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Thom Reilly - Rethinking Public Sector Compensation: What Ever Happened to the Public Interest?

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Thom Reilly Rethinking Public Sector Compensation: What Ever Happened to the Public Interest?
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Rethinking Public Sector Compensation

Rethinking Public Sector Compensation
What Ever Happened to the Public Interest?
Thom Reilly
In memory of my father John J Reilly 19332005 To my mother Marie and my - photo 1
In memory of my father
John J. Reilly
(19332005)
To my mother, Marie, and my partner, Jim
First published 2012 by M.E. Sharpe
Published 2015 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA
Routledge is an imprint of the Taylor & Francis Group, an informa business
Copyright 2012 Taylor & Francis. All rights reserved.
No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
Notices
No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use of operation of any methods, products, instructions or ideas contained in the material herein.
Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility.
Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.
Library of Congress Cataloging-in-Publication Data
Reilly, Thom, 1960
Rethinking public sector compensation : what ever happened to the public interest? / by Thom Reilly.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-7656-3054-4 (hardcover : alk. paper); ISBN 978-0-7656-3055-1 (pbk: alk. paper)
1. United StatesOfficials and employeesSalaries, etc. 2. United StatesOfficials and employeesPensions. 3. State governmentsOfficials and employeesSalaries, etc. United States. 4. State governmentsOfficials and employeesPensionsUnited States. 5. Local officials and employeesSalaries, etc.United States. 6. Local officials and employeesPensionsUnited States. I. Title.
JK776.R45 2012
331.2835173dc23
2011045384
ISBN 13: 9780765630551 (pbk)
ISBN 13: 9780765630544 (hbk)
Contents
I was flattered when Thorn Reilly asked me to write the foreword for his book, Rethinking Public Sector Compensation: What Ever Happened to the Public Interest? although my initial reaction was one of hesitation. I have always had a high regard for Thorns professional competence as a manager in the public sector. Forty years ago as a young lawyer, I represented several public employee unions in their negotiations with their public employer. Moreover, as a former attorney general, governor, and U.S. senator, I am a recipient of retirement benefits in both the state of Nevada and the federal retirement systems. I anguished: Would there be an element of hypocrisy in my commenting on public employee benefits? After wrestling with this concern I decided to leave it to the reader to reach his or her own conclusion.
I do not subscribe to the view shared by others that all wisdom resides with those who labor in the private sector. In my 36 years of public service I have been privileged to work with extraordinarily talented and dedicated public servants. By way of contrast on more than one occasion, I was underwhelmed by those in the private sector who sought employment with state agencies. Public employees should not be required to take a vow of poverty. They are entitled to be fairly compensated. The question is one of balance: Has the pendulum gone too far in favor of employee benefits? Has the public interest been compromised by the new public employee compensation structure?
The right for workers to unionize and to collectively bargain for benefits is a comparatively recent development. The seminal event in the private sector was the enactment of the National Labor Relations Act in 1935part of Franklin D. Roosevelts New Deal. Public employee recognition of such rights came much later. Unlike the current debate, its genesis was often bipartisan. In Nevada, for example, a conservative Republican state senator from rural Nevada was the sponsor of the legislation that gave local government employees the right to collectively bargain with an enforcement mechanism if an impasse was reached.
In recent decades labor union membership in the private sector has declined markedly, but in the public sector it has seen explosive growth. The growth of local governments in the post-World War II era fueled an expansion in its workforce and added to the political influence of public employees. Among the first to recognize the opportunities presented were the public safety groupsfire, police, and teachers unions; they were soon followed by other public employee groups. While exercising their newfound clout they were successful in negotiating salary increases and generous retirement benefits for their members.
The collective bargaining process by its very nature lacks transparency. Local government boards and councils delegate to staff the responsibility of negotiations with public employee groups. The negotiated collective bargaining agreement is submitted to the public employee groups for ratification and to local government board members for approval. Seldom do the negotiated agreements generate front-page coverage in the press or lead the evening news. Typically, the press coverage would indicate a new agreement had been reached, covering a specific number of years with cost of living increases for each year of the new contract.
The collapse of the U.S. economy in 20072008 and the onset of a recession more devastating than anything since the Great Depression changed that dynamic. The decade of irrational exuberance as Alan Greenspan observed with reference to the stock market was over.1
Reeling from the impact of plunging revenues, state and local governments faced serious financial crises. Benefits negotiated with public employee groups were no longer affordable. At the same time, the private sector was shedding 700,000 jobs per month by the fall of 2008, and the financial markets were facing a potential meltdown.
Public sector managers were left with these choices, both grim: massive layoffs or reducing benefits, or a combination of the two. The dialogue between public employee unions and their local government employers became testy and often acrimonious. The provisions in the collective bargaining agreements that were previously obscure became front-page news.
Stripped of their inconspicuous presence in the bowels of the bureaucracy, many provisions that had never received public scrutiny generated enormous controversy. Comparisons were made between private and public sector compensation for essentially the same level of responsibility. The higher level of compensation for public employees was difficult to justify. Politics reared its ugly head and some sought to demonize public employee unions and blame them for the financial crises faced by state and local governments. Public employee unions mobilized to protect their benefits and joined the fray.
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