Privatization Should Target Administrators

Privatizing low-end public service jobs will accomplish little or nothing in the way of improving government cost efficiency, argues Washington Gov. Mike Lowry.

Whenever talk turns to contracting out government work, the governor complains, janitorial jobs pop into people’s heads.

Unfortunately, that makes no sense, Lowry says.

“Somebody earning $8 an hour and getting decent benefits for cleaning up the place is not the problem,” Lowry says.

And he’s right.

Let’s say you privatize that person’s job. Now the janitor makes $5.25 an hour - without benefits. And his family goes on welfare, and they start getting free health care under the basic health plan.

“Is that progress?” asks Lowry. “I have a hard time believing that is progress.”

Me, too. Score one for the guv.

The problem is bloated middle management, Lowry says. There are tons too many administrators hauling in $65,000 and $85,000 a year trying to justify their existence by dreaming up new hoops for small business and the general populace to jump through. Eliminating that bureaucratic blubber, Lowry says in effect, is what will really cut costs.

Right again. But I still think some of the governor’s views on pay for public service are a tad cockeyed.

Take his efforts to privatize state liquor stores.

On the face of it, Lowry’s proposal to franchise out the state’s 164 retail liquor stores to private operators is Jim Dandy. It’s estimated that, in exchange for fiveyear operating franchises, the government will pick up $30 million in fees.

And cut its payroll by 382 employees.

Not a bad piece of work, you might think.

The knock against it is this: The state wants to require franchisees to hire all the government’s clerks, at their present salaries, and continue to pay them full benefits. Whoa!

This is privatization?

Well, yeah, says gubernatorial spokesman Jordan Dey.

The State Liquor Control Board researched pay for liquor store clerks in Washington and other states and determined rates for government store clerks were comparable to private sector store clerks.

So, the board and the governor have seen fit to tie government wage levels and benefits to the franchise package.

Is that the way this adminstration thinks privatization works?

The governor sees no difficulty with that, Dey says. “If a company doesn’t want to bid on a franchise,” he says casually, “they don’t have to.” Sure enough.

But others see this process as simply setting up a shadow government agency and calling it privatization.

“Well,” says the Lowry spokesman, “there’ll always be nitpicking.”

Yeah, maybe. According to the liquor board, an experienced store clerk gets $11.48 an hour.

The board’s payroll department told me medical benefits come to $305.32 a month. Nobody could come us with a standard pay and benefits package.

But the rule of thumb I hear for the private sector is that at least one-third of the total cost for an employee is benefits. At that rate, a fully experienced state liquor store clerk would run taxpayers $35,000 plus.

And this is the same payroll cost that consumers will get tagged with under privatization.

If $35,000 plus sounds fair to readers, fine with me. But Gov. Lowry also wants to hike the wages of state employees again.

And that raises another issue.

Consider: Including benefits, the average state employee these days makes about $44,000.

That contrasts with wages of about $28,000 (including those big government payouts, as well as, obviously, a preponderance of much smaller private paychecks) in Spokane, where workers in little businesses quite commonly don’t receive benefits.

Now the governor wants to reward state workers with another 6 percent wage hike over two years. This is a hard thing to accept in Eastern Washington, where state workers live high on the hog.

Maybe public employees in the Puget Sound need raises. If so, it’s time to zone state wages in Washington.

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