Monday, June 7, 2010

Why we should fire all civil servants and public school employees (but only for five minutes)

It is troubling that in a time of high unemployment state governments and school districts in Oregon and other states may have to lay off hundreds of thousands of people. The U.S. Education Secretary has warned that without an additional $23 billion in emergency federal aid, 100,000 to 300,000 public school teachers and administrators could lose their jobs. But the federal government itself is already running alarming deficits and might not come up with the money.

There is an obvious alternative to firing so many people: keep them all on but make the necessary savings by reducing their salaries and fringe benefits. To some extent this has already been done, with freezes in salaries and benefits here and there, and perhaps even a few actual reductions in pay. But other public employees continue getting raises, and cutting pay is politically difficult even for a lame duck like Governor Kulongoski.

Even leaders who are willing to cut salaries might not legally be able to do so because of collective bargaining contracts with various unions. “A contract’s a contract,” as Ken Allen, director of the state American Federation of State, Country and Municipal Employees was recently quoted in an Oregonian headline.

This indeed is a problem. Oregon unions are reported to be hopping mad about Kulongoski’s proposed continuation of pay freezes, and the chances they would agree to substantial reductions in pay are nil. And starting July 1 the Oregonian reports that “union-represented state workers are scheduled to get step increases of 4.75 percent.” Just to pay for this raise for those remaining would require firing about 5% of these workers. (So much for labor “solidarity”!)

Perhaps I am wrong here, but normally collective bargaining contracts merely specify what people will be paid if they have a job and do not guarantee that anybody will have such a job. That is why layoffs are possible when money must be saved.

If this is the case, there is a solution to our current woes. It is an unhappy solution, one that no one would advocate except for the fact that the alternatives are all worse. The state of Oregon must fire all state civil servants and school employees. The laws providing for collective bargaining for state employees must be repealed. All former employees who would like a job would be hired with salaries and fringes determined on the basis of the available money (subject to further reductions later on if that proves necessary). Although vested rights in PERS would be preserved, just as they are for layoffs today, no future rights would be accrued and the state would shift to a defined contribution retirement system for all workers.

To avoid even temporary closing of schools, lack of police and fire protection, and throwing the prison gates open, the newly hired employees could go on the payrolls five minutes after they are fired from their previous positions. (Details could be worked out in advance.)

These admittedly draconian steps would avoid increasing unemployment, keep our schools fully staffed, and allow the state budget to be balanced. They would inflict moderate amounts of pain on all state workers rather than the huge amounts of pain that would be inflicted on those state workers who will lose their jobs under our current system.

The bottom-line question we must answer is whether Oregon government primarily exists to serve the people of Oregon, or whether its prime function is to promote the well-being of the people who work for it even when this conflicts with the general interest.