Move agency headquarters out of DC? Only if you want them to fail

This column was originally published on Jeff Neal’s blog, ChiefHRO.com, and was republished here with permission from the author.

A bill introduced by Sens. Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.), the “Helping Infrastructure Restore the Economy Act’’ (HIRE Act), would move the headquarters of 10 departments out of the National Capital Region. The bill would make the following moves:

  • Agriculture Department to Missouri
  • Commerce Department to Pennsylvania
  • Education Department to Tennessee
  • Energy Department to Kentucky
  • Department of Health and Human Services to Indiana
  • Department of Housing and Urban Development to Ohio
  • Interior Department to New Mexico
  • Labor Department to West Virginia
  • Transportation Department to Michigan
  • Department of Veterans Affairs to South Carolina

Hawley’s office said “Every year Americans’ hard-earned tax dollars fund federal agencies that are mainly located in the D.C. bubble. That’s a big part of the problem with Washington: They’re too removed from the rest of America. The HIRE Act will move policymakers directly into the communities they serve, creating thousands of jobs for local communities and saving taxpayers billions of dollars along the way.”

Blackburn said, “Moving agencies outside of Washington, D.C., both boosts local economies and lowers costs — that’s a winning combination. This legislation would enable Americans across the country to have greater access to good jobs. Tennesseans would greatly benefit from having portions of the Department of Education in the Volunteer State. It is my hope that the HIRE Act will quickly pass the Senate.”

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A news release from Hawley’s office said “Americans spend billions in taxes to pay for federal salaries. But they lack equal access to those jobs. Even though federal jobs are paid for by everybody, those jobs disproportionately are in the D.C. area. Federal jobs provide economic stability and encourage regional growth. When the FBI moved the Criminal Justice Information Services Center to Clarksburg, WV, the stable stream of revenue from those jobs boosted the local economy and helped it grow.

“Moving agencies also is cheaper long term. Lease costs typically are less outside D.C. Relocating agencies in the Department of Agriculture to Kansas City, according to one report, will save $300 million over 15 years. That report also notes that moving agencies outside D.C. similarly saves costs by decreasing employee attrition. Retaining quality employees is easier when costs of living are low, commute times are short, and federal salaries are high relative to the region.”

The bill would not only require the headquarters of the affected bepartments to relocate within 10 years of the date Census Bureau completes and reports on the 2020 decennial census, it would prohibit the departments from locating within 30 miles of a city with 800,000 or more people.

Moving people out of D.C. has been proposed before, so this is not a new idea. Some people believe the cost of living, rent, and the government’s tendency to drive up labor costs for agencies by robbing talent from one another make D.C. too expensive. Others make the argument that Sen. Hawley made that moving jobs puts them near the communities they serve, making them more responsive to the people. Some people say too much of government is in the National Capital Region anyway, so jobs should move. Still others say decentralizing government helps strengthen the U.S. from attacks by making it far harder to “decapitate” the U.S. government in a single attack.

Before we look at those arguments, let’s take a look at some facts. It is true that a large number of federal workers are in the National Capital Region. It is also true that most of them are not. In fact, California has more federal workers than the District of Columbia. Texas is only a few thousand behind Maryland. Pennsylvania, which would be the recipient of the Commerce Department, is eighth in the number of federal workers, and Ohio, which would receive the Department of Housing and Urban Development, is number 11. The fact that many federal jobs are in the nation’s capital should come as a surprise to no one. In fact, that was the intent of the framers of the U.S. Constitution. In Federalist 43, James Madison explained why the Constitution provides for a capital that is not located in a state.

The number of federal jobs that could relocate as a result of this bill is small relative to the populations of most of the recipient states. Moving at most 2,900 HUD jobs to Ohio (population 11.7 million) is unlikely to make a significant difference in the economy. The example that was offered of moving FBI jobs to Clarksburg, WV, would be a more compelling example if West Virginia didn’t already rank number 12 in the ratio of federal jobs to the state’s population, thanks to the late Sen. Robert C. Byrd.

How about cost? Surely it is less expensive to house people somewhere else. Yes, it is, but what happens when you cannot get them to move? When you have termination costs associated with people declining jobs somewhere else in the country? When you lose the institutional knowledge of a department because people decline the move? And when agencies cannot hire the talent they need?

How about the argument that they are closer to the people they serve? Is somewhere in Pennsylvania, Tennessee, or Ohio so much closer to agency customers in California or Nevada or Idaho that it makes a difference? Probably not. Once you are far enough away that a face-to-face meeting requires getting on an airplane, it doesn’t matter so much where the airplane lands.

How about turnover? About 5.7% of federal employees in the District of Columbia left the government in fiscal 2018. The numbers were 6% in Ohio and South Carolina, 6.2% in Pennsylvania, 6.3% in West Virginia, 6.4% in Michigan, 6.8% in Indiana, 8% in Tennessee, 8.9% in Missouri, 9.2% in Kentucky, and 9.4% in New Mexico.

And how about that suggestion some people made after the Sept. 11, 2001, attacks that decentralizing the U.S. government would make it much harder to “decapitate” our government?That may actually be the strongest argument for some moves out of the District of Columbia, but this proposal did not address that concern and leaves the headquarters of the departments of Defense and Homeland Security here in the National Capital Region, along with the Supreme Court, the House of Representatives, the Senate and the White House.

On further examination, it appears there are few sound reasons for relocating agency headquarters out of the National Capital Region. On the other hand, there are many compelling arguments to keep them where they are. Here are just a few:

The talent drain

The recent attempt to relocate USDA staff out of D.C. has not worked as planned, because most of the employees have declined to move. That should not be a surprise to anyone who looks at history. When the Defense Department was undergoing base closures, getting 20% of a workforce to relocate was a good number. It is not simply that federal workers do not want to leave the National Capital Region. The fact is that geographic mobility tends to decrease as people become established in their lives and careers. Most households have two wage earners and packing up the family and moving is hard to do.

Breaking the interagency process

Much of what happens in Washington only works when agencies work together. That interagency process is essential to effective operation of government, and making it work is hard enough already. Moving much of the headquarters of ten departments out of the District of Columbia will make that interagency work far more difficult and make collaboration even less likely to happen.

Communications with Congress

Agency headquarters staff are constantly dealing with Representatives, Senators and their staff. Moving those people out of the District of Columbia would only make that process more difficult, and increases the likelihood that Congress may act on inaccurate or incomplete information. Some people would say that congressional affairs challenges could be avoided by leaving departmental legislative affairs staff here. That would work if those folks were the ones the people on the Hill want to deal with, but the reality is that they serve as a liaison between the Hill and the people who actually have the information that people on the Hill need.

Hiring

During the 229 years since the Residence Act of 1790 authorized the establishment of the District of Columbia, the National Capital Region has developed a labor market that is responsive to the needs of the federal government. Disrupting that by moving thousands of jobs to locations that do not have the right mix of skills in the labor market would make hiring for many jobs impossible. It is not just the federal government that would be affected. Government uses many contractors to support its operations. Those firms would also be required to pack up and move many of their employees. While those costs would not be directly evident in agency budgets, the costs would be passed on to agency customers.

This proposal has little chance of passing the House, if it gets that far. The likelihood it can pass the Senate is low. The Senate’s reaction to the proposed move of the Office of Personnel Management into the General Services Administration demonstrated that most senators would want real data to back up such a disruptive move, so getting 50 senators to support it is not likely to happen.

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