Tuesday, February 22, 2011

SB 5: A qualified endorsement

Let me begin by stating that I am a twenty-year state employee in Ohio. The State has been very good to me over the years, and I am grateful for the salary and benefits I have received. Some of those benefits do not exist in the private sector; including four extra paid holidays, longer vacation leave, and one of the last defined benefit pension plans out there. On the other hand, there is currently no opportunity for a state employee to be recognized for merit. In private enterprise, effective employees can easily be promoted or given bonuses. Neither is possible within state government. The only way a classified (non-managerial) state employee can receive a promotion is to take a competitive examination for an open position. In some job classifications, an employee may have to wait several years before such an opportunity arises. Since I was not a state employee prior to 1982, I cannot say to what extent these benefits have been due to collective bargaining.

Reaction to state efforts to abolish public employee collective bargaining has been strong and swift. On Thursday, some 13,000 state employees demonstrated at the Wisconsin state capitol in protest against their bill, and they occupied the state capitol overnight. Here in Columbus, about 2,000 state employees demonstrated during last Thursday and 5,000 today against Senate Bill 5 (SB 5), introduced by Sen. Shannon Jones (R-Springboro).

State employees have some justification for feeling that the General Assembly has laid recent budget crises on their backs. Salaries were cut by 3% in the current union contract (2009-2012). The State compensated through "cost saving days," which effectively give each employee two extra weeks of vacation. On the other hand, we need money to live, just like everyone else.

State employees are not responsible for the $8-$10 billion deficit, and eliminating all of our jobs would not resolve it. However, the problem is so serious that the Governor and the General Assembly have to look at all possible opportunities to cut. Raising taxes is not an option in Ohio. Our taxes are already very high by national standards, and clearly raise a barrier to economic growth. The 800-pound gorilla in the State budget is matching funds to the federal Medicaid program; but the only way the State can cut significantly in this area is to radically redesign, or even abolish, Medicaid – a sudden move that on the short term would be cruel to those who depend on it. Ohio state legislators might look into the proposal made by Florida State Senator Joe Negron to replace the federal Medicaid program with one that is much smaller and, if a waiver is not granted by the federal Department of Health and Human Services, unsupported by federal funds. While holding the promise of substantial efficiencies, such a proposal is likely to be politically dicey, even for Republicans.

I do not like unions. They are expensive (1½% of gross salary for dues or "fair share fee" doesn't sound like much, but experienced or highly-paid employees can easily fork over more than $1,000 a year). I disagree with most of the political positions taken by the union, and I find that relatively few employees actually use the grievance process. Unions also tend to create unnecessary tensions between employees and their managers. There are two union benefits extended to all employees that have worked well (and efficiently) for us: the benefits trust, which manages our dental and vision coverage (and some other optional insurance), and the Education Trust, which provides money for college education and training. However, the Education Trust has proven easy to abuse for non-job related training.

I have two problems with the bill: First, the bill calls for the Department of Administrative Services to define "merit based pay." While the Department of Administrative Services is clearly experienced on State personnel matters, it potentially opens a gap between the legislators' understanding of "merit based" and the Department's understanding of the same term. Merit based needs to be defined within the act, so everyone is on the same page, and so employees and the public can comment on that definition before it is imposed. Secondly, the State needs to think through the issue of employee training.

If the State uses this occasion to neglect training altogether – a common temptation in hard times – it will do itself, as well as its employees, a great disservice.  Particularly in information technology, when state employees are inadequately trained in current technologies, the State will be tempted to hire contractors at $150 per hour, when it could have had State employees doing the same work for less than half that, including all benefits. In recent years, the State has tended to under-budget by leaning on the Education Trust to finance any needed job-related training. The State should learn from the experience of large private corporations to develop a usable just-in-time training model.

I should note here that the bill does provide for a grievance procedure using a State Personnel Board of Review, so workers will not be completely thrown to the wolves when problems arise. In addition, classified state and local employees will continue to enjoy civil service protection from political pressure. This should allay concerns for those with bad workplace situations. While I have been blessed with good supervisors, there is plenty of anecdotal evidence that petty tyrants are all too common in state government.

SB 5 does not address pension reform, but it is true that some public employees (principally in law enforcement) have had the State furnish up to 24% of their salaries for pensions in addition to the percentage withdrawn from employee salary. (Private enterprise typically handles pensions by offering a matching contribution up to about 3% of an employee's salary for deferred compensation. For employees under the Ohio Public Employees Retirement System, the State pays 14% of employee salary, with the employee contributing another 10%.  Under HB 69, the State's contribution would decrease to the same amount as the employee contribution (10% for most employees). The pension includes a partial payment for medical insurance in retirement, the remainder to be covered by the retiree out of pocket).

Bottom line: the State employment system under collective bargaining is not fiscally sustainable, just as the automobile and steel industries were unable to maintain their union contracts. State employees are not giving up any "rights" that the great majority of workers in the State of Ohio would recognize. We are giving up a few privileges – privileges that the taxpayers of this state can no longer afford to support.  I favor SB 5 because it is necessary, even though it will work against my short-term personal interest. However, I would like to see the General Assembly add the safeguards mentioned here to provide employee growth opportunities and to offer a minimal level of protection from managerial favoritism.  


Anonymous said...

You are an idiot and I hope you get denied your "merit raises." I further hope that when layoffs come to your department, that your supervisors recognize you are an idiot and show you the door while they keep some low seniority, less trained, lower paid employee in your job.

It would be priceless to hear that you lost your job because of SB5. Be sure to post a blog update when you do.

Harold Thomas said...


Let’s face a few facts of life:

No one is entitled to a job. You got your job because you interviewed or applied for it, and the employer (and this is as true of government as of anything else) decided that you have skills that help them get their work done. You keep that job by keeping your skills current and continuing to do work that the employer needs. If you don’t keep your skills current, you will be laid off. If you do not do the work, you will be laid off or fired.

In a really free market, if you did not like your employer, you could easily find another; either by selling your skills or by accepting a little less money. Our laws and regulations, designed to “protect” the people, actually make this much harder for people on the bottom to find work and to make their way up.

So we have a choice. If the state goes bankrupt, we will lose most of our jobs. If we raise taxes, we will throw our employers and best people out of state. Either way, we all lose.

And yes, if I am laid off because of SB 5, I’ll be sure to let everyone know.

Anonymous said...

Anonymous is what is wrong with the internet. People feel free to say stupid stuff without recourse.

Harold, thank you for the open and honest discussion about your feeling on SB 5. There are very few neutral articles written on the subject. I agree with you on most all of your points.

Unions need to understand that jobs, much like benefits, are not rights. People earn them by showing up and doing a good job everyday.

Unions say capitalism is bad, but much like you outline, merit is awarded in the private sector, not averaged in with the underachievers.

While it would be great to continue to pay everyone, our tax base will not sustain that. And while the proposed SB 5 may not fix the state budget, it will probably go along way in all of the local school districts and municipalities in balancing their budgets.

David in Ohio

Harold Thomas said...

Thank you, David, for your kind words.

Actually, I do have recourse. I could delete his comment; but I prefer to let such people embarrass themselves... and it gives me the opportunity to reply in a way that I am sure Anonymous did not expect.

Mike Smith said...

"In a really free market, if you did not like your employer, you could easily find another; either by selling your skills or by accepting a little less money."

Harold, what do you do for a living? I'm guessing it's not quite the same as teaching. In response to your quote above, as a teacher I will never get the benefit of a "really free market". If the governor can cut funding to my profession (as he just did), he does it state-wide. So the employer down the road will have to cut pay just as much as mine. It's one thing to say that unions have more power than they should. But SB5 completely shifts it to a situation where I have no voice whatsoever. Every private sector worker has a voice. "Don't pay me enough, and I will go down the road to a different employer who can". For teachers, pay will soon be cut state wide. "Somewhere else" will soon be limited to a new state. And quality of teachers will decrease. There is a reason why the states in which teachers are not unionized are at the bottom in education. I agree that unions have major problems, as you note. But disbanding them in the public sector will lead to larger problems.

Harold Thomas said...

Mr. Smith:

Your analysis describes the current reality, which is not a genuinely "free market" in education, something we have never known.

A truly free market in education would have the state abolish government-run schools to issue vouchers to every parent for an equal amount for each child (with an additional amount for special needs children) to be used for the school of their choice.

The state can still insist on minimum academic standards, but a genuinely free market would compete for the best teachers -- a competition that does not exist today.