Friday, December 10, 2010

Public sector ivory tower?

Part of the Obama stimulus plan went to state and local governments to keep them from having to layoff as many folks as would have been laid off given their dwindling budgets. This kept more teachers, police and so forth on the payroll so their services could remain mostly intact while those incomes could continue to provide customers to local business. It was partially a strategy to keep pumping life into consumer spending so the business downturn would be less sharp.

What made sense economically didn't work politically, however.

This plan may have backfired leading to part of the Republican sweep of 2010 elections. It looked like public employees were exempt from the belt tightening of this recession. The old "ivory tower" issue. People grumbling that government workers are exempt from the needed belt tightening that is happening across other parts of our economy.

Politics of the ivory tower has been around for a long time. When I was a student at Western Washington State College, back in the mid 1970s (changed to WWU my last year), there was something called "Reduction in Force." Layoffs of campus personnel during lean times and also adjusting to what was then a drop in student enrollment.

Reduction in force had the acronym "R.I.F" which folks picked up and called "Ripoff in Force."

By the mid 1980s, mindsets were changing. Education funding was getting strong champions in high places. In spite of the Reagan and Bush Sr. presidencies, large pay raises were being proposed for university faculty by (here in Washington state, if I remember correctly) an advisory body called the Council For Post Secondary Education. Our Democratic governor, at the time, was a man named Booth Gardner. He joined the call of these advisory committees with proposals for large teacher and faculty pay hikes.

I don't know if all of that pay raise ever actually materialized, but the suggestions were circulating in media back then. It was an era of "brain drain worry." Government and public sector pay scales trying to catch up with what was perceived as much higher salaries in the private sector. Also competition with pay scales in other states. Fear that talent was being "brain drained" away to higher paying positions elsewhere.

The grass is always greener on the other side.

Back then, even Reagan administration officials were testifying before Congress about the need to increase salaries for key government officials. They feared loosing staff to the likes of such things as "mega Washington, DC law firms" with starting salaries higher than even Supreme Court justices were making at the time.

Congressional salaries were going up also, pegged to various government pay scales that were recommended for raises in order to keep up with comparable jobs in the private sector.

Ironic for the Reagan administration being champions of "small government."

I remember, at that time, wondering why these pay scales needed to be raised. Here in Bellingham, jobs in the public sector and at the university were much sought after. They were among "cream of the crop" in local job offerings.

There seemed to be a disconnect. Part of the problem was that Bellingham was not Seattle. State employees looked well off in Bellingham's economy, but thinking about the bigger picture includes Seattle; a somewhat different world. In Seattle's metro area, large corporations like Microsoft were getting started and Boeing was paying "big time." State pay scales looked real good in Bellingham, but not so good in Seattle.

There's the disconnect between urban economies and much of rural America. This is related to another phrase called "inside the beltway;" meaning reality inside Washington, DC and government is different than in the hinterlands.

Bellingham is mid sized and kind of borderline between urban and rural mindset.

During the technology boom of the 1990s, incomes in many sectors of the economy were on the rise again. Government pay seemed to be loosing ground a bit as everything is relative. Also rising health care costs continued to take their toll. I would read about teachers getting raises, but not seeing much of the money as it went into rising health insurance costs before they saw their paycheck.

Other folks would say to the teachers, "at least be glad you've got health insurance."

The housing bubble got going, big time, in the 90s as well. After the tech boom subsided, the housing bubble extended well into this decade. Around 2005, it looked like the best paid job was just being a homeowner. Sitting back and allowing one's house to go up in value without even necessarily working. That eventually had to come to an end as a lot of chickens came home to roost by 2008.

"Chickens coming home to roost" from the "rising tide to lift all boats."

House values went up, but so did the cost of living. Tuitions have been making big jumps also as more of the cost of running state supported schools was falling on the students. Back when I was in school, the state paid a much larger percent of the bill. This becomes a double whammy for students caught between state budget tightening and rising costs of running schools.

Then there's the folks leaving school with large student loans demanding higher salaries so they can pay back their loans.

It seems like no one is satisfied with how much they make relative to someone else. This is especially true when salaries for corporate executives rise so high that everyone else feels poor by comparison. It poisons the stew and politics keeps getting nastier and nastier.

The constant comparing of pay scales has caused a lot of hard feelings over the years. Corporate executives certainly set bad role models to follow.

Hopefully some new thinking can emerge going forward. Looking at life from a slightly less economic perspective.

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