Richard S. Davis: State bargaining table not serving taxpayers

In this age of disappearing boundaries, there’s little off limits. Folks get on TV and boast of stuff that previously they would have haltingly whispered in confessionals. New acquaintances casually ask how much you paid for your home, car or clothes. Everybody’s talking about everything.

Even now, though, there’s something unseemly about discussing the pay of everyday people. Yet, the recent boost in the state payroll now has folks talking.

Celebrities, of course, have long been fair game. Told in 1931 that he was demanding a higher salary than President Herbert Hoover, Babe Ruth famously responded, “I had a better year than he did.”

While I’m not suggesting Ruth had a nuanced position of public employee compensation, he understood competitive environments. And it’s the absence of competition that provokes concern that payrolls are rising too fast without accountability. Perhaps the compensation hikes are justified – without question, some were – but without the discipline of a market, who knows?

On July 1, most state workers belonging to unions got a 3.2 percent pay increase, thanks to the contract ratified by the Legislature earlier this year. But it’s just part of the story. A bunch of add-ons means that thousands of workers received double-digit pay hikes, some climbing 30 percent. Those add-ons include longevity pay and adjustments to bring some workers – like nurses and corrections officers – closer to private sector pay.

The Olympian reports that the tab for compensation increases – including public schools, universities, health care and pensions – amounts to $2.1 billion. Just the increase.

In 2002, Gov. Gary Locke signed legislation allowing state collective-bargaining power with respect to wages and benefits. Billed as a compromise, the legislation also expanded management’s ability to outsource work historically performed by state workers. Properly executed, such contracting introduces competition to what’s been a government monopoly, boosting efficiency and controlling costs.

The compromise was a fiction. The bill received overwhelming support from Democrats and unions. Most Republicans and business groups opposed it, saying the collective bargaining provisions would weaken legislative budget control and drive up labor costs. Further, most folks believed that the state had little appetite for what was then called contracting out.

Score one for the critics. While competitive contracting languishes, the public payroll balloons. And, as the Seattle Times recently reported, the collective bargaining agreement doubled union membership and poured millions of additional dues dollars into their political action programs. That’s allowed them to influence elections and legislation, putting in place the folks on the other side of the table during contract negotiations.

Government is labor-intensive and compensation represents a big chunk of the state budget. The growth of the state payroll corresponds with an eye-popping surge in state spending. That’s why the salaries of everyday people have become fair game for discussion.

The new two-year state budget boosts spending 15 percent. On top of the 13 percent growth in the last budget cycle that’s a four-year bump of 30 percent. Acknowledging there were some lean years during the recession, the state and its workers are long past catch-up.

Labor representatives say the contract is the best deal in history. The governor’s negotiator tells the Olympian, “…this is a good contract for state employees.”

Indeed.

In business, labor and management understand that consumers have choices. To preserve jobs and markets, they must think long-term. They can’t just boost prices to cover excessive labor costs. Customers will simply find another vendor.

Not so with government, where labor often sits on both sides of the table and government is the sole supplier. Backed by a strong economy, the state added some 8,000 new employees in the last four years as it boosted wages, lifting spending to an unsustainable level and guaranteeing future problems. Labor costs and the absence of competition exacerbate the situation.

No one objects to fair compensation for public employees. But voters will balk if they think that state workers – insulated from competition – enjoy better pay, benefits, pensions and job security than most of their neighbors.

That’s worth remembering, particularly now that Initiative 960, which would make it harder to raise taxes, appears likely to qualify for the fall ballot. One way or another, taxpayers will demand a place at the bargaining table.