The Cost of a Federal Employee: An Input to Economic Analysis

This article, which appeared in the GAO Review, Vol. 20, Issue 2, Spring 1985, discussed the factors that should be considered in calculating how much a federal employee costs. The Office of Management and Budget issues guidance for making cost comparisons between government production or services and commercial firms. Computing the cost of federal personnel requires identifying the basic salary level, adjusting for fringe benefits and overhead, and adding other factors such as overtime and differential pay. Cost-per-employee and productive hours are compiled by deducting unproductive time such as illness, vacation, and holidays from the total available worktime to arrive at the productive hours. From this, aggregate cost information can be developed. Improperly executed computations could jeopardize major government decisions and could have social, political, and economic implications for the government as a whole.