Sharing the pain
National unemployment is more than 8 percent and according to most economists we’re heading for close to 10 percent before the year is out.
The longest recession of our time has already taken its toll on nearly everyone, but the way many companies have chosen to handle budget reductions in previous downturns seems to have changed for the better.
Time For Sacrifice
In the past, the prevailing method of reducing overhead was, after tightening expenses in the non-personnel areas, to go straight to employee layoffs.
What has changed this time around is that many employees are sharing the burden through frozen wages (across the board or selected wage reductions among the higher paid), elimination of bonuses or overtime, trimmed benefits, or reductions in hours.
All of these methods call for sacrifice from the many — but all of them reduce the number of people thrust onto the unemployment line, and leave employees with company benefits.
This new approach is an enlightened and better way of doing business. With headlines of our current economic reality saturating most every news outlet, employees know the score, and many are openly appreciative to just have a job that just a year ago they may have taken for granted.
This broad knowledge of how tough times are has led to a calling out of leaders who have not been sensitive to the new reality. Bonuses to already highly paid executives at the insurance giant AIG were met with outrage, a behind the scenes promotion to a Governor Patrick loyalist for an obscure, cushy job at $175,000 was dragged into broad daylight and flogged so badly the whole deal was rescinded.
In Worcester an insider from the previous administration of the Worcester public schools was given a teaching position that she was short on qualifications for — and a public storm ensued.
The outrage was clearly part politics, but the larger part of the outrage was based on the fact that in these times with everyone’s personal net worth down significantly, and so many people losing their jobs or having their pay frozen or reduced — slipping an outsized bonus or highly paid job to an insider feels like a cold slap in the face.
These broad based pay freezes, reductions in benefits and reduced hours have been absorbed largely in the private sector — but there are also a few recent examples of such reductions in the public sector.
This past week city unions in Boston gave up negotiated pay raises in an effort to preserve jobs, as have some other groups across the state. But largely the public sector negotiators seem to be far less willing to accept the new reality than their colleagues on the private side.
And when there is a refusal to compromise or give back a little on hard won benefits we all suffer.
The city of Worcester is in the midst of these negotiations right now with several of its public unions, and the outcome could be stark.
The proposals include an increase in health care copays from 20 to 25 percent and wage freezes for the coming year. These are cuts of substance to each individual involved, but these kind of cost controls are necessary, and inevitable at all levels of government if it is to continue to provide an acceptable level of service to taxpayers.
Partisan Politics
Negotiations such as these invariably lead to the two sides digging deep into fortified trenches. Is management bluffing, and will they “find the money” at the last possible minute? Will federal stimulus money flow into city or state coffers stemming any threatened cuts? Is there a rabbit that will be pulled out of the hat in this high stakes game of chicken, or is this picture the new, stark reality? We think the latter.
Today, a sacrifice made by all employees is helping others save their jobs.
Already there are signs that the practice is increasingly accepted in the private and nonprofit sectors.
It’s time this ethic be embraced more widely in the public sector. This kind of needed change will not eliminate layoffs, but it will greatly reduce them.
The new reality is that there really are fewer resources to get the job done. As taxpayers we should demand that all the players in the public sector recognize that new reality and make sacrifices in partnership, not in territorial division.
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