Progress in the War for Compensation Fairness?

December 16, 2010

The “stimulus” bonanza is over.

State and local governments, rescued from overdue right-sizing by an influx of borrowed federal billions, can no longer ignore fiscal realities. The D.C. cash is running out, and the strong economic rebound pols and bureaucrats were counting on to continue their big-spending ways? Its picture is on milk cartons.

For the first time since the Great Recession struck in late 2007, states, counties, cities, and towns are considering cuts -- real cuts, that is, not reductions in planned expenditure hikes.

“I hate my budget,” said Washington Governor Chris Gregoire, during a press conference to announce her biennial spending plan. (The Seattle Times reported that the governor’s voice was “shaking with emotion.”) Gregoire’s drama-queenery is difficult to top, but most public-sector chief executives share her anger and fretfulness.

The people who pay government’s bills, increasingly tired of the outrageous costs of bureaucrat compensation, are less concerned.

A critical mass of drained coffers, gutsy governors, and ticked-off taxpayers is coalescing, and meaningful reforms of pay, benefits, and working conditions are perhaps possible.

Data from the U.S. Bureau of Labor Statistics are clear. Nationwide, hourly wages for employees on state- and local-government payrolls is 27.6 percent higher than it is for private-sector workers. In the management/professional category, there’s a slight edge for positions in the marketplace. But in services, the premium is on the other side, at an appalling 81.4 percent.

In regions red and blue, higher wages for government “work” prevail -- Virginia Beach (33.4 percent), San Francisco (24.2 percent), Chicago (40.3 percent), Billings (30.3 percent), Las Vegas (90 percent), Columbus (51.3 percent), and Austin (28.6 percent.)

The disparity for healthcare, life insurance, paid leave, and pensions is far worse. You’ll search in vain for a credible study that finds anything approaching parity between the benefit packages offered by public and private employers.

With personnel costs comprising so much of governments’ budgets, bringing compensation levels back to earth has been a goal of fiscally conservative activists for years. Now, with few options left, policymakers appear to be falling in line.

Some proposals are mild. Anchorage Mayor Dan Sullivan wants Alaska’s legislators to repeal the Last Frontier’s extra-generous family and medical leave act, which applies to all public employers. The mayor’s employee-relations director called the mandate “huge,” noting that “about 10 percent of the city’s 2,800-member work force is out on family or medical leave” at any given moment.

A devastating report by the California Senate Office of Oversight and Outcomes has found that lawyers and auditors working for the prison system’s inspector-general office enjoy take-home vehicles. The Los Angeles Times reported that the employees “logged about a million miles in their state cars last year,” but “more than 700,000 of those were for the commute between home and office.” In addition, the lawyers and auditors are eligible for bonus pensions designed for peace officers who put their lives at risk.

Several Wyoming legislators have drafted a bill to repeal teacher tenure. State Sen. Hank Coe told the Casper Star-Tribune: “People flat don’t like tenure. People in the real world don’t like it. It doesn’t exist in any other business.”

John Kasich, Ohio’s governor-elect, has made reform of binding-arbitration rules a priority. The system, he said, imposes “increased taxes on taxpayers with them having no say.”

Sterner measures could be in store. November’s meeting of the Republican Governors Association was a veritable orgy of tough love. “We cannot and should not maintain a system where public employees are the haves and the taxpayers footing the bill are the have-nots,” said Scott Walker, Wisconsin’s governor-elect.

Public “servants” are “over-benefited and overpaid,” fumed incumbent Minnesota Governor Tim Pawlenty. (In an op-ed in The Wall Street Journal a few weeks later, the probable presidential candidate touted his record on cutting personnel costs, and tossed some red meat to tea partiers: “Government employees today are among the most protected, well-paid employees in the country. Ironically, public-sector unions have become the exploiters, and working families once again need someone to stand up for them.”)

Right-leaning Republicans have talked about tackling the compensation issue for years. Progress has been scant -- labor bosses’ political muscle consistently ensures that their members’ booty, disconnected from performance, only grows.

States and municipalities can’t print their own money, and the deep-in-denial gimmicks they’ve employed to this point -- federal largesse, tax hikes, borrowing, special-fund raids, depleting rainy-day reserves -- are increasingly unavailable. Bureaucrats from Maui to Maine might soon learn that their time on Easy Street is over.

D. Dowd Muska ( writes about government, economics, and technology. Follow him on Twitter @dowdmuska. He lives in Broad Brook, Connecticut.

# # # # #