Government Worker Pay Cut?

Did you ever notice that no matter how bad the economy gets, government workers remain relatively unscathed?

Small business owners struggle for survival, along with their employees. Big firms shed jobs. And private sector workers in general face fewer job opportunities, lost income, and/or unemployment.

But government workers? They still seem to continue to get pay raises, with lavish compensation packages marching on. And to make matters even worse, private individuals and businesses wind up paying higher taxes to continue with these luxurious pay packages for government’s often wasteful and unnecessary ventures.

That’s why a story about California state government from the July 9 Sacramento Bee caught my attention. It said:

The governor's latest budget proposal assumes almost 20 percent in employee wage cuts: 15 percent from the three-day furloughs that started this month, plus another 5 percent across-the-board whack.

"Three days (furlough) plus the 5 percent," said H.D. Palmer, Department of Finance spokesman when asked Wednesday to clarify the governor's budget proposal.

The Legislature won't go for the pay cut, but the governor can then add a furlough day …

Last May the governor proposed a 5 percent cut on top of what were then twice-monthly furloughs. The proposal was dead from the start; everyone knew the Democratic-controlled Legislature would never go for it. "State workers," as one Capitol Republican staffer told me, "are their constituents."

Sure enough, the Legislature defeated the plan in June. Schwarzenegger followed the "defeat" with a new executive order to add a third furlough day, getting the 5 percent cut in state worker wages that he wanted.

He could do that because a Sacramento Superior Court judge ruled in February that Schwarzenegger's emergency powers let him treat the government's fiscal meltdown like a Southern California wildfire by claiming broad emergency authority – including the power to furlough state workers.

The legal hurdle to exercising that power is proving there's a crisis. The Legislature's bickering while the state's budget ruptures helps. Its rejection of a pay cut is even better.

Of course, no one likes the hardships that come with the current deep and long recession. But if we really want to get the economy moving again, then it’s time for government to start seriously tightening its belt. Apparently, though, things have to get as bad as they’ve been in California in order to get any action on the government worker front.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council