Upside Down Is Unstable…& Unsustainable

When I was in the third grade I started delivering newspapers door to door for the Las Cruces Sun News. My older brother, Dan, had a newspaper route and made what seemed like a lot of money, so when an opening came, I took in 75 cents a day, six days a week, if all the customers paid their bills. I said six days a week, but Saturdays were collection days, so I guess that really makes seven.
This was in the 1950s so money went a long way; as we older people remember, candy bars were five cents hamburgers 15 cents.
Well, I did this all throughout my school years, taking on more and more routes as they became available. Over time I hired other kids to help me. The circulation manager, Mr. Templin, came to realize that I was earning more than he was even though I only worked afternoons and he worked all day.
This did not sit well with him, and he became increasingly testy toward me, making my life uncomfortable at times and miserable at others.
Now, to the present: I see the same sort of thing playing out across the country between the private and public sector. The public hires civil servants to perform the work of government, and all was well for a time.
But increasingly the civil servants came to be paid more, a lot more, than those who hired them. The tension didn’t really raise its ugly head too much until the economy turned poor, money got tight and the people started to notice that they were paying their public servants substantially more in salaries, benefits and retirement than they themselves were earning.
The Cato Institute Jan. 10, 2010 Tax & Budget bulletin reported state and local governments’ pay in 2009 was “45 percent higher than the private sector…34 percent in wages and 70 percent in benefits.” (Combined totaling $39.66 per hour vs. $29.42 in the private sector, based upon US Bureaucracy of Labor Statistics).
Now that things have gotten upside down, communities are scratching their heads trying to figure out what to do about it.
The New York Times ran a story in the July 29 edition entitled “A City Outsources Everything. California’s Sky Doesn’t Fall.” The headline tells the gist of the story. It goes on to say that the town saved substantial money and the citizens are happy.
The Cato bulletin I cited went on to conclude that major cost-cutting is needed.
“State and local governments across the nation face huge fiscal challenges. Spending on Medicaid is soaring, debt is rising rapidly, and many governments have massive gaps in their pension and health care funding. (Sounds like New Jersey) To solve these problems, governments need to make major budget cuts.
They should privatize services, cut staffing levels, and terminate low-value programs. And with employee compensation representing half of total state and local spending, large savings could be found by freezing wages and overhauling excessive benefit packages.
Reality is, for stability and sustainability of our economy, we have to make Templin happy. In the fat times, elected officials have not held a tight rein. Lean times demand a reality check. Anyone unable to adjust to the “new real” will find himself on the outside looking in.
Art Hall, publisher