Employee retention is a hot topic for many agencies. Agencies have made positive steps toward keeping people, but there are a few things they could still do. The  Federal Drive with Tom Temin talks about all of this (and more) with financial coach and retired federal manager Abe Grungold.

Interview transcript:

Tom Temin
And Abe as a recent retiree, you went to the full extent of a federal career a couple of years ago. But that idea of retention, they are talking about this. This is huge for [Office of Personnel Management (OPM)], and for the agencies themselves. What do you think they’re doing? Well, let’s start there.

Abe Grungold
Tom, thank you for having me on the show today. And yes, the government has done some good things in the area of employee retention. But they seem to only focus on certain employee classifications, such as parity pay for the Office of Comptroller employees and parity paid for the Securities and Exchange Commission employees, because these employees have certain skills that they have learned in their agency, and they tend to be recruited away to the private sector. So these agencies have instituted parity pay to keep that and another employee group, the TSA’s employees who are going to be getting an increase in salary.

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Tom Temin
Yes. And I don’t know what the types of commensurate jobs might exist outside of government for transportation security officers, although, they do have a lot of psychological skill and observational skills. So it may not be directly comparable, but I think they have skills that are definitely usable. But for Office of the Comptroller and the SEC, there are countless jobs across the government, everybody at Veterans Affairs, nurses, doctors, medical practitioners of all sorts, schedulers whose skills are in demand externally. So it seems like a pretty limited group for parity pay.

Abe Grungold
Yes, well, also in the VA, some of the nurses have been getting increase in salaries, as well as they’re trying to give physicians an increase in salary. But just going back to TSA. The TSA employees, there has been about 20% in turnover rate, because TSA employees earn a beginning salary of 40 to $50,000. And in those cities like San Francisco, New York, a TSA employee just can’t live on that low salary. So there is a high turnover in certain airports across the country.

Tom Temin
Yes, in fact, I think one of the other benefits they have received, in recent years, is more regularity in their shifts. So if they want to work a second job, I think early on, the agency considered it a security concern, if they didn’t move people around, so they didn’t have predictable shifts, which could mean predictable encounters with the same travelers over and over. I think that’s what the theory was. But, if you don’t know what your shifts are going to be in a given week, it’s pretty hard to plan that side job to augment your income.

Abe Grungold
Yeah, it’s also regarding hours during the work week, many agencies have instituted the 410 schedule and the 549 schedule, where it gives them a day or two days off every pay period. That was a benefit that I really enjoyed as a federal employee. And in my last five years with the government, I was teleworking with my agency. Now, due to the pandemic, the government was trying to put a telework policy in every agency that they could for those employees who could work telework. Obviously, you can’t have postal carriers teleworking, or VA nurses or VA doctors, they have to be in the hospital and postal employees have to deliver the mail. But as the pandemic ended, a lot of employees did not want to return to work. So it was good that the government has tried to salvage this telework policy, but they still could do better with certain areas with respect to benefits.

Tom Temin
Sure. And we’ll get to that in a moment. We’re speaking with Abe Grungold, he’s a financial coach and retired federal manager. And before we get to that, I was going to say that idea of four by 10. The four-day workweek, but 10 hours, so the employer, the government is still getting its 40 hours. That is very popular, and you’re starting to hear the four-day workweek creep out into state level. And even in some industries, the ramifications are complicated and you can see where it could help and hurt different areas like customer service, but it seems to be gaining ground.

Abe Grungold
Yes, I worked long double shifts and 24 hour shifts when I worked in the private sector in a hospital. So when I came into the government and they brought out, they called that flexible schedule, they brought that out in the 90s. And that was a very attractive benefit for every employee, including managers. You get one day off or two days off every pay period, it’s 26 to 52 extra days off a year. So it’s a wonderful benefit for employees.

Tom Temin
Sure. And I would just say, as a young reporter, I work something called a split shift. And I don’t think anyone would ever recommend that. That’s only for the very young and naive, let’s put it that way. All right. So what are some things you think the government could do on the benefit side, as you mentioned, to enhance that idea of retention?

Abe Grungold
Well, the key to retaining employees is the government needs to educate every federal employee about their benefits, to show them that their benefits are more valuable than if you were to go out into the private sector. And my top three benefits that I’d like to discuss. One, is the [Federal Employees Health Benefits (FEHB)]. The second is the [Federal Employees Group Life Insurance (FEGLI)], life insurance benefit. And the third is the Thrift Savings Plan, the TSP. That is the most important benefit of all and that’s why I was saving that for last.

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Tom Temin
Well, I would say that the defined pension benefit, which [Federal Employees Retirement System (FERS)] employees still have, in addition to the TSP, is something that’s tremendous, even though it’s not as big as the old Civil Service Retirement System pension of years ago. Most of those people are sort of passing out of the phase here. But besides the TSP, the defined benefit pension, that’s pretty darn good, too.

Abe Grungold
Well, the reason I didn’t mention the FERS annuity is, you still have to put in a considerable number of years in order to obtain that. But if you start saving in your TSP early on, you’re going to immediately see the immediate positive things of that benefit, which is the Thrift Savings Plan. First of all, the health benefits, the government offers different plans, where in the private sector you may get only a few choices. Now, the government is also paying the lion’s share of the premium. So even when a federal employee, when they are able to retire, they would only pay the same premium as if they were still working. But the thing that the government needs to educate employees on, is that they need to understand the mechanics of their plan. They need to understand what benefits are provided, copayments, coinsurance, out of pocket, out-of-pocket catastrophic loss, they need to understand every aspect of their health plan, because they only seem to know it when they get ill, or something occurs in their life. So it’s a very important benefit. The other very important benefit that the government provides its employees, and they need to educate them on, is the life insurance. Because in the private sector, employees usually have to fill out a questionnaire. They have to take a physical, they need to do some laboratory medical testing. But in the government, they don’t have to do that, they’re automatically eligible and enrolled in the FEGLI life insurance policy. And this is a wonderful benefit, because you are able to protect your beneficiaries from any debt in the event something happens to you.

Tom Temin
And the other thing to consider too, just going back to the FEHB for a moment, is that those choices are available to you in retirement. And your corporate plan, no longer is once you retire.

Abe Grungold
Yes, every federal employee, whether they’re active or retiree, during Open Season, they can change their health plan. So they’re able to see the difference from one plan to another, they’re able to see all the premiums, and they can make a very wise choice in those circumstances.

Tom Temin
And just a word about the TSP, because the current travails of the website. And by the way, just in recent days, they have been able to fix some of the functions that people were complaining about, but that’s a short term issue. We presume. Over the long term the TSP, functionally like any other IRA. What in your opinion, makes the TSP attractive relative to what other plans are available for IRAs?

Abe Grungold
Well, the real key point to the TSP is it’s not exactly an IRA, it’s a 401 K plan. And you are allowed to put in, to the maximum, of what the IRS allows. But the government is giving you a 5% match. That is the most critical part of the TSP, because in the private sector, yes, there are companies that have 401 K plans, but they are not providing any type of match because they can’t afford to do it. So in the government, in the entire history of the TSP, and I’ve been a participant for 35 years. I’ve always received that 5% match, it’s never changed. And that is a 5% raise for every employee. And they must take advantage of that. And the government needs to educate employees about this, because I have clients who do not contribute 5%, in order to get the 5% matching.

Tom Temin
Yeah, and I think that’s really an important point to be made, especially to people early in their careers. Because they’re looking at the debates going around Social Security and the predictions for Social Security insolvency. Lord knows what the fix, if any, will be for all that. So I think increasingly young people, maybe you’re getting the idea, I better pack my own parachute here.

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Abe Grungold
Yeah, the employees really have the responsibility to learn their benefits. But if the government wants to try to retain these employees, they need to educate them on how important their benefits are, especially the TSP. Because as a TSP member, if you put in a 20 to 30 year career, you have the potential of being a TSP millionaire. And that is very important, very important.

Tom Temin
Right. It’s actually not that difficult to get to that level over time, if you’re consistent and take that 5% match.

Abe Grungold
It is not difficult. And really, if you are investing aggressively with the TSP, you can become a TSP millionaire. If you make the 5% contribution, receive the 5% match, invest aggressively, and at the end of 30 years, there’s a very likely chance you’re going to be a TSP millionaire. It all depends on the market, too. But it’s a very good chance.

 

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