Public Workers Take The Blame Again

Larry Price
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Wednesday - December 08, 2010
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There is a federal commission looking into possible ways to cut the federal deficit. To no one’s surprise, one of its first recommendations was to freeze the pay of federal workers. Also to no one’s surprise, U.S. Sen. Daniel Inouye, while supporting President Barack Obama’s call for a federal wage freeze, pointed out that the freeze, if adopted, would affect tens of thousands of workers in Hawaii.

To get an idea of its impact, there were more than 33,000 federal civilian workers in Hawaii in 2009. That represents 5.6 percent of the labor force in the state. It’s interesting to note that the average pay for a federal worker in Hawaii is about $81,258 in wages and another $41,791 in benefits.

In the same week, newly elected Mayor Peter Carlisle announced that he intended to eliminate public worker furloughs in Honolulu. He said his “financial plan will not include furloughs, and the existing budget has city workers staying home two Fridays each month through June 30, the end of the fiscal year.” He went on to say, “It’s not healthy for government to have furloughs,” noting that work backs up when city workers aren’t in, and that city employees enjoy incredibly generous sick time, scheduled holidays and regular vacation days.

A while back, when Mayor Mufi Hannemann faced a similar financial shortfall, he ordered 10,000 city employees to begin furloughs, closing most city offices for two days a month. Employees dealing with public safety and other core city services such as TheBus and refuse collection were instead faced with 5 percent pay cuts, the equivalent amount of salary being lost by those put on furlough.

The general public believes that government workers are paid too much and have benefits that are too generous. Well, there is no abundance of evidence that is true. What is readily apparent is that when the government needs more money, more often than not it raises taxes. When governments are hit with a recession, they freeze salaries and benefits or cut the workweek with some kind of a furlough plan. The excuse is the same: The government cannot afford the compensation.

There are some things that workers, at any level, should keep in mind. There are four basic factors that determine what people are paid: legal, union, policy and equity. Legally, there are numerous laws that stipulate what employers can or must pay in terms of minimum wages, overtime rates and benefits. There is nothing whimsical about compensation laws.

Read the Fair Labor Standards Act of 1938. It specifically contains minimum wage laws, minimum hours, overtime pay, equal pay, record-keeping and child-labor provisions covering most U.S. workers, but not all. The 1963 and 1964 Civil Rights Act talks about discrimination and the privileges of employment. Then there are laws for unionized companies, union-related issues that influence pay plan design. Workers were granted these rights in the National Labor Relations Act in 1935.

Historically, the wage rate has been the main issue in collective bargaining, and it’s all packaged with various benefits such as health care. What many people forget is that a collective bargaining settlement has the force of law in a courtroom. You can’t just take away something that has been negotiated at the bargaining table with management.

The important point is that the compensation plan negotiated by government should support the employer’s strategic aims. Said another way, management should produce an aligned reward strategy that supports and achieves its strategic aims and competitive strategy.

Penalizing government workers every time there is an economic downturn or recession is not a fair plan, and can only lead to poor employee morale and low productivity.

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