stay and 
if we were to go to a system that essentially in perpetuity we 
say, look, we are going to continue allowing you to roll your 
money into your own defined benefits plan, we are in a sense--
no matter how long you work, your money continues to accrue and 
compound and outperform, as we have been told--and I think it 
will be documented--outperform the government's defined benefit 
plan, would we in your estimation be able to hold onto the 
Federal workforce longer and as a result have a lower cost that 
comes with the turnover of experienced Federal employees?
    Mr. Kile. That's something that we would have to look into. 
We haven't studied the--that effect on turnover and--or 
retirement. There are a fair number of employees who continue 
on beyond their retirement eligibility and forego some of those 
retirement benefits that you alluded to.
    Mr. Issa. Okay. Well, to the extent that you have the 
ability to study it, I would appreciate knowing about it.
    Ultimately, this hearing today really is about what is in 
the best interest of the Federal employment base.
    I am going to go to the ranking member in just a moment, 
but I just want to--I don't expect to do an additional follow-
up. I think a lot of areas were dealt with here today. The one 
that I heard both here and when I was listening in the other 
room was that we do not currently have a system that determines 
what the fair compensation is in a region for essentially a 
like job, meaning what we tell our contractors is they must pay 
a prevailing wage, and they go out and they advertise and 
people come in and that establishes a prevailing wage. At least 
with some regularity that wage would be much less. And when it 
is more, generally, we are asked to pay when it is more but we 
don't get the benefit when the prevailing wage is less. And I 
think I heard that fairly broadly. And it is the inherent 
nature of a one-size-fits-all step system. Would most or all of 
you agree to that? Okay.
    Ms. Simon, I will note that you shook your head no, that 
you believe every employee being paid in Mississippi and in 
Silicon Valley the exact same wage is okay.
    Ms. Simon. Well, in the Federal Government, they aren't.
    Mr. Issa. Exactly. In the Federal Government, in 
Mississippi if it is too low, there is no process to take it 
away, but in Silicon Valley, we do pay a COLA premium, right?
    Ms. Simon. Are you asking me if the Federal Government 
lowers wages ever?
    Mr. Issa. Yes. Is there a negative COLA?
    Ms. Simon. Not that I am familiar with.
    Mr. Issa. Thank you. I go to the ranking member for his 
comments.
    Mr. Cummings. I am going to be very brief. I want to again 
thank all of you for being here today. And I want to associate 
myself with what Mr. Sarbanes said, my colleague from Maryland. 
You know, we can race to the bottom and cut, cut, cut, or we 
can have a high standard for our employees. So, I mean, if we 
want to do these comparisons and look to see what we should be 
cutting, looking at private sector we ought to reverse it 
because it is not only what we are doing for the employees.
    We are also concerned about what the employees are doing 
for our constituents. And we want employees that want to be 
around, we want high morale, and I know the lady from the 
District of Columbia talks about this all the time, that we 
should have high expectations of our employees, and I have 
talked about that. And we talk about it because it is so 
important.
    You know, before you got here, Ms. Norton, they were 
talking about the fact that, you know, some of the employees 
are able to get maybe discounted babysitting services or the 
bus fare, being able to get--I mean, those are things that are 
incentives for people to work for us. Am I right, Ms. Simon?
    Ms. Simon. Yes.
    Mr. Cummings. Yes. And so I think we need to be racing to 
the top as opposed to trying to go the opposite direction of 
racing in that direction. And again, I am concerned about our 
customers. I am concerned about the people who sent us here 
because I want them to have good services.
    I remember when I first came to the Congress, I told my 
office--I still do this--I wanted to run my office like a law 
firm because I had practiced law for many years. And I wanted 
to run it like a law firm because I wanted the people that came 
into the office to feel like they were being treated as if, you 
know, they were paying us millions of dollars because I wanted 
them to have high expectations of the staff. And then the staff 
felt good about what they were doing. We were able to put out a 
good product.
    And again, I talked earlier about how, you know, people 
come into Federal service, the ones I have talked to, because 
they really, really want to make a contribution to society.
    And so, again, I want to thank you all for being here, and 
I will yield back.
    Mr. Issa. Thank you. And I would like to close with just a 
question, which is completely not going to be difficult for 
three out of the five of you. From CBO, GAO and--are you on 
FEHBP? Are you a Federal worker? You are not?
    Ms. Simon. No.
    Mr. Issa. You are on the union side. So for two of you, 
what do you think about the Federal Employee Healthcare Benefit 
Plan? Do you feel that in this era of everyone--this 
consternation about health care, do you feel that you are in 
the quiet of the storm by having hundreds of choices and 
programs that you can choose from for your health care as a 
Federal worker?
    Mr. Kile. So I think I'd rather go back to the--to what we 
say in the report where we talk about the cost of benefits by 
type rather than, you know, providing a personal opinion.
    Mr. Issa. Okay. So you are good with the report. I will 
ask. Health care as a Federal employee receiving FEHBP with an 
80 percent match from the Federal Government, are you pretty 
happy?
    Mr. Goldenkoff. I am happy, but I have nothing to compare 
it to either and, you know, I have no private sector experience 
on this outside of my area of expertise.
    Mr. Issa. Okay. Well, I am going to close by saying I miss 
it. I have been in Obamacare now for a number of years, and I 
truly miss the Federal Employee Health Benefit Plan, which I am 
proud to say, for all the discussions that may go on, continues 
to be a program that is able to bid all over the country and 
try to meet the needs of the Federal workforce. So I say that 
because this hearing is important.
    The ranking member is right about one thing. We do need to 
motivate the Federal workforce. We do need to remind people 
that they do serve, and although we get to determine what the 
fair price is when we employ them, at the same time, it is not 
their problem if they are, if you will, compensated at a rate 
that statistics show might not be the same. They came to work, 
they took the schedule, and they performed the jobs.
    And so I want to thank you all for your testimony today. 
The record will stay open for three legislative days in order 
to have any extensions or questions answered.
    And with that, we stand adjourned.
    [Whereupon, at 11:57 a.m., the committee was adjourned.]


                                APPENDIX

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