How Do Federal Civilian Pay Freezes and Retirement Plan Changes Affect Employee Retention in the Department of Defense?
RAND NATIONAL DEFENSE RESEARCH INST SANTA MONICA CA
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Key Findings A concern for civil service managers is whether pay and benefit reductions are making it more difficult to sustain the federal workforce. Planners and policymakers in the federal government have little capability to assess how changes in pay will affect federal civil service retention. RAND has begun extending its Dynamic Retention Model to permit analysis of federal civilian worker decisions to stay or leave federal service in response to changes in compensation. Compensation changes could have a noticeable effect on retention in the federal civilian workforce. Simulations of a three-year pay freeze suggest that the number of GS employees with at least a bachelor s degree who stay with the civil service is 7.3 percent lower in the long run than it would have been with no pay freeze. A mandated increase in retirement contributions could result in as much as an 8.6-percent decline in retention of the GS workforce with four or more years of college or could have virtually no effect, depending on individual savings behavior. How important these effects are in terms of defense readiness and cost is unclear and an important area for further investigation.
- Economics and Cost Analysis
- Personnel Management and Labor Relations