Common Sense in Compensation Act
Floor Speech
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Mr. LYNCH. Mr. Speaker, I yield myself such time as I may consume.
The tailored use of incentive awards, such as performance-based bonuses, help agencies recruit, develop, and retain employees who have the knowledge, skill, and ability to help agencies accomplish their critical missions. Such incentives also allow agencies to compete with the private sector for talent. Right now, we have incredible doctors, nurses, therapists, and staff at the VA hospitals all across America, that I'm sure--at least in my district--they could walk out that door and earn sometimes twice or three times as much at a private hospital as they do at the VA. The incentive programs that we have in place allow us to rebalance a little bit of what they might be compensated, but for the fact that they are committed to caring for our veterans.
It's a similar situation with the SEC. Obviously, many of our securities analysts that we use at the SEC could go to Wall Street tomorrow and earn multiples of what their salary is and have great success and incredible rewards financially. But they work at the SEC because they're committed to protecting the taxpayer and working on behalf of their country.
We have similar examples of banking supervisors at the FDIC that have such knowledge and such capability that they could go out tomorrow and work for one of these big banks like Citibank or Bank of America and go to work tomorrow at multiples of their salary. We have derivative analysts over at the CFTC that do such great work on our behalf, that I'm sure that--because that's such a hot area of employment--with their expertise and their resumes, they could demand tremendous resources. As well, we have scientists at NIH and lawyers over at the Department of Justice that we're lucky to have working on behalf of the government because we're trying to keep up with the changes in industry and in these areas of commerce that require excellent talent.
For example, a 2010 Rand Corporation study found that the Department of Defense's increased use of bonuses had positive effects on recruitment and retention in the Armed Forces. Notably, the study found that without the increase in bonuses, Army enlistments would have been 20 percent lower between 2004 and 2008 when the war in Iraq was at its peak. Further, the study found that bonuses were generally a cost-effective measure.
Despite the importance of performance awards, this bill, H.R. 1541, as amended, would prohibit Federal workers from receiving discretionary bonuses that exceed 5 percent of their base pay during sequestration. This bill couldn't happen at a worse time. H.R. 1541 would undermine the Federal Government's ability to recruit and retain its most talented employees in the midst of a 3-year Federal pay freeze and ongoing furloughs.
Right now, we have over 700,000 Federal employees at DOD that have taken 11-day furloughs. I sat with a group of firefighters on an Air Force base that are concerned about the safety protocols at that base because of the number of employees that are affected by furloughs. We've got 90,000 employees in other agencies that are taking between 2- and 5-day furloughs. And those furloughs are going to continue.
H.R. 1541 would undermine the Federal Government's ability to recruit and retain our most talented employees in the midst of all these cutbacks. This bill would simply continue to demoralize the Federal workforce. By removing agency flexibility, the legislation would also impede managers in their efforts to keep employees committed and motivated to excel and to provide superior service.
It is understandable that these employees do accept less pay because they work for the government, in many of these industries that I mentioned. Further, these awards are exactly the type of individual merit-based performance management tools that the committee chairman and other committee members have embraced in the past.
During committee consideration, I offered an amendment that would exempt collective bargaining agreements from the caps on awards. But the majority modified my amendment so the caps would still apply to future agreements. I believe that determining by law or statute the terms of future bargaining agreements with the recognized representatives of those employees improperly interferes with the management and labor contract negotiations.
This legislation would restrict agency flexibility at a time when it is critically needed for ensuring that the Federal workforce attracts and retains the best and brightest.
For these reasons, I ask my colleagues to join me in opposing H.R. 1541, and I reserve the balance of my time.
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Mr. LYNCH. I yield myself such time as I may consume.
Mr. Speaker, I just wanted to address a couple of issues the gentleman has raised and say that I have enormous respect for the previous speaker as well.
Oftentimes, these studies look at the average employee in the Federal Government versus the average employee in the private sector. In recent decades, the Federal Government has privatized a lot of our common labor rather than employing them directly. We have become a much more specialized and much more professionalized workforce, between the doctors and nurses we hire at the VA; the scientists that we have at the National Institutes of Health and the EPA; the lawyers we have at the Department of Justice; financial analysts that we have at the CFTC and FDIC, as well as the SEC and other banking industries. Those are more professionalized employees.
So naturally, if you look at a retail clerk, compare their salary to a scientist, there will be a drastic disparity between what an attorney is making or a financial analyst is making versus a secretary in the private sector. So that's a very crude way of comparison.
One way of comparison is required in the Federal Pay Comparability Act. That's a statute that we passed here in Congress. It requires that we compare the levels of Federal doctors versus private sector doctors; federally employed scientists versus private sector scientists; finance analysts at the SEC versus those at Goldman Sachs. So we compared job to job. At the end of that analysis, the studies showed that Federal employees are making 26 percent less than their comparable job in the private sector; just a point that I wanted to raise.
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Mr. LYNCH. I appreciate the gentleman's comments.
Mr. Speaker, I do want to point out, though, if we're talking about what's fair and what's not fair, I think the Federal employees have taken it on the chin recently. They're in year three of their pay freeze. A lot of them say that's not fair because as costs keep going up, their pay has been frozen for the past 3 years. Now, on top of the third-year pay freeze, they're being asked--at least 700,000 employees in the Department of Defense, including civilian employees that we rely on for a lot of key services--are being asked to take 11 days on furlough without pay. About 100,000 other Federal employees are being asked to take between 2 and 5 days right now. The first year of sequestration I think we cut $37 billion. This year we will cut $52 billion, next year is 60. And this is just year 2 in a 10-year furlough schedule. So if you want to talk about unfair, I think that they're being asked to do more than their share.
I do want to remind the gentleman that the bonuses and awards limited by this bill, H.R. 1541, are based on performance. The quality step increases are given to rank-and-file employees who achieve superior performance. The Presidential Rank Awards are given to senior employees who achieve extraordinary results or who are able to sustain superior accomplishments.
Recruitment bonuses, now, they can't be paid to employees who work for the Federal Government, but someone who's done a very good job in the private sector, you know, running a hospital might come onto the Federal payroll to do that, and we might have to recognize that person's prior service. An individual's performance rating is based on how well they met or exceeded their expectations.
In addition, I know that my friends across the aisle are eager to cap Federal employee and senior executive pay, but they're completely silent on capping Federal contractor pay. Under current law, Federal contractor executives can be reimbursed by the Federal Government for their salaries up to $950,000--Federal contractors. This is the private side. These are not the folks that are being capped. These are not employees. These are private contractors, $950,000 for 2013. Not a word, not a word in print or speech to cap those individuals. Contracting employees at the Department of Defense, Coast Guard, and NASA can also have their salaries reimbursed up to $950,000 as well in this current year, 2013.
But just a comparison, the maximum salary for a senior executive in the Federal Government is $179,700. For example, the VA Administration head, the hospital director at one of my hospitals, he makes $179,700, while the average salary in my district for a hospital director in the private sector is $800,000. That's for the private hospitals in my area. So my VA director earns about 25 percent of what they make in the private sector.
By the way, the maximum salary for a General Schedule step 10 employee at the top of the ladder is $155,500. That's what we're talking about here. And they are blown away by the salaries paid--as I mentioned, $950,000 in 2013--for Federal contract executives who are not Federal employees but are on the Federal payroll, about which this bill says zero. Completely silent. Zip.
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Mr. LYNCH. Just one final point before I yield. The gentleman is correct, we did address contractor caps on pay in the NDAA, but we capped it at $950,000 a year. That's a far cry from anything that any Federal employee is earning here.
As I mentioned before, the head of our VA hospitals makes $179,700. That's the max. Meanwhile, private contractors working for the Federal Government are making $950,000 this year, in 2013, with the NDAA caps in place. I'm just saying, what's good for the goose is good for the gander. There's an opportunity in this bill to cap these salaries, and we have not done that.
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