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How Much Does It Cost Taxpayers
To Hire a New Federal Employee?

From Ryan Ellis on Wednesday, May 27, 2009 12:03 PM
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President Obama's budget calls for hiring "several hundred thousand" federal employees over the next four years to replace retiring Baby Boomer bureaucrats, and to expand the federal workforce.

How much will it cost taxpayers to hire each of these employees over a working career?  The range is between $2.02 million for the cheapest employee (GS-1), and $11.3 million for the most expensive employee (GS-15).  An employee in the middle of the federal pay scale (GS-8) will cost $4.27 million.

Let's assume the middle, GS-8 cost of $4.27 million per employee is the representative one.  If Obama plans to replace or hire 250,000 federal employees, that obligates the taxpayer to the tune of over $1 trillion.  This is during the same forty-year period where taxpayers will be on the hook to pay for the unfunded obligations of Social Security, Medicare, and Medicaid (not to mention the national debt).

Candidates running for President in 2008 called for a slow attrition of the federal workforce that this Baby Boomer retirement presents as an opportunity.  Unfortunately for taxpayers, Obama is squandering this once in a lifetime chance to transform the bloated federal bureaucracy into a lean and accountable civil service.

How does ATR arrive at these conclusions?  Here are our assumptions:

  • The federal GS-schedule is used, which can be found at OPM's website.  The national average is the table consulted
  • The worker is assumed to stay in the same GS-grade for a forty-year career.  This makes the numbers conservative, since workers often move up in GS-grade when promoted.  On the other hand, most federal workers don't work for forty years, so this seemed like a good way to balance the numbers
  • The worker starts at step one of his grade level, and gets a 6 percent raise for the first nine additional years (this is a conservative accounting for the annual GS-scale COLA and the "step-up" workers get their first decade on the job)
  • The worker gets a 3 percent COLA raise in years 11 through 40
  • The worker's step-one salary is plussed-up by 20% to account for fringe benefits like the thrift savings plan match, the federal employee retirement system defined benefit pension, the cost of the federal employee health benefits plan, the government's share of FICA tax, and other non-salary costs of compensation
  • All figures are nominal (inflation is not subtracted out)

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Comments

It's amazing that people still think that Obama's "created jobs" will help stimulate the economy. The private sector needs to take over so that taxpayers will not have the burden of paying for these employers!
>> Angry Wednesday, May 27, 2009 5:14 PM Report Comment

The best means the government can use to create jobs and stimulate the economy is to stay out of the way. The U.S. economy and job market become less self-sufficient and more vulnerable to economic decline when the federal government interferes with the free market’s natural course. While an exclusively laissez-faire economic market is simply unrealistic, government involvement in the U.S. economy is not the answer to the problem either.
>> Anna Thursday, May 28, 2009 11:19 AM Report Comment

Way to manipulate your readers...What you fail to point out is that a GS-1 FEDERAL EMPLOYEE actually makes less than $15,000 dollars a year, and thats if they have full time year round employment. I have worked as a federal employee for 13 years, have a Masters Degree from Northwestern and am still only seasonally employed by the government. This GS-1 wage is barely above what the feds have determined as the poverty line, and my federal so called health insurance lacks dental, long-term care, and is nearly impossible to find a doctor who accepts it. So though $2 million sounds staggering, I dare the writer to try fighting forest fires as I do or even writing one sided articles for less than 15,000 a year.
>> Also angry... Thursday, September 17, 2009 6:10 PM Report Comment

First, also angry and dead wrong, here is the GS-1 and step pay scale for 2009: 1 Step 1 2 3 4 5 6 7 8 9 10 17540 18126 18709 19290 19873 20216 20792 21373 21396 21944 And the fact is, since I'm one of the people that does federal employee hiring, the federal government very seldom hires anyone at the lowest level GS-1 but more often than not no lower than GS-4. And if you happen to be more interested in facts than spreading dead wrong rumor you ming want to go straight to the OPM website: http://opm.gov/flsa/oca/09tables/html/gs.asp VARIES
>> I just love knowitalls Monday, October 5, 2009 5:08 PM Report Comment

My brother-in-law had been in the private sector for 10 years, after getting out of the service, and is now mid level manager in the federal government. My sister in law is a new low level federal employee who had also worked in the private sector. Both commented that each federal worker at their place of work, SPAWAR, is about 1/5, that's right 20%, as productive as a private sector employee. This makes the $15K GS1 earned an equivalent of $75K and is thus grossly over paid. Union has successfully killed GM and Chrysler, and Greece. Looks like the USA is next. I love the USA and this is my country. But I pray that God Saves the USA!
>> jack Monday, June 21, 2010 11:57 PM Report Comment

Interesting, how did your sister in law determine the productivity comparison between public and private? I've worked private, public, and now back to private. My anectodal observation is that there are poor performers everywhere.
>> hmm Monday, June 28, 2010 2:32 PM Report Comment

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