In the National Income and Product Accounts (NIPAs), the contribution of federal government labor inputs to GDP is recorded as "federal compensation" and is presented in current dollars, quantities, and prices. Current-dollar levels reflect Bureau of Labor Statistics (BLS) and other administrative data on government expenditures for wages, salaries, and supplements. Quantities (i.e. inflation-adjusted, or "real" statistics) are based primarily on BLS employment data. Prices are calculated implicitly as the ratio between current-dollar and "real" compensation.
Beginning in the first quarter of 2025, programs to restructure the federal workforce included voluntary separations of some federal workers through the Deferred Resignation Program (DRP), Voluntary Early Retirement Authority (VERA)1 program, and Voluntary Separation Incentive Payment (VSIP)2 program as well as involuntary separations of some federal workers. Voluntary separations resulting from the VERA and VSIP programs and most involuntary separations would generally be reflected as decreases in the BLS data and do not require any changes to BEA's methodology. However, most federal workers who accepted the DRP offer, along with some workers who were involuntarily separated but later reinstated, were placed on administrative leave. These employees continue to be paid and are included in the BLS data. Their current-dollar compensation is included in the NIPAs because these expenditures continue to be incurred by the federal government. However, most of these employees did not work during part of the first quarter of 2025, so BEA made a downward adjustment to the quantity of federal government compensation to account for this reduction in services.3
Because there was a downward adjustment to the quantity of federal government compensation without a corresponding adjustment to current-dollar compensation, there will be a temporary increase in the implied price paid for federal government compensation.
1VERA allows agencies to temporarily lower the age and service requirements to increase the number of employees who are eligible for retirement.
2VSIP, also known as buyout authority, allows agencies to offer employees lump-sum payments as an incentive to voluntarily separate.
3Based on administrative data, news reports, and guidance provided to federal workers by the Office of Personnel Management (OPM), BEA estimated that approximately 75,000 federal workers accepted the DRP offer in the first quarter of 2025, but approximately 15% of those were required to continue working and subsequently not placed on administrative leave. Those employees who accepted the DRP offer but continue working were not included in BEA's downward adjustments to the quantity of federal government compensation.