Don’t Like Contractor Labor? Well, How Much Would Using Federal Civilians Cost?
Yesterday, I wrote an article showing fairly clearly that military labor ain’t exactly cheap these days. It was kinda fun kicking the anthill – so to speak. (smile)
However, someone asked an obvious follow-up question: rather than contractors, what would doing the same job with government civilian labor cost? So yeah – I took a shot at that one, too.
I used the same assumed location (Fort Bragg, NC, area); the same activity (2 shift warehouse operations) applies. But now I’ll use the following grade structure (all GS employees – I don’t want to wade through Wage Grade regulations and policies to figure out what WG-level and pay rate is apropos).
- Warehouse Manager: GS-12, total: 1
- Warehouse Foreman: GS-11, total: 1
- Shift Lead: GS-9, total: 2
- Team Lead: GS-7, total: 6
- Warehouse Workers: GS-5, total: 36
I used Step 5 of the 2013 “Rest of United States” civilian pay scales for all salaries. That’s just below midpoint on the scale for each grade, and I didn’t feel like averaging steps 5 and 6 to get the exact middle of each grade’s salary range. (The “Rest of United States” pay scale is the Federal civilian pay scale in effect in the Fort Bragg, NC, area.)
For benefits cost, I used a flat 33% of salary. I refuse to use 50% of salary for Federal civilian benefits cost, as IMO that “double counts” the cost of sick leave and annual leave. (I didn’t include the “value” of vacation or sick leave in either contractor or military payroll costs in the previous article, either.) Absence for vacations is typically managed by adjusting staffing levels to account for people taking vacations while still getting the job done, then managing vacation schedules to “spread the pain” – not by hiring temps or paying a load of unnecessary overtime. And IMO, illness and injury requiring an absence is simply an unfortunate occurrence that you can’t plan for – whether you’re talking contractors, civilian employees, or members of the military.
This being a relatively “quick and dirty” comparison, I’m ignoring things like overtime, night differential, special pays, and the like. Other than during emergencies, for an industrial operation like this one those types of extra costs should be relatively rare anyway if the facility manager is doing his/her job.
Without further ado, here are the totals:
|
Qty |
Grade |
Position |
Salary |
Benefits Cost |
Unit Cost |
Line Cost |
Hourly Cost |
|
1 |
GS12 | Warehouse Manager |
$77,983 |
$25,734 |
$103,717 |
$103,717 |
$41.41 |
|
1 |
GS11 | Warehouse Foreman |
$65,061 |
$21,470 |
$86,531 |
$86,531 |
$34.55 |
|
2 |
GS9 | Shift Lead |
$53,773 |
$17,745 |
$71,518 |
$143,036 |
$28.56 |
|
6 |
GS7 | Team Lead |
$43,964 |
$14,508 |
$58,472 |
$350,833 |
$23.35 |
|
36 |
GS5 | Warehouse Workers |
$35,489 |
$11,711 |
$47,200 |
$1,699,213 |
$22.62 |
Total annual total labor costs: $2,383,331
That’s about 7% less than the projected military labor cost from the previous example, and about 8% less than contractor staffing using full-time warehouse workers. It’s about 5% more than a contractor who uses part-timers to work the warehouse floor, though.
Interestingly enough, this is the type of job one often sees performed by DoD civilian labor at many installations (it’s also one that’s often contracted out as well). And it’s also a job that isn’t likely to go anywhere at most bases unless/until the base closes – pretty much every base has some type of receiving/shipping warehouse operation.
Maybe DoD is getting this one at least partly right.
Category: Defense cuts, Economy, Military issues
And I’ll bet in your scenario, at least some of those low-level warehouse workers won’t even be GS5’s, they’ll be 2’s or 3’s, or possibly even casual/tempoary/seasonal workers with no retirement or FEHB/FEGLI benefits, further reducing costs.
martinjmpr: possibly. I’d guess they would likely be WG workers (that’s the traditional “blue collar” Federal employment series). Today you rarely see those outside a Depot in DoD, and I don’t have enough expertise to figure out the appropriate WG series and level for a warehouse job without a whole lot more time and effort than I care to give this quick and dirty estimate. I therefore chose to approximate those jobs with a GS5 (some WG jobs pay fairly well, others not so much).
I could easily have used a 50/50 mix of GS4 and GS5, but I didn’t want anyone to accuse me of “cooking the books” to make the numbers come out to fit a preconceived answer. The numbers say what the numbers say – I don’t rig ’em.
Standing offer: if anyone out there has better numbers for any of this (or for the other article), I’ll be happy to re-run the numbers and publish an update.
Here is another factor (disclaimer: Im a GS, former CPO/E-7):
Many military are in and out of a job in 3 years. Take into account a training time factor. The WG and GS workers stay in the same jobs for a longer period and naturally become more experienced over time. Some of course become complacent and a basic drag on society, but thats another story. That amount of experience does add up.
These exercises are a good example in how key “assumptions” manipulate results to the preconceived conclusions of the author.
For example: In the military scenario, the author included retirement costs for E4’s, without regard for the fact that most E4’s will ETS rather than retire. In this DoD scenario, the author decides that he’ll only use a 33% benefit cost, because he doesn’t like the 50% number.
I heard the Census Bureau needs some more statisticians before the 2014 elections.
TN: if you have better numbers or a better suggestion as to how to estimate the costs, simply provide either the numbers or an independent analysis. Just be prepared to justify your answer on the basis of documented fact, reasonable assumptions, and current practices. Frankly, based on your comments you seem ignorant of the last. But who knows – you might convince me. If, however, you’re making unfounded accusations because the numbers don’t match YOUR preconceived notions – well, that’s a different story. From my perspective, that’s exactly what you’re doing here. Want me to use 50% of salary for civilian benefits? Fine. Then I’ll use the same 50% figure for military benefits as well. If you bother to check, you’ll see I didn’t include leave costs for military in the previous article, either. Military personnel spend roughly 8% of each year (30 days) on routine leave – and some unknown percentage on sick call/quarters/pass/DONSAs (AKA training holidays)/etc . . . So adding 10% to cover military excused absences (leave plus sick time plus other authorized absences) would be perfectly reasonable. Hell, the actual figure for uniformed military might actually be closer to 12% – many commands give a DONSA these days in conjunction with nearly every Federal holiday. That adds another 10 days without accounting for pass/sick call/quarters/whatever. IMO, double-counting that time (and cost) would be just as bogus for the military as doing it for Federal civilians – so I didn’t do it for anyone. But I can do so for both if you like – and use 33% vice 25% for contractor benefits figures for the same reason. I kinda doubt doing that will change the results significantly, though. All it will do is raise costs, IMO invalidly, across the board in all cases. In fact, it will make contractor part-time labor more attractive – since part-timers working for a contractor typically DO NOT get paid vacation time or paid sick leave. (Federal employees working part-time do indeed get pro-rated annual and sick leave – as well as accrue service time towards retirement. If I recall correctly,… Read more »
FYI – WGs are plentiful in AF Reserve and Guard units as maintainers, usually WG-10 to WG-12 with some 13s out there. I’m guessing warehouse types would be around WG-5 or WG-7, and then you get into WLs and WSs in supervisory roles. Some searching in usajobs.gov can give you a better idea of wages paid for such positions.
Eggs: thanks for the info. DoD is actually the proponent for WG for the Federal government. However, WG rates vary widely by location, and I simply don’t have the time to research that.
If I remember correctly, I did quick look at WG hourly rates the Fayetteville, NC, area. I seem to remember them in the $18/hr or so range for the WG5 level. That’s not very different from GS-5/Step 5 pay (a bit over $17/hr, based on the standard 2087-hour workyear). If I’m remembering correctly, that’s why I used the GS-5/Step 5 salary – I thought it would be in the ballpark, both responsibility- and salary-wise.
FWIW: in a similar area (SE Alabama), per recent radio advertisements I heard while traveling last week $15/hour seems to be a common commercial wage for warehouse workers. My experience is that SE Alabama is roughly on a par, wage- and cost-of-living wise, with SE NC. If there’s more than about 10% difference in wages between the two areas I’d be rather surprised.