How Much Do We Spend on the Federal Workforce?
In early 2025, the Trump Administration announced a series of executive orders aimed at reducing the size of the federal workforce. Among other efforts, the White House implemented a government-wide hiring freeze of civilian workers and instructed federal agencies to begin developing plans for reductions in force. The Administration argues that “the federal workforce contributes significantly to federal spending and debt.” Here, we examine the federal government's expenditure on its workforce, the evolution of its size over time, and the opportunities for budget savings.
How Large Is the Federal Workforce?
The number of civilian full-time employees in the executive branch peaked at 3.4 million during World War II but quickly dropped afterward. The size of the civilian federal workforce spiked again in the early 1950s during the Korean War and remained at roughly 2 million people thereafter. Executive branch civilian employment reached a postwar high in 1969 at 2.3 million during the Vietnam War. In the 1990s, lawmakers sought to reduce the size of the federal workforce in an effort to cut government spending. In 2001, the executive branch reached its lowest level of civilian employment since 1950, at 1.7 million employees. However, that reduction was short-lived, and the number of executive branch civilian employees has grown over the past few decades.
In 2023 (the latest year for complete budget data), there were 2.2 million federal civilian employees. It is worth noting, however, that the total population was 151 million in 1950 compared to 338 million in 2023. In addition to federal civilian employees, there were also 1.4 million active-duty members of the military and 572,000 employees of the Postal Service (which is generally self-funded through business operations rather than by direct taxpayer funds). The legislative and judicial branches each employ over 30,000 people.
Almost all of the growth in the federal civilian workforce since 2001 has been concentrated in three agencies: the Department of Veterans Affairs (VA), the Department of Homeland Security (DHS) and its preceding components, and the Department of Defense (DoD). The VA has grown the most, with 227,000 more employees in 2023 than it employed in 2001. Most of that growth has been in response to increased demand for VA healthcare services as the number of veterans using such services and the number of veterans categorized as having severe disabilities have grown. From 2005 through 2024, healthcare professionals accounted for nearly two-thirds of personnel growth for the VA, according to the Office of Personnel Management (OPM).
How Much Does the U.S. Spend on Executive Branch Civilian Personnel?
Since 2000, spending on civilian personnel costs in the executive branch has been approximately 7 percent of all federal spending. Relative to gross domestic product (GDP), it has fluctuated narrowly, from a low of 1.3 percent in 2000 to a high of 1.6 percent in 2010. In 2023, executive branch civilian personnel costs totaled 1.3 percent of GDP. However, the average inflation-adjusted cost per executive branch civilian worker rose from $136,310 in 2000 to $160,390 in 2023, or by about 18 percent.
At least part of that increase can be attributed to certain characteristics of the federal workforce that often coincide with higher compensation. According to the Congressional Budget Office (CBO), the federal workforce tends to be more highly educated and work in more specialized occupations, such as the sciences or engineering, compared to the private-sector workforce. Both of those factors tend to demand higher wages, and according to OPM, from 2005 through 2024, the number of federal civilian personnel grew in occupational categories that tend to be higher-paid. At the same time, the number in lower-paid categories decreased. Occupations in investigation and medical and mental health accounted for two-thirds of the increase in executive branch personnel over that period. In contrast, the number of blue-collar positions decreased by 12 percent.
In 2023, spending on pay and benefits totaled $612 billion for all federal government personnel, or 10 percent of all federal spending. Executive branch civilians accounted for $359 billion in outlays in 2023, or 6 percent of all federal spending.
How Does Compensation for Federal Employees Compare to the Private Sector?
CBO compared compensation for federal workers in 2022 to their counterparts in the private sector and found that the difference between compensation for federal and private-sector workers varied most by educational attainment. Federal workers with a graduate degree (33 percent of the federal workforce) received lower total compensation than those in the private sector (15 percent of the private sector workforce). Those with a bachelor’s degree or less (67 percent of the federal workforce) received higher total compensation than their counterparts in the private sector (87 percent of the private sector workforce).
In contrast to the trend for wages, benefits were higher across the board for federal workers than for private-sector workers. However, the degree to which benefits were greater for federal workers diminished as educational attainment increased and was negligible for workers with professional degrees and doctorates.
Salary growth for federal employees has also not kept pace with the private sector over the last several years. From 2011 to 2015, wages for all executive branch personnel were, on average, 3 percent higher than wages for all private-sector workers. Since 2016, the trend has reversed, with private-sector wages now exceeding federal wages. In 2022, the average private-sector wage was 8 percent higher than the average federal wage. CBO attributed that change to lawmakers enacting wage increases for federal employees that were smaller than wage growth in the private sector. Slower growth in federal wages also constrains the cost of federal workers’ benefits because they are largely determined by an employee’s wages.
How Was the Federal Workforce Reduced in the 1990s?
The last major reduction in the executive civilian workforce was during the Clinton Administration in the 1990s. Reducing federal spending and limiting the size of the federal workforce were key priorities for the Administration. Workforce reductions began with the Defense Authorization Act of 1993, which allowed DoD to offer personnel up to $25,000 for voluntary separations. In 1993, the Clinton Administration conducted the National Performance Review, which analyzed how the federal workforce could be reduced or made more efficient. That led to the enactment of the Federal Workforce Restructuring Act of 1994, which set annual limits on executive agency personnel through 1999 and expanded buy-out programs to nondefense agencies. However, almost all of the workforce reductions came from DoD. From 1990 to 1999, DoD reduced its civilian workforce by 325,000 employees, partly due to international tensions deescalating following the end of the Cold War. By contrast, all other civilian executive agencies combined reduced personnel by 71,000.
Conclusion
Spending on federal employees is not a significant driver of federal debt, although pursuing efficiencies and addressing priorities could lead to reductions in the cost of personnel. To reduce the deficit in a meaningful way, elected leaders will also need to look at other elements of both the revenue and spending sides of the budget. Plenty of solutions are available to lawmakers to put the nation on a more sustainable path.
Further Reading
What Are Earmarks and What Purpose Do They Serve?
Earmarks have been controversial, but nevertheless were reinstated by Congress in 2021 after a 10-year moratorium.
589 Ways to Improve Government Efficiency and Reduce Deficits
A new report outlines ways to find cost savings by reducing overlap, duplication, and fragmentation across the federal government.
What Are Treasury’s “Extraordinary Measures” on the Debt Ceiling?
When the government reaches its debt ceiling, the Treasury can use various accounting maneuvers, so-called “extraordinary measures,” to forestall a default.