11/9/98

KUFM / KGPR

T. M. Power

Taxing Government Workers to Support Public Programs

Frustration and anger are rising on Montana’s college campuses as the non-faculty staff who actually run these institutions continue to be stone-walled in their efforts to negotiate salaries for the next several years. It has reached the point where the Montana Public Employees Association has filed an Unfair Labor Practices complaint because the Commissioner of Higher Education refuses to negotiate. The campus unions have reluctantly begun to talk about a strike at the beginning of the next semester.

The level of frustration is particularly high on campus because the non-faculty staff have watched as the faculty received significant "catch-up" pay increases and the Commissioner’s office granted themselves 6 percent pay raises over each of the last four years. Meanwhile the staff has faced years of salary freezes or minuscule one percent increases that literally added about a dime an hour to their pay.

The wages paid to state employees are supposed to be tied to what similar workers in Montana get paid and what government employees in surrounding states are paid. This market-based approach makes sense. As the Governor has said, it is hard to ask Montanans who are paid well below national levels to pay high taxes so that government employees can earn more that the taxpayers do themselves. Tying pay to what similar workers are paid also allows the government to attract and hold qualified workers to do the public’s business efficiently and well.

The problem is not with the theory; it is with the implementation. The legislature simply has not funded the market-based pay levels. When it comes time to make the difficult decisions that are required to balance the state budget, rather than raise taxes to meet this commitment to public employees, the legislature instead has taxed its employees to make up the difference by effectively freezing their pay while inflation continues to eat away at its purchasing power. In an attempt at humor, the university staff have labeled this the State Employee Pay Shuffle: two steps forward, three steps back, 1 percent, 1 percent, freeze, freeze, freeze. This dance step has a predictable impact. It moves employees back against the wall or out the door.

The Governor’s response has been that all Montanans make a sacrifice to live here. But he should check the data that his own Department of Labor and Industry reports on hourly earnings in Montana. They have been increasing at a rate of about three percent per year, not one percent, one percent, freeze, freeze, freeze. As a result Montana workers’ hourly wages have about kept up with inflation since 1991. Meanwhile state workers have watched their hourly wages constantly eroded by inflationary forces. The state market studies of government pay rates also show this, but it is politically easier to tax government workers than it is to tax the voting majority.

Montana workers do make a sacrifice to live in Montana. If one carefully compares Montana workers with workers elsewhere in the nation, in terms of education, skill, occupation, and industry, we are paid, on average, about 12 percent less per hour than we would be paid elsewhere in the country. This approach allows us to estimate the sacrifice different types of workers make to live in Montana. Not surprisingly, government workers make a sacrifice almost twice as great as the average Montana worker. In order to work for government agencies in Montana, they give up over 21 percent of the pay they would receive elsewhere. No other major industrial group in the state so underpays their workers.

There certainly is a conservative logic to starving government employees. If one does not believe that the government usually does anything right, one way to assure that this is a self-fulfilling prophecy is to pile on the responsibilities given to government agencies and then deny them the resources to do their job. The result will be frustrated and angry workers who one can then point to and accuse of lacking the expected public spirit. When a third of those workers are exhausted from having to work a second job besides taking care of their families, it is not surprising that frustration and anger have begun to bubble to the surface.

The state administration is taking initial steps to try to deal with this cumulative problem. It proposes modest raises for the next two years; something that does not even begin to make up for past wage erosion. Even that modest proposal will depend upon the legislature being willing to fund it. If progress is not being made during the winter, don’t be surprised to see University staff on the picket lines, joined by both supportive students and faculty.