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3/13/2009
Public employees - layoffs vs. wage freeze. Compromise?
Very interesting article – did you see it yesterday in FP News? From the Christian Science Monitor:
The faltering economy has put unions at a crossroads nationwide: How much should they compromise with cash-strapped cities, counties, and states trimming their wage bill?
So far, unions have frequently shown a willingness to make concessions – realizing that their members are not immune from the crisis. But in many cases, they are balking at the stark terms being proposed. It points to a growing showdown between unions and employers, as each contests the other’s appraisal of the situation and the remedies that will be sufficient.
…. “Unions and union members tend to feel the same as anyone right now – that you’re lucky to have a job,” A number of articles have been in the news of late about teachers or municipal workers accepting some form of a wage freeze, often in exchange for no layoffs. The City of Green Bay is an example in Wisconsin. Sheboygan’s schools have reopened their contract, looking for reductions.
Last week I wrote about the Appleton Area School District possibly thinking about settling union contracts for less than past precedent. In arguing against the recent AASD referendum, I also asked if indeed district employees might consider a salary freeze and bidding their health care package in these challenging times, preventing layoffs and preventing class sizes from inching up. Just a thought, one more option besides asking strapped homeowners to throw in more than the levy limits allow. I cited a few examples in the press about wage freezes – by now I’ve seen many more.
Ok… so here are the thoughts of a considerate, reasoned FoxPolitics reader in response to my perception that “salary adjustments” might be being thought about at AASD.
I am teacher in the AASD perhaps I can take a stab at your thoughts. I don't see much sign of Bait n Switch in this … article.... In terms of the administrators or teachers surrendering pay or health insurance to cover th[e state] cap, this violates the prevailing wage theory of skilled workers. Prevailing wage is the idea that workers who are skilled have to be paid approximately the same wage within industry or else the company will simply lose their workers as [you] try to cut pay. The same thing would happen in the AASD just as it would if Miller Electric tried to cut wages. Because both Miller Electric and AASD have a large number of skilled laborers, a pay cut would merely make them uncompetitive in respective industries. Thanks. Do you buy that? I didn't - and I’d really like to hear your thoughts. My response:
I think there may be many experienced, qualified folks very willing to work at a public sector job for the same wages as paid in 2008. Or 2007, for that matter. The folks still working at Miller Electric are pleased to still have their job. Please look at the economic environment around you. Wow. This is not the time to be claiming that employees need a raise to stay in their jobs. So my conscientious reader continues his courtesy, but in my mind, not in the right direction.
… are you saying people that are employed should take a pay cut because the unemployed don't have a job? Admittedly that idea would have a vein of populism to it, but it sounds like it was stolen from a certain little Red Book….My line of thinking is that if more employees (public or private) get pay raises, the end result would be an increase in consumer demand and perhaps an end to the recession. What??? Ok, I responded with disbelief, asking about my correspondent’s credentials in economics. His response – back on prevailing wages.
My point was that I don't feel pay cuts for skilled employees create the savings you think it will without serious consequences to the AASD. If the AASD fails to pay prevailing wage for teachers, the teachers will find employment elsewhere or future skilled teachers will not apply to a Low Pay district. This is the rule of prevailing wages: no matter what the industry, the prevailing wage must be paid or else you lose skilled employees be they bank executives, nurses, or corporate lawyers. Best not get me started on the statutory prevailing wage in WI - but it's a different subject. Grrrrr. Again, our reader, after a third response from me:
If your suggestion is that the teachers not have benefits [my suggestion was nothing of the sort] and their pay be more reflective of the private sector counterparts, then I do see some potential merit in that. It is very expensive for the teachers to maintain health insurance coverage with insurance rates rising as much as they have. Teachers have sacrificed much in salary to keep that health insurance. To exchange our current health insurance coverage for a massive pay increase would therefore be more reflective of our private industry counterparts.
No. Current research indicates public sector wages are very comparable to similar jobs in the private sector – and benefits are vastly superior. Could this year of very challenging times possibly be a time when it would be helpful for all workers to share/suffer the burdens of a depressed economy?
Jo Egelhoff, FoxPolitics.net
COMMENTS
Jo, you are just too nice to some readers. Tell em what you really think!
Have a GREAT weekend. Thank You for all your GREAT work.

Berry Laker (Fri Mar 13 06:15:46 2009)
The trouble with unions is that they seem to think employers exist just to provide them with jobs. The UAW, e.g., can partly blame themselves for the failures of American automakers. GM paid twice as many workers, to produce fewer cars per day than their Japanese counterparts.
Implementing efficient Japanese-style factory policies was resisted by UAW, as it would have meant layoffs; thus they cooked their own goose. (Note to potential gainsayers: this is NOT meant to be exusing top exec's taking huge salaries when their companies were in trouble.)
My husband's school district is having layoffs, and he is thankful to have a job, instead of whining about cuts. Also, if school districts wanted to be more efficient (well maybe pigs CAN fly), they could try trimming some of the administrative people from their central offices instead of teachers.

emily matthews (Fri Mar 13 09:19:20 2009)
I can tell you that many of the Tecumseh employees who lost their $14-$16 per hour jobs two years ago and still can't find a job or found a new one for $10 per hour look back now and wish they would have been more negotiable and been able to keep that company in new Holstein. Did the unions fight so hard for that wage and force them out or were they going anyway? I don't know and now we will never know. Losing a large manufacturing company like this one in NE Wisconsin is hard on all of us.

Mike (Fri Mar 13 09:42:19 2009)
Jo: The "Prevailing Wage" argument is a shallow one! The concept was created by Unions and Union supporters to equal-ize wages in the construction industry, making "Merit Shop" bidders theoretically equal in cost to Union Shops. Thus, politically relying on the "Bid" going to the Union Contractor.
Public Sector Unions have always "Eaten Their Young", shelfishly letting younger Teachers go to "The Street". Just
once, wouldn't it be "Professional" to freeze or reduce wages/benefits to protect ALL their jobs. Bet they won't!
The referred to "sacrifices" of Teachers in Wages to protect benefits is a farce! They've gotten BOTH, good times and bad. They just don't like the 3.8% QEO. But then, "It's all for the Kids".

GL Schilling (Fri Mar 13 10:01:54 2009)
Well 'sharing and suffering the burdens of a depressed economy' that's socialism right?
You first.
You first with all these suggestions of how and why they over there need to sacrifice while the proverbial 'we' maintain our lifestyles.
You first.
In an ideal world, sacrifice and volunteerism for the public good (rather than say some religious or other self gratifying reason) would be done by all. Whom do you see doing it?
If you put it in a moralistic or duty-bound perspective as I see here the argument is extraordinarily weak. And the only comment in the section below about Tecumseh was to be afraid, be very afraid if you negotiate. I've gotten familiar with the word rubbish to
describe these sorts of arguments. It is never the employee who determines whether a business stays or goes. Only under a system that is not based on you (or me) first is there the sort
of regulation and control needed of the corporate world.
This singling out of teachers as the ones who have to sacrifice for the common good is a weak argument.
You first.

Lon Ponschock (Fri Mar 13 10:18:58 2009)
Compromise.
Jo, I bet that if you could survey the teaching staff in Appleton teachers would overwhelmingly tell you that they support a wage freeze.
I do not think that the Union truly represents the teachers desires and thoughts.

David (Fri Mar 13 10:19:07 2009)
Jo - I agree with Dave. As my wife is a teacher, and I am friends with many others, I know that the AASD teachers just signed a contract this week and believe me, they were grateful for it. I hear very little from teachers in the schools complaining about anything. In fact, most that I know are grateful that they have such secure employment. I see this problem as more the union bosses trying to justify their existence by fighting without reason and negotiating without common sense.

Jim Steineke (Fri Mar 13 10:30:35 2009)
Jo: a feel a bit honored to have so much of a topic dedicated to my responses. Thank you.
Lets get to business: I am glad you did not connect the prevailing wage argument of mine to the "statutory" prevailing wage provision in the state budget. They are not the same. For anyone to argue there is no such thing as a prevailing wage in skilled industries, then one must turn a blind eye to professional sports were the prevailing wage of major league right fielders and starting pitching are well know and the consequences of not paying the industry's prevailing wage for talented workers result in lack of ability to compete (Please note the Milwaukee Brewers for the last two decades).
I was interested in reading your 2007 blog comments about teachers pay especially when you search for proof that teachers are overpaid. The Manhattan Institute study on teacher pay is silly. How does one measure an hourly rate for a salary job? I understand a desire to put wages in terms Americans can understand but teachers don't work hourly, they work off the clock like other salary professionals are expected to do.
Jo, I am curious about your thoughts on this topic: If Fox Valley workers have enjoyed higher wages and lower unemployment than most of the rest of the state, do you explain this by: the quality of Fox Valley schools, the number of university graduates, our natural resources, favorable business environment -i.e low tax rate, or perhaps other factors? I wonder how Thrivent or Plexus would answer that question. Jo, if you compare low-tax rate communities versus high education communities populations, communities that cut taxes at the expense of their education affect their productivity. And I think there is the big difference between you and I. You believe lowering tax rates is more important to the economy than increasing productivity of the workforce(pardon the assumption but you have yet to make one argument that this will not hurt education, your focus has been on teacher pay rather than the overall economic consequences). I believe that schools are most significant factor in why both our income and employment rates have have exceeded the state's averages. Cutting our education needs to provide a small tax decrease will have long term consequences.
Once more thank you.

Chad (Fri Mar 13 10:52:48 2009)
I'd be careful about whom you think you're talking to Lon - which includes me, my family, friends and associates and my readers.

Jo (Fri Mar 13 11:49:48 2009)
Lon, OK I'll take you up on your argument ... Me first? You've got it!
Who has been paying the property taxes which fund teacher's salaries, or the price for a union-built products (like my Saturn or Chevy Blazer)? The union members make far more per hour than I do - but I've been making the sacrifice to pay for those benefits as a part of my purchase price.
Who has been paying for someone else to enjoy very generous health care benefits not only for the period of their employment, but if their union contract dictates, throughout the length of their retirement years? We, the purchasers have.
Who, as taxpayers, is now paying to sustain union-shop businesses which by all reasonable arguments should be bankrupt? We the people have - to the tune of owning the company and then some ... just to save the union's CBA.
So even by your self-righteous "You first" argument, IT'S YOUR TURN. Step up and 'put some skin in' baby. WE HAVE GONE FIRST.

Jeff (Sat Mar 14 13:06:50 2009)
Chad, your comments rendered me speechless. For days. Simply unbelievable. First of all, I repeat, I am not talking about salary cuts. I am not talking about cutting tax rates,/i> either. (Tax rates don't mean a thing. It's total tax levies and relative burdens that are analyzed and compared, year-to-year.) Also, as long as you are throwing misstatements around, the Manhattan Institute study doesn't say teachers are overpaid. It says they are paid commensurate with private sector employees. The information is helpful in assessing the necessity in the market for ever higher salary and benefit costs to a community.
Here's the deal Chad. We are, throughout our community, state and nation, in an economic recession. Private sector companies are laying off employees and actually cutting pay. Many public sector jobs are having salaries frozen, in exchange for no or limited layoffs. At the same time, AASD has seen the need for more teachers to push down class sizes, a worthy goal. Your union continues to claim they are in this 'for the kids.' Given the economic environment and market situation, I'm simply saying that one effective alternative is to freeze salaries at AASD and bid out the health insurance. That would go a long way toward saving 44 jobs and bringing class sizes down to the administration's claimed goals. Freezing salaries is in no way 'cutting our education needs.' You are wrong to insinuate it. Many teachers I know are very pleased to have the secure job, health care and pension they now have and would gladly accept the same salary and benefits as last year if all could keep their jobs and the kids could benefit from reduced class sizes.

Jo (Tue Mar 17 03:55:56 2009)
Jo, I can't begin to express my relief that you managed a reply. I was concerned you might haven't fallen ill, but it appears that only ailment i need to stress over is your speechlessness.
But then again maybe there is more here that you a admit to. How is your vision Jo? Because I never said you were offering salary cuts. I only raised point that if you fail to pay a prevailing wage, then you will lose quality employee. This principle is well accepted in both the private and public industries.
As an unapologetic free-marketer, I can't help but think that government interference in both wages and benefits no nothing but harm balance the market worked so hard to create. Now Jo, if you are saying public employees should be able to find their correct market wages and benefits through unrestricted and fair negotiations like everyone else, then perhaps we are like-minded. But somehow Jo, i am sensing you wish for government to step in and create laws that restrict negotiations for public employees for either wages or benefits. I am too much of a capitalism to agree to that idea.
Thanks
Chad
P.S. you failed to answer my question about why the Fox Valley has had greater wages and lower unemployment than that rest of the state. Would you be able to offer your opinion on what is the most important engine for the valley's economy?

Chad (Tue Mar 17 21:26:25 2009)
I can't confirm your wage/unemployment data. Perhaps you could link to appropriate sources. Any number of factors impact wage/employment data. Quality of K-12 education is most likely a minor variable. But again, show me your data. So far, you've presented assumptions, hypotheses and relational (not causal) data.
While you're at it, you may want to share data that clearly registers outcomes for AASD students. And that doesn't include the NCLB testing done by Wisconsin (WAES? - am I using the correct acronym - eek, not coming to me), where performance standards are lower than most other states. That is indisputable. I'll provide the data link if you want it (won't take time now), but ask AASD administration and the School Board - they know state standards are unacceptable and are continuously looking at alternative testing and performance measurement tools.
To talk about capitalism and public employees (i.e., no bottom line) in the same sentence is less accurate than not. The only place it applies is the claim I think you made several days ago something to the effect that when the community pays public employees more, they then have more to spend. How/why does that impact a local and national economy more than if those same members of a community keep those extra dollars in their own pockets? I believe your discussion of capitalism and public employee salaries is uninformed. (And your tone is getting a bit nasty.....)

Jo (Tue Mar 17 21:42:28 2009)
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