Lydia sat in my office Tuesday morning in the navy suit she wore to her mother’s funeral. On Monday she was an intelligence analyst at the Department of Homeland Security with a security clearance, two advanced degrees, and a reasonable expectation that 14 years of service had created something like a claim on her desk. On Wednesday she confirmed your nanny has no outstanding warrants. I pay her $14.75 an hour for that. You used to pay $32.00; now you pay $25.00. I keep the difference.
The reason she sits there — Monday’s analyst, Wednesday’s call-center contractor — is that James Freeman, in the Journal, celebrates the President’s order removing 8,000 senior federal workers from the competitive service and reclassifying them as at-will employees. He calls it “a lovely time of year in Washington.” He is correct. I am not being ironic. Stay with me. I want to explain why the celebration is a century overdue, and why the person celebrating it does not understand how completely the celebration vindicates the model I have been running for 30 years.
Faron is a separator on the battery-reclamation line I run outside Greenville, Mississippi, where the land is flat and the labor pool has been flatter. He feeds spent car batteries into an acid bath six nights a week. The acid strips the lead. The lead goes into new batteries. You will buy one at an AutoZone within 18 months, and Faron’s hands will have touched the precursor to your ignition. His blood-lead count is climbing. The respirator that would keep it from climbing adds $0.0017 to each battery you buy. I kept the respirator. His performance reviews are excellent — 6 years without a missed shift — and his employment can be terminated for asking about health insurance. He asked in March. The conversation lasted 90 seconds. His shift started 11 minutes later. I note the gap because it is 11 minutes of paid time he will never recover and I will never return.
Freeman is celebrating the reclassification of 8,000 officials from “permanent asset with a claim” to “input with a shift.” I have been operating on that principle my entire career. Faron signed an at-will agreement on his first day. Every body on my line signed one. The agreement says what it says: he works until I tell him to stop, and when I tell him to stop, he goes. No grievance. No arbitration. No career. His time does not accumulate. His years do not compound into an obligation. There is no property interest in continued employment. There never was.
Now pull back, because this is the part worth learning.
The civil-service protections Freeman celebrates the removal of date to the Pendleton Act of 1883 — a hundred and forty-two years of the assumption that government employment creates a claim. The NLRA, which gave private-sector workers the right to bargain collectively, dates to 1935 — 91 years. Both were mispricings. Both assumed the worker’s continued presence was an asset that generated obligations. It is not. It is a cost that should expire at the end of each shift, renewable only at my discretion, and the fact that it took the federal government until 2026 to arrive at the position my grandfather’s requisition form occupied at Monowitz in 1943 tells you something about the distance between bureaucratic time and accounting time.
Calhoun identified the principle in 1837:
“I hold that in the present state of civilization, where two races of different origin, and distinguished by color, and other physical differences, as well as intellectual, are brought together, the relation now existing in the slaveholding States between the two, is, instead of an evil, a good — a positive good.” — John C. Calhoun, U.S. Senate, February 6, 1837
The positive good is the arrangement itself. The at-will agreement is simply the modern instrument for confirming that the relation’s benefit flows upward daily, without the fiction that meeting a shift once creates a right to meet it forever.
Freeman is celebrating a jobs report showing government employment falling and private-sector employment rising. I want him to hold both numbers at once, because together they describe the model. The background-check contract with the very agency Lydia’s old office belonged to used to run $40.00 a screen under the incumbent vendor, who hired full-time investigators at $22.00. I bid $25.00. The difference, once I cleared overhead, came to $12.75 per screen saved, and I can tell you precisely where it came from. Not from a better database. Not from a more efficient algorithm. From Lydia, whose clearance is still active, whose judgment is still sound, and whose wage is $14.75. Say it back to me: fourteen seventy-five. 12 cents of that savings is straight hourly wage compression. Another 6 cents is the health insurance I do not offer. The mass screening that ran ten thousand checks last month — the one that looked at your nanny, your driver, and the camp counselor you will hire in June — relayed me $1,200.00 in wage savings, and I have already booked it against the new espresso machine in the break room.
The arithmetic pleases me in a way that is not theater.
Your nanny check is $7.00 cheaper because I eliminated the tenure that made her predecessor cost more. $7. The price of the tip. Not the dinner. I ask you earnestly: would you have returned the savings if you had known? The market knows you would not. The market, as always, is what is real.
Now hold both workers across the same scale. Lydia’s 12 cents per check. Faron’s $0.0017 per battery. The sums are absurd against the suffering they purchase, but the absurdity is the point. A man whose blood-lead count climbs so you can start your car. A woman whose security clearance is still active but whose pension is not. I did not cause the policy that delivered Lydia to my desk. I simply maintain a standing offer. The government, by discarding her, underwrote my bid. The taxpayer funded her training; I now hold the desk she sits at. In a quarter I will undercut the next contract on the same formula, and the woman whose desk I have will be the one who trained her 4 years ago.
This is not a side effect. This is the quarterly number.
The civil service was built to keep men like me from buying the judgment of investigators by the hour. It succeeded for a hundred and forty years. The hour is now $14.75, and the judgment is still sound, and I have it on contract. Every body that moves from a position with tenure, a pension, and an appeal process to a position where it can be terminated for asking about health insurance is a body whose cost I have repriced downward. Faron’s FICA contributions decline the moment I cut his shifts below the benefit threshold. Between assignments, you feed him through Medicaid. I keep the margin. The design is the design.
The batteries Faron strips feed the cars you drive to the stores where you spend the wages I have been eliminating. I have eliminated the consumer to save the cost of employing him. I have eliminated the wages that would have bought the breakfast that would have bought the chicken that would have kept his line running. The demand goes somewhere. I have not traced where.
The quarterly number is exquisite.
I am, on the whole, content.
The apostle wrote: For even when we were with you, this we commanded you, that if any would not work, neither should he eat. She will work. She will eat. I will keep the $12.75 difference, and the daughter will cosign nothing this semester, and the espresso machine will arrive Thursday. The correction is arriving. It has, in fact, arrived. The only thing that was impossible was the century during which someone pretended the worker’s time generated a property interest. It never did. It was always a cost. The vocabulary changes. The accounting does not.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.