RALEIGH – Well, there seems to be a bit of a disagreement about how best to reduce public payrolls to help close the state’s $3.7 billion budget deficit for FY 2011-12.
Last week, I wrote a column observing that North Carolina’s ratio of public employment to state population was significantly higher than the national average. If most other jurisdictions can deliver state and local services with fewer workers, it seemed reasonable to me to conclude that North Carolina should at the very least reduce its workforce to the national average – through some combination of attrition and layoffs – as part of a budget-balancing plan.
Others disagree. Rob Christensen, a political columnist for the Raleigh News & Observer, wrote in his Sunday column that instead of eliminating thousands of positions, Gov. Bev Perdue should propose an across-the-board pay cut of, say, 15 percent. That way, he argued, the state could reduce payroll costs without increasing the jobless rate and thus “spread the pain equitably.”
Christensen got the idea from John Sanders, former director of UNC-Chapel Hill’s Institute of Government. Sanders wrote his own letter to the editor laying out the case for pay cuts over workforce reduction. Here’s a key passage:
That approach, in contrast to the suggested personnel dismissals, would have the effect of spreading the sacrifice evenly over the state workforce, while leaving programs and services less impaired than would wholesale dismissals. It would also be capable of adjustment, up or down, as financial circumstances might warrant in the future. And it could be terminated when the financial crisis passes, as it will.
Respectfully, this is entirely the wrong approach to balancing North Carolina’s budget. To “spread the sacrifice evenly over the state workforce” is to fail to make critical distinctions – both among employees and among state programs. Some state employees are fantastic and deliver government services. Some state employees are fantastic but the services they perform aren’t a high priority in tight budget times. And some state employees are lazy, incompetent, or simply in jobs that don’t fit their skills and interests.
Because public officials are spending someone else’s money, they don’t get the luxury of ignoring these differences and avoiding difficult decisions. They owe it to the taxpayers to construct budgets based on firm priorities, outcome metrics, and sound management practices.
It is bad for morale to treat all employees equally, regardless of their efforts, talents, or contributions to the organization. It makes current and potential high performers think twice about working hard or staying in their jobs. Why should their pay be whacked 15 percent to protect others from layoffs? What incentive would there be to excel in the future?
And as a matter of fairness, why should a stressed-out probation officer trying to keep dozens of convicts from returning to a life of crime get the same 15 percent pay cut as someone working in, say, the Department of Cultural Resources or college administration? I’m not slighting the work done in these agencies, but let’s face it: lives are rarely at stake in them.
As to the notion that pay cuts are better for the economy than layoffs, that assumes that North Carolina’s current rate of public employment is defensible and economically beneficial. It isn’t. We have hampered our economy for years, during periods of boom and bust, with the expense of paying for too many public-sector workers.
There is good evidence showing that North Carolina has more public employees than average. You will not find similar evidence suggesting that North Carolina’s fiscal problems stem from excessive salaries. Sure, some state jobs are overpaid, and others compensated at the national average. But other positions are so poorly paid that we don’t attract good workers to fill them. These are the kinds of differences that shouldn’t be glossed over with across-the-board cuts.
Setting priorities and sticking to them is what we hire governors and lawmakers to do. If they aren’t up to the job, perhaps we could begin to reduce the public payroll by cutting their pay approximately 100 percent.
Hood is president of the John Locke Foundation.