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Public payrolls due for a post-recession correction

Post by Kim Bradford on May 28, 2011 at 7:34 pm |
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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