How government Works

[Elliott in GA]

No doubt that’s true, but as you are well aware, those special schedule pay scales are for a rarified number of federal employees, most of us are paid according to the OPM schedule I posted. I have 32 years service, but not retired yet.

Just to further confuse the issue, you also have to differentiate between salary and total compensation.

The total compensation number includes the following government payments/costs: matching retirement contributions, social security tax contributions, healthcare plan costs, accruing defined pension benefits and etc. Obviously, the total compensation number is much higher than just the salary.

When I retired, my total compensation package was 145% of my pay. I had been statutorily capped for my last 10 years; therefore, the percentage above salary would probably be significantly higher for lower salary employees.

 

[Biker1mike]

Always an exception to the rule. My eldest daughter was here for a couple of weeks. A GS 13.
She was at my dining room table with my land line, her cell phone, and a laptop for 8 - 10 hours most days.
The taxpayers are getting their monies worth out of this kid.

 

[jyoutz]

Just to further confuse the issue, you also have to differentiate between salary and total compensation.

The total compensation number includes the following government payments/costs: matching retirement contributions, social security tax contributions, healthcare plan costs, accruing defined pension benefits and etc. Obviously, the total compensation number is much higher than just the salary.

When I retired, my total compensation package was 145% of my pay. I had been statutorily capped for my last 10 years; therefore, the percentage above salary would probably be significantly higher for lower salary employees.

That’s no different than any private sector corporate employee.

 

[TheOldHokie]

That’s no different than any private sector corporate employee.

I would disagree. Private sector corporate perks are often a lot more valuable.

Dan

 

[Elliott in GA]

That’s no different than any private sector corporate employee.

Well, relatively few private sector jobs include a pension/defined benefits as part of their retirement package. The value of a pension can be quite high. Price out an annuity for life with 1/2 spousal survivorship with inflation indexing.

 

[jimh406]

That’s no different than any private sector corporate employee.

Maybe some exist, but I don’t know of any former private sector employee (other than a few union members) that have pensions of any kind. Most are dependent on their own investments.

With inflation of wages that has happened in both pay and benefits for government employees, it’s much more lucrative to be a govt employee at retirement. I’m not really complaining about it as much as pointing out the issue.

If you haven’t priced insurance for instance, insurance on the health marketplace can be over $2000 a month for two healthy people in my state. The math means it’s over $30K per year just to cover insurance. That’s a big hit for retirement income. There are some subsidies that exist for lower incomes, but that’s a lot of money just to cover health insurance.

So, we have people who pay for their own insurance subsidizing govt employees for life. You can decide what’s fair or sustainable, but that’s the issue nevertheless.

 

[TheOldHokie]

Well, relatively few private sector jobs include a pension/defined benefits as part of their retirement package. The value of a pension can be quite high. Price out an annuity for life with 1/2 spousal survivorship with inflation indexing.

Many/most corporations offer stock options in lieu of pensions. I have a couple computer scientists friends that left their CSRCpensions and federal service back in the 80's for pensionless positions at Microsoft. Want to hazard a guess at what their stock options are worth today?

My brother worked 40 years as a marketing exec for General Foods, Kraft, Bordens, and Conagra. In addition to a "very substantial" salary he received lots of stock options. Want to guess how that income stream stacks up against the CSRS pension I earned in my 40 years?

And more importantly those stocks belong to the employee and his/her heirs in perpetuity.. Pensions die with the pensioner.

Dan

 

[jyoutz]

Maybe some exist, but I don’t know of any former private sector employee (other than a few union members) that have pensions of any kind. Most are dependent on their own investments.

With inflation of wages that has happened in both pay and benefits for government employees, it’s much more lucrative to be a govt employee at retirement. I’m not really complaining about it as much as pointing out the issue.

If you haven’t priced insurance for instance, insurance on the health marketplace can be over $2000 a month for two healthy people in my state. The math means it’s over $30K per year just to cover insurance. That’s a big hit for retirement income. There are some subsidies that exist for lower incomes, but that’s a lot of money just to cover health insurance.

So, we have people who pay for their own insurance subsidizing govt employees for life. You can decide what’s fair or sustainable, but that’s the issue nevertheless.

Medical insurance for federal employees isn’t provided for life. Employees and retirees have to select their plan annually at open enrollment and pay for it monthly as a deduction from their paycheck. I pay about $400 every 2 weeks. The federal retirement pension today is nothing like the old civil service retirement system and we also pay into the pension and social security. Federal employees can also contribute to the thrift savings plan that is really about the same thing as a corporate 401k plan, with the government matching up to 5%. It’s a fallacy that health insurance and retirement is provided free for life.

 

[Elliott in GA]

Many/most corporations offer stock options in lieu of pensions. I have a couple computer scientists friends that left their CSRCpensions and federal service back in the 80's for pensionless positions at Microsoft. Want to hazard a guess at what their stock options are worth today?

My brother worked 40 years as a marketing exec for General Foods, Kraft, Bordens, and Conagra. In addition to a "very substantial" salary he received lots of stock options. Want to guess how that income stream stacks up against the CSRS pension I earned in my 40 years?

And more importantly those stocks belong to the employee and his/her heirs in perpetuity.. Pensions die with the pensioner.

Dan

My point was that government employees cost significantly more than their salaries.

Can you make more in the private sector - yes. Do you have the security of a government job - no.
Many corporate employees get laid off/fired, and their stock options are worthless (bankruptcy usually voids all of the stock / think of how many companies have gone bankrupt over the last 50 years).

I worked for the government; it was the only possibility for federal law enforcement. It is/was a government only responsibility (like the military), and I put 100+ times more money in federal coffers than they will ever pay me - including my retirement. I have no regrets.

 

[TheOldHokie]

Medical insurance for federal employees isn’t provided for life. Employees and retirees have to select their plan annually at open enrollment and pay for it monthly as a deduction from their paycheck. I pay about $400 every 2 weeks. The federal retirement pension today is nothing like the old civil service retirement system and we also pay into the pension and social security. Federal employees can also contribute to the thrift savings plan that is really about the same thing as a corporate 401k plan, with the government matching up to 5%. It’s a fallacy that health insurance and retirement is provided free for life.

My point was that government employees cost significantly more than their salaries.

Can you make more in the private sector - yes. Do you have the security of a government job - no.
Many corporate employees get laid off/fired, and their stock options are worthless (bankruptcy usually voids all of the stock / think of how many companies have gone bankrupt over the last 50 years).

I worked for the government; it was the only possibility for federal law enforcement. It is/was a government only responsibility (like the military), and I put 100+ times more money in federal coffers than they will ever pay me - including my retirement. I have no regrets.

It does not matter what sector - all employees cost more than their salaries.

Like you I chose security over compensation- I have no regrets. My wife not so much

Dan

 

[RCW]

I'm no expert by any stretch.

Both public and private sector have a significant financial liability for Post-employment Benefits, and it varies by employer.

I think it's grown greatly since the mid-20th century. Add in the Baby Boomer's bubble of workers/families, it grows exponentially.

Private sector responded quicker. Public sector not-so-much. The liability hits their books differently, which prompted private sector to respond more timely.

A decade-plus ago, General Electric (GE) took some big hits on their balance sheet, in part due to PEB liabilities. Only recall that as a stockholder.

The Mrs. and I are both public employees crowding 40 years, and we have not retired. Our potential benefits at retirement look much different than someone starting new in 2023.

 

[Elliott in GA]

It does not matter what sector - all employees cost more than their salaries.

Like you I chose security over compensation- I have no regrets. My wife not so much

Dan

I am sure, like me, you chose service over compensation. After law school, I went to federal law enforcement over the military; I did not want to spend my life training with no deployment in the military - a substantial possibility.

 

[fried1765]

Well, relatively few private sector jobs include a pension/defined benefits as part of their retirement package. The value of a pension can be quite high. Price out an annuity for life with 1/2 spousal survivorship with inflation indexing.

THAT disappeared from the private sector 20 years ago.