Arnold Kling  

Cut Their Pay

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Catching Up... Values are Subjective...

President Obama writes,


Already this year, we have lost 84,000 jobs in state and local governments...if additional action is not taken, hundreds of thousands of additional jobs will be lost.

Therefore, we need to cut pay for state and local workers.

Even if you think that we need more government spending, the spending could be on something other than keeping salaries and benefits high for government employees.


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CATEGORIES: Fiscal Policy



COMMENTS (4 to date)
Boonton writes:

I posted this on the Just a Reminder thread but it bears repeating:

BTW, just to give a big picture perspective:

Real state and local government purchases (2005$) had fallen from $1543.7 billion per year as of 2007QIV to $1537 billion per year as of 2009QIV and then dropped to $1521.7 billion last quarter.
) http://econospeak.blogspot.com/2010/05/senator-mitch-hebert-hoover-mcconnell.html

That is a 1.4% drop in spending during a period where population increased by about 5% and inflation grew


That's about a 1.4% drop in spending during a period where I estimate population increased about 5% (using http://www.stats.indiana.edu/state_projections_2010.xls). (I originally added inflation too but I notice the quote above is citing real, not nominal, figures).

Whatever the merits of downsizing versus wage cuts in particular areas, on a macroscale scale I think it's hard to make a convincing case that state and local governments have been spending recklessly.

floccina writes:

I posted this before:
In companies that use Open-book Management employees have shown willingness to take pay cuts over layoffs.

Considering that most Americans trust Government more than businesses and considering how prized Government jobs are, I would think most Gov employees would be willing to take a pay cut if shown the facts.

Makes me wonder if education and open books could get Americans to accept higher medical deductibles to get higher compensation.

Richard writes:

Arnold,

It is generally recognized that paycuts are unattractive for private employers becuase they hurt morale and hence reduce worker productivity. Is there reason to think that this dynamic would not apply in the public sector?

Noah Yetter writes:

Since public sector employees have negative marginal productivity, I think a little hit to morale might do us all a lot of good.

On a more serious note, having gone through a round of budget cuts in 2003(?) when I worked for the State of Colorado, I can assure you no matter how tight budgets look on paper, there's always fat left to trim. Waste is the rule, not the exception.

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