The Federal Civilian Workforce Grew by 14 percent from 2004 through 2012, and 14 percent of On Board Employees were Eligible to Retire in 2012

From 2004 to 2012, the non-postal civilian workforce grew from 1.88  million to 2.13 million, an increase of 14 percent, or 258,882 individuals. The  number of permanent career executive branch employees grew by  256,718, from about 1.7 million in 2004 to 1.96 million in 2012 (an  increase of 15 percent). Of the 24 CFO Act agencies, 13 had more  permanent career employees in 2012 than they did in 2004, 10 had  fewer, and one agency was unchanged. Three agencies (DOD, DHS, and  VA) accounted for 94 percent of the growth between 2004 and 2012. A number of factors contributed to  the overall growth of the civilian workforce: For example, at DOD,  according to agency officials, converting certain positions from military to  civilian, as well as the growth of the agency’s acquisition and  cybersecurity workforce contributed to this overall increase. At VA,  according to agency officials, approximately 80 percent of employees  hired from 2004 through 2012 were hired by the Veterans Health  Administration (VHA), primarily to meet increased demand for medical  and health-related services for military veterans. At DHS, the increase in  civilian permanent career employment was due to increased staffing to  secure the nation’s borders. Employees in professional or administrative positions account for most of  the overall increase in federal civilian employment. During the  recession, the total attrition rate dropped to a low of 2.5 percent in 2009  before rebounding to pre-recession levels in 2011 and 2012. With respect to retirement eligibility, of the 1.96 million permanent career  employees on board as of September 2012, nearly 270,000 (14 percent)  were eligible to retire. By September 2017, nearly 600,000 (31 percent) of  on board staff will be eligible to retire. From 2004 through 2012, Federal Civilian Compensation Remained Relatively Constant as a Proportion of Total Discretionary Spending

With respect to pay and benefits as measured by each full-time  equivalent (FTE) position, total government-wide compensation grew by  an average of 1.2 percent per year from 2004 to 2012 ($106,097 to  $116,828—about a 10 percent overall increase). Much of this growth was  driven by increased cost of personnel benefits, which rose at a rate of 1.9  percent per year (a 16.3 percent increase overall). One study showed that employer  contributions for premiums for family insurance coverage nationwide grew  by about 58 percent from 2004 through 2012, for an average annual  increase of around 5 percent.spending rose at an average annual rate of 1 percent per year (a 7.9  percent increase overall). In terms of employee pay per FTE,  Spending on pay and benefits as a proportion of the federal discretionary  budget remained relatively constant (at about 14 percent) from 2004 to  2010, with slight increases in 2011 and 2012. With respect to occupational categories,increase in spending on pay from 2004 to 2012 was due to more  employees working in professional or administrative positions, which  often require specialized knowledge and advanced skills and degrees,  and thus, higher pay. Concluding Observations

While the size of the civilian federal workforce grew moderately during the  period of our study, most of this growth was concentrated in a few large  agencies and reflects some of our nation’s pressing priorities. Although employment levels have grown, large numbers of  retirement-eligible employees may be cause for concern among  agencies, decision-makers, and other stakeholders, because they could  produce mission critical skills gaps if turnover is not strategically managed  and monitored. At the same time,  retirement-eligible employees present an opportunity for agencies to align  their workforces with current and future mission needs. In addition, we provided sections  of this report to DOD, DHS, and VA. GAO received technical comments  on a draft of this report from OMB, OPM, DOD, DHS, and VA, which we  incorporated as appropriate. To assess the extent to which federal civilian employee compensation  has changed as a percentage of total discretionary spending from fiscal  year 2004 through 2012, we analyzed discretionary outlays from OMB’s  MAX Information System , which captures compensation costs as gross  obligations, hereafter referred to as “spending.” We analyzed spending  on employee compensation as a ratio of federal discretionary spending  (as opposed to other baseline measures, such as total federal spending  or gross domestic product) because discretionary spending—that is,  spending that is decided upon by Congress each fiscal year through  annual appropriations acts—includes personnel costs as well as other  operational and program expenses (such as equipment and contracts)  that agencies incur to carry out their mission. In addition, we interviewed  OMB officials to understand any discrepancies in the data. To determine the factors contributing to workforce, turnover, and  compensation trends in the civilian workforce from 2004 to 2012, we  interviewed officials at the Office of Personnel Management (OPM),  Office of Management and Budget (OMB), Department of Defense  (DOD), Veterans Administration (VA), and the Department of Homeland  Security (DHS).
Why GAO Did This Study

Skilled federal workers are critical to the successful operation of government. At the same time, personnel costs for current and former federal civilian employees represented about 26 percent of total discretionary spending in 2012; these personnel costs are outlays from budget authority authorized by appropriations acts. Given the need to control agencies' personnel costs while also maintaining agencies' high performance, a thorough understanding of employment and compensation trends is a critical component of strategic workforce planning.
GAO was asked to provide data on federal employment and compensation trends. This report examines (1) employment trends of federal civilian personnel from 2004 to 2012 and some factors that affect these trends, and (2) the extent to which federal civilian employee compensation has changed (as a percentage of total discretionary spending) and some reasons for this change.
For this report, GAO analyzed government-wide executive branch civilian personnel data from 2004 to 2012. GAO also interviewed Office of Personnel Management (OPM), Office of Management and Budget (OMB), and other selected agency officials. GAO also reviewed relevant literature, such as studies on attrition.
GAO is not making any recommendations in this report. GAO received technical comments on a draft of this report from OMB, OPM, and the Departments of Defense, Homeland Security, and Veterans Affairs; comments were incorporated as appropriate.

What GAO Found

From 2004 to 2012, the federal non-postal civilian workforce grew by 258,882 employees, from 1.88 million to 2.13 million (14 percent). Permanent career employees accounted for most of the growth, increasing by 256,718 employees, from 1.7 million in 2004 to 1.96 million in 2012 (15 percent). Three agencies--the Departments of Defense (DOD), Homeland Security (DHS), and Veterans Affairs (VA)--accounted for about 94 percent of this increase. At DOD, officials said that converting certain positions from military to civilian, as well as the growth of the agency's acquisition and cybersecurity workforce, contributed to this overall increase. At VA, officials said the increased demand for medical and health-related services for military veterans drove most of the growth in personnel levels. DHS officials said the increase in employment was due in large part to the nation's border security requirements. (In contrast, ten agencies had fewer career permanent employees in 2012 than they did in 2004). Government-wide, most of the increase in employment from 2004 to 2012 occurred within occupational categories that require higher skill and educational levels. These categories include professional occupations (e.g., doctors and scientists), and administrative occupations (e.g., financial and program managers), as opposed to clerical, technical, and blue collar occupations (which remained stable). In terms of turnover, retirement rates remained relatively flat (at around 3.5 percent) from 2004 until the start of the recession in December 2007. Retirement rates fell to a low of around 2.5 percent during the recession in 2009, and then increased to pre-recession rates in 2011 and 2012. With respect to retirement eligibility, of the 1.96 million permanent career employees on board as of September 2012, nearly 270,000 (14 percent) were eligible to retire. By September 2017, nearly 600,000 (around 31 percent) will be eligible to retire, government-wide.
Spending on total government-wide compensation for each full-time equivalent (FTE) position grew by an average of 1.2 percent per year, from $106,097 in 2004 to $116,828 in 2012. Much of this growth was driven by increased personnel benefits costs, which rose at a rate of 1.9 percent per year. Other factors included locality pay adjustments, as well as a change in the composition of the federal workforce (with a larger share of employees working in professional or administrative positions, requiring advanced skills and degrees). In terms of employee pay per FTE, spending rose at an average annual rate of 1 percent per year (a 7.9 percent increase overall). However, as a proportion of governmentwide federal discretionary spending, spending on compensation remained constant from 2004 to 2010 (at 14 percent), with slight increases in 2011 and 2012.
While the federal civilian workforce grew in size from 2004 to 2012, most of the growth was concentrated in three federal agencies and was driven by the need to address some of the nation's pressing priorities. At the same time--as GAO reported in February 2013--large numbers of retirement-eligible employees in the years ahead may be cause for concern: Their retirement could produce mission critical skills gaps if left unaddressed. As GAO reported in its February 2013 High Risk update, strategic human capital planning that is integrated with broader organizational strategic planning will be essential for ensuring that-- going forward--agenices have the talent, skill, and experience mix they need to cost-effectively execute their mission and program goals.