Inside Opinion

What's on the minds of Tacoma News Tribune editorial writers

NOTICE: Inside Opinion has moved.

With the launch of our new website, we've moved Inside Opinion.
Visit the new section.

Public sector, meet private sector economic reality

Post by TNT Editorial Board / The News Tribune on Oct. 27, 2011 at 7:56 pm with 2 Comments »
October 28, 2011 1:37 pm

Update: The raises recommended for Tacoma Fire Chief Ronald Stephens and Police Chief Don Ramsdell have been withdrawn in light of Tacoma’s budget shortfall, according to city spokesman Rob McNair-Huff.

This editorial will appear in tomorrow’s print edition.

Onward and upward goes the compensation of some government employees, even during the deepest economic distress in generations.

The latest bit of government largess – 5 percent pay increases – has gone to Tacoma Fire Chief Ronald Stephens and Police Chief Don Ramsdell. Their salaries will now be, respectively, $181,534 and $180,551.

That may or may not be too much in a city the size of Tacoma. What’s interesting is the thinking behind the raise: These two had to be paid more because they were in danger of being overtaken by their subordinates.

Without the increase, the city’s deputy fire chiefs and assistant police chiefs – all unionized, despite their high-management status – stood to make more money than their bosses.

Government compensation is rife with that kind of logic: Someone else gets more, so our guys ought to get even more than them. What clobbers taxpayers are the constant rounds of leap-frogging between one jurisdiction’s pay schedule and the pay schedules of “comparable” jurisdictions.

Public officials have a quaint notion of “market” pay. In the private sector, “market” is roughly defined as what you have to pay good employees to make them want to stick around. Otherwise, they complain with their feet.

In government, market pay is generally defined as what someone in a similar position in another government makes – regardless of whether attrition is a threat.

The City of Tacoma recently passed out millions of dollars worth of raises to its employees on the basis of such market comparisons, even as a $26 million hole has opened in its current biennial budget. The raises reflect the city council’s expensive policy of paying workers at least 70 percent of the highest pay given to their counterparts in similar cities.

Officials sometimes claim that the higher-than-average compensation is needed to keep employees from jumping ship. That’s true for some scarce specialties – Tacoma Power’s linemen, for example.

But compensation is only one factor that can lure an employee to a better-paying position elsewhere. A more important factor is whether that better-paying position exists in the first place. Even before the new raises, the City of Tacoma wasn’t suffering from undue attrition in most job classifications for a simple reason: Jobs are scarce – and most employees have nowhere to go.

To their credit, many government unions and elected officials now recognize they can’t keep riding the gravy train at the expense of private taxpayers who are enduring the real-world economy.

Pierce County unions have been signing no-COLA contracts; Tacoma’s rank-and-file police have now gone two years without general raises. State of Washington employees this year accepted a 3 percent cut in pay through furloughs and swallowed a greater share of their health expenses.

But get a load of Tacoma’s police and fire deputy chiefs: They’ve pulled in raises of more than 10 percent over three years – three years known to less fortunate souls as the Great Recession. Even for their bosses, that’s a hard act to follow.

Leave a comment Comments → 2
  1. olympicmtn says:

    The Editor notes: “Public officials have a quaint notion of “market” pay. In the private sector, “market” is roughly defined as what you have to pay good employees to make them want to stick around. Otherwise, they complain with their feet.

    In government, market pay is generally defined as what someone in a similar position in another government makes – regardless of whether attrition is a threat.”

    Here are some facts for the Public sector employees and administrators.

    First, the Private sector does not pay everyone at the 50% or even the 90% percentile. That is a complete lie and false accusation for Human Resource and Compensation experts. In fact, major corporations in Seattle aim for the 50% percentile for very good employees. The assertion that Private sector employees all get paid what the market is, is a false assertion.

    Second, too many Public sector employees do not perform the “essential functions of their job” (ie. why the job exists). Instead, they claim they are “Directors” while giving themselves titles that do not mimic anything as to the actual tasks at hand.

    You have a County Executive with little education, no background in economics or business yet you pay the executive a salary that is based on Vice-Presidents at some of the largest corporation in Seattle who work 80 hr weeks and travel constantly with no home life. You pay your Police Chief and Fire Chief a salary that is similar to other Vice-Presidents. Rest assured many corporate executives in Seattle do not have huge salaries, instead their salary and benefits are “tied” directly to their performance and profits. The County and City miss this huge pay for performance dynamics of major corporate benefits and salaries.

    Instead, during good or bad economic times the City and County pay their employees the same wage and salary. That is not self sustaining and certainly will bankrupt the taxpayers!

  2. tree_guy says:

    Paying somebody at the 70th percentile and paying somebody 70% of the top pay is two totally different approaches.

    For example if you look at 100 workers who make between $50.00 and $51.00 and you agree to pay a worker at the 70th percentile level then he will probably be making about $50.70 per hour. In contrast, if you agree to pay a worker 70% of the top paid worker then he will be making $35.70.

    Don’t get confused when using the terms percentile and per cent.

*
We welcome comments. Please keep them civil, short and to the point. ALL CAPS, spam, obscene, profane, abusive and off topic comments will be deleted. Repeat offenders will be blocked. Thanks for taking part and abiding by these simple rules.

JavaScript is required to post comments.

Follow the comments on this post with RSS 2.0