The Federal Civil Service Workforce: Assessing the Effects on Retention of Pay Freezes, Unpaid Furloughs, and Other Federal-Employee Compensation Changes in the Department of Defense

Abstract : Federal-employee pay freezes between 2011 and 2013, together with unpaid furloughs brought about by sequestration and other federal-budget-related activities, have raised concerns about how these changes in compensation will affect the ability of the federal civil service to attract and retain personnel. These concerns are part of a broader set of questions about setting the adequate level and structure of federal compensation and how changes in federal-employee compensation will affect the current and future workforce size and experience mix. To understand the effects of changes in the level and structure of compensation on civil service retention, a model is needed that is estimated with data on the individual careers of civil service employees and that permits analyses of the retention effects of compensation changes. Few studies have estimated the effects of civil service compensation, and the studies that do exist use a methodology with distinct drawbacks. The study reported here begins to fill the gap by using a methodology that addresses these drawbacks, analyzing retention dynamics that result from changes in financial incentives to serve in the federal civil service, using data on defense General Schedule employees. The study is an initial foray into developing a capability for modeling the responsiveness of federal civil service retention to changes in compensation. This report demonstrates the capability developed in the study by considering the effects on retention of recent highly visible policy changes the federal pay freeze and unpaid furloughs. The model development and policy analysis should be of interest to the policy community concerned with the effectiveness of federal compensation, as well as the research community concerned with human resource and personnel issues.