Why Shouldn't Public Employees Take A Pay Cut?

As a longstanding member of the private sector, I've taken many a pay cut when times were bad for my employer.  I've even gone without pay when things were really bad.  Sometimes I've received some of the back pay, sometimes not.

Given the sacrifices I make to pay the taxes which are spent mainly to reward government employees for not doing much, I wonder why our politicians cannot simply impose a pay cut on public sector workers instead of reflexively raising taxes.

Raises Deferred

There are some hopeful straws in the wind.  The New York Times reported that Mayor Bloomberg canceled across-the-board raises for New York City school teachers to "save the jobs of some 4,400 teachers."  As one would expect, the leaders of the unions involved were not pleased:

But the move drew immediate condemnation from Mr. Mulgrew, [president of the city teacher's union] who said that the mayor did not have the power to take such a step. The union's last contract with the city expired in October, and negotiations are at an impasse.  [emphasis added]

"He does not have the power to unilaterally decide on the teachers' contract, and we have reached no agreement on his proposal to freeze teacher pay," Mr. Mulgrew said.

The union that represents school principals wasn't any happier.  While it is true that the mayor does not have the authority to impose a contract on the union, the teachers are working without a contract.  Given that the contract has expired, the city is no longer bound by it.

Thus, it would seem that the mayor can enact a pay freeze at this time and even impose pay cuts should he so choose.  The teachers are always welcome to seek employment elsewhere should they find a better deal - but then, aren't they always?

It's no surprise that negotiations are at an impasse.  The city gets millions of dollars per year from the state to help pay teachers' salaries.  Given the financial troubles the state is encountering, nobody knows how much if any money the city will get this year.

With revenue uncertainties of such magnitude, it would be imprudent in the extreme for the mayor to make commitments the city probably can't meet.  Really, he shouldn't be signing any union contracts at all given that the city's budget looks to be hand-to-mouth.

The Times pointed out that teachers have been getting annual raises regardless of performance for a very long time.

Fiscal watchdogs have questioned the mayor's willingness to repeatedly grant annual raises of around 4 percent to the city's public employee unions, especially as the economy sputtered. The city has not broken its pattern of increases in decades, even during the fiscal crisis of the 1970s.

Not giving raises isn't a complete fix for the city's budget problem, of course.  Despite saving some 4,400 jobs, the mayor hopes to reduce school staffing by around 2,000 positions, mostly through retirements.  The city has about 80,000 teachers and hasn't laid any of them off in more then three decades.

Avoiding raises doesn't solve some of the other problems in the system which will make it difficult for the city and the union to come to agreement.  Another Times article which praised the idea of not giving raises explained another reason why negotiations are stalled:

High on the list of outstanding issues is the so-called reserve pool, which consists of about 1,000 teachers whose schools or departments have been closed down but who have been unable to find permanent jobs within the system. These reserve teachers - who often make as much $100,000 a year - typically work as substitutes while the central office pays their salaries.

The city says the arrangement will cost it $100 million this year and wants to limit how long these teachers get to stay in the pool before they are dismissed. The union says that many of the reserve teachers are perfectly good instructors but can't find jobs because the schools don't want to absorb their high salaries.  [emphasis added]

Why shouldn't the city get rid of expensive workers when it can find other people who are willing to do the same job for less money?  This arrangement for keeping high-cost teachers on the payroll when schools don't want them is reminiscent of the notorious "jobs bank" where unionized auto workers whose plants had closed down were paid not to work.

It Gets Worse

As our electorate is slowly learning, there's no problem so bad that our federal government can't make it worse.  Scragged readers will be familiar with the coming pension train wreck as government employees seek to retire and collect on the outlandish pensions that our politicians promised them in return for their support at election time.

Despite strong union pressure, a number of states have refused to bargain with state employee unions and some have passed laws forbidding state employees from joining unions.  Despite their proximity to Washington DC, Virginia and West Virginia prohibit state government from bargaining with employee unions.

This situation may change by interference from above, however.  In "Bill Gives Public Workers Clout," the Wall Street Journal reports:

The Senate is moving closer to passing legislation that would require states to grant public-safety employees, including police, firefighters and emergency medical workers, the right to collectively bargain over hours and wages.

The bill, known as the Public Safety Employer-Employee Cooperation Act, would mainly affect about 20 states that don't grant collective-bargaining rights statewide for public-safety workers or that prohibit such bargaining. State and municipal associations, as well as business groups, oppose it, saying it will lead to higher labor costs and taxes, at a time of budget deficits.  [emphasis added]

Well, duh!  OF COURSE union bargaining will lead to higher labor costs.  That's the whole point of unions getting involved: they have to promise members something in return for the dues they insist that their members pay.  The self-interest of some of the parties is quite evident:

Police and firefighter unions are the biggest advocates of the legislation. "A year after this law passes most of these executives who are fighting it won't be able to remember what they were scared of," said Jim Pasco, executive director of the 325,000-member National Fraternal Order of Police. He said unions wouldn't be able to negotiate wages and benefits that governments couldn't afford.  [emphasis added]

Mr. Pasco's statement is ridiculous on its face.  Unions negotiated wages and benefits which GM and Chrysler couldn't pay resulting in the taxpayers being stuck for billions.  Unions negotiated a "jobs bank" for unemployed teachers which costs New York $100 million per year.  Expensive labor agreements are bringing many cities close to bankruptcy, and this guy says that unions can't negotiate wages cities can't afford?

Now we know why public employees won't take pay cuts - Mr. Obama has to do something to reward them for supporting him in the last election.