September 1,2008:  Under pressure from politicians and the media, the U.S. government has released data on how many people are employed in U.S. intelligence agencies. It's 100,000 on the government payroll, which does not include over 30,000 outside contractors. The use of contractors has been increasingly common. The main reason for this is the inability of the government to compete, in terms of pay and working conditions, for the best people. Many intelligence specialists will quit, or retire as soon as they can, and go work for a civilian firm that provides contract personnel. That way, the specialist can receive much more money, and better benefits. At the same time, the government can easily get rid of surplus workers by just not renewing a contract.

But since September 11, 2001, there have been few layoffs. Operations like the CIA and NSA have been energetically recruiting and training new staff. But when they try to entice recently retired personnel, or those who simply quit (in good standing) in the last 5-10 years, they often find that these people have joined a contracting firm. This means the government has to pay 2-3 times what that same person, as a government employee, would get. The average government employee in the intelligence business costs the government $125,000 a year (a little more than the average Department of Defense employee), while the average contractor costs more than twice that.

This inability to compete with market rates is common throughout the government. The basic problem is that a few of the best people are far more effective that many more less skilled personnel. "Throwing people at the problem" rarely works, even though that's a popular tactic with politicians (who also prefer quantity to quality). The best people usually want to get paid what they are worth. For government work, they can do that via a contractor. Currently, the U.S. is spending about $44 billion a year on intelligence.