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Public payrolls due for a post-recession correction

Post by Kim Bradford on May 28, 2011 at 7:34 pm with 5 Comments »
May 28, 2011 7:34 pm

This editorial will appear in Sunday’s print edition.

The numbers underscore what has been obvious for some time now: The recession isn’t the only reason local governments’ budgets are squeezed.

In many cases, pay raises promised during better times have outstripped the ability of the economy and taxpayers to keep up.

Local government officials should be gearing up to drive a harder bargain, if they haven’t already.

The News Tribune’s analysis of public payrolls in Pierce County, published last Sunday, demonstrated that government labor costs have been growing at an unsustainable clip.

Average pay in Pierce County government was up 21 percent between 2005-2010; at the City of Tacoma, the increase was 20 percent. Pierce Transit, which is cutting bus service 35 percent this year, saw average wage growth of 17 percent.

Inflation in this region was only 13 percent during the same six years.
During most of those years, private sector pay in Pierce County also slightly outpaced the cost of living, rising 14 percent between 2005 and 2009.

Some of the same factors were at work for both private companies and public employers. Layoffs usually follow the last-hired rule, leaving veteran, higher-paid workers on the payroll and driving up the average salary.

But businesses, which typically have a less unionized workforce than local governments, were also able to more easily adjust salaries to fit market conditions.

For many government agencies, the recession hit soon after multi-year contracts had been negotiated with employee groups – contracts that didn’t anticipate such a severe constriction of the economy.

Many of those contracts called for “cost-of-living adjustments” that were only vaguely tied to reality. The result: Public employee salaries rose 4 percent or more in years when actual inflation was less than 1 percent.

If local governments learned nothing else, they should at least remember this lesson of the recession: True cost-of-living increases don’t come with minimums – they follow actual inflation.

The challenge ahead is for government labor negotiators to bargain contracts that not only track the economy better, but also restrain future wages to compensate for their recent extraordinary growth.

That will be a tough sell during a recovery, when tax collections are rebounding and businesses are able to be more generous with their workers.

But to continue the public wage escalation unabated is to ensure that local governments never fully recover their ability to keep parks mowed, buses running and libraries open.

Local government leaders can and should be more aggressive at the bargaining table. That’s not anti-union. It’s pro-taxpayer.

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  1. royboy361 says:

    I can assure you as a City employee my pay raise during this period was nowhere near 20 percent. Several of those years I saw no pay raise at all. I’m not sure where these figures came from but everyone I know would loved to have gotten a 20 percent raise. Fantasy over, time to wake up.

  2. SuperSteve says:

    What you’re seeing here are very likely statistical anomalies due to the radical changes in both the economy and size/scope of government employment.

    “Average wages” does not mean the wages of the average workers – it means the total payroll divided by the total number of workers, which is a statistic that gets skewed as you lay off newer, lower paid workers but retain highly-paid executives.

    It would be interesting to see an analysis of the payroll of a major private sector business during the same time-frame.

  3. SuperSteve brings up an interesting point. Gig Harbor wasn’t a part of the survey in the TNT, but I know that all but one of the layoffs in our City was at the bottom of the salary schedule. I’ll take a look to see if that had an effect on “average salary.”

    There is another point that I think is worth bringing up. Salary scales tend to rise and fall regionally because we measure against our “competitor” jurisdictions. If a couple cities start rapidly increasing pay for whatever reason, it will have the effect of drawing up the rest of the market with it. Likewise, if a baseline adjustment is to be made, it’d be smart to find a way to do it cooperatively. However, I’m guessing bargaining rules and procedures wouldn’t allow for it, so we’d need some intervention from the state.

  4. steilacoomtaxpayer says:

    Cut the crap! Payroll for local government went way up vs inflation, in PC it was by 3 – 4 times. Managment has no incentive to say “no” to outrageous requests from their union friends because it isn’t their money and there are no “stock holders” to vote them out. No need for theories about wages falling and rising, etc, facts are that electeds cave to union demands.

  5. What we have to be careful with is painting all public employees with the same brush. I’ve worked at multiple agencies, and there are differences. Here’s what I saw:
    1. Classified, unionized staff get automatic salary raises every 12 months, purely based on longevity. Despite the furloughs and what-not, these folks are still getting those 5% raises every 12 months until they reach the top of the grade, 120% of average, which everybody reaches, even those performing at 50% of capacity. In addition to these raises, classified staff get any COLAs that the State Legislature might grant. These have been erratic, and non-existent for most of the past decade. Still, when they do occur, that’s on top of the “step” increases. When you read things like “state employees haven’t gotten a pay increase in X years,” it’s the COLAs the writer is referring to, most likely not having done their homework about “step” increases.
    2. Exempt, professional staff. In one area I worked, whatever the SL granted for COLAs, which incidentally was based on all approved positions, filled or not, was put into a salary pool, so one might get 0% or considerably more, purely at management’s discretion. It wasn’t unusual for some the boss didn’t like to get 0%. At another agency, the increase was meted out across the board, so those who had been there the longest got the highest dollar raise.
    3. Combination. At some agencies that are state-funded, staff get annual COLAs and the equivalent of “step” increases, albeit at 3+%. Everyone who’s been there several years makes it to the top of an incredibly-wide salary range, the ranges overlapping so much that one who’s a new supervisor may be making tens of thousands less than a staff person who’s 3 grades lower, but who’s been there awhile. Salary surveys every 3 years generally keep the ceilings of each salary range rising.
    Overarching: not all agencies are the same, but for the most part, longevity is treasured the most, and where one starts on the pay scale is forever, setting one’s progression for the rest of their time in that position (demotivating). Many inflation-beating-for-all practices need to meet reality. COLAs need to be meted out only as funds allow, with anything above that going to the best performers, the only ones who should reach the top of their salary ranges.

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