When cutting the budget, should the government cut back hours or cut out jobs entirely? *UPDATED*

Here in California, faced with a devastating fiscal crisis, Gov. Brown is talking about cuts.  If I were in charge, I’d cut out whole departments and agencies because they’re inefficient, redundant, unnecessary, or entirely inappropriate uses of taxpayer funds. Or within departments, I’d simply do a “rip off the band-aid” approach and fire some employees entirely.  It would be painful, but the department would be pruned and the fired employees wouldn’t be in workplace limbo.  Instead, they could get on with their lives.

Gov. Brown, however, is going a different route, at least for some things.  Rather than get rid of entire departments or entire employees, he’s proposing cutting back on hours — and pay with it.  This means that a government office that was open five days a week will be open only four days a week.  Everyone working in that office will take a 20% pay cut.  That’s a big cut.

Two questions for you:  First, from the employee’s point of view, would you rather be laid off, making a clean break, or would you prefer to have a 20% pay cut in exchange for a much shorter work week?  Second, from the taxpayer’s point of view, do you think it’s better to get rid of whole programs or clumps of employees, or do you think it’s better to cut back on everything at once by shortening hours and pay?

UPDATE:  Here’s an email from someone with a personal insight into government employment:

May I suggest you consider one other little item?  Ask the employees what they think.  My wife works for the Cal State system ; they were confronted with something similar a few years ago.  The union was asked whether or not they’d like to accept fewer hours/lower pay or some number of layoffs (by seniority, of course).  They voted for the reduced hours by a fairly large margin.  Never came to fruition, but the peons seemed pretty well to know the right answer.

Remember, once you lay off all those folks, you just put them on the unemployment rolls for 99 weeks, then … Given our “business friendly” climate, what do you think will happen?

Something to consider.  State employees are human beings too.

State employees are definitely human beings, and I respect the ones who work hard and provide real services. Their views do matter, although I would never deny the government the right make raesonable and appropriate, albeit painful, cuts to the job roll.

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  • JKB

    Depends on the need for the cutback.  If it is to cover a short-term cashflow problem, you cut back hours.  If the cuts are needed to fight a systemic deficit, then you cut personnel and programs, as you need the big savings that come from the 50-60% of compensation that is “benefits.”  Downside of a permanent cut, for government, is the union notification, union fighting and the entrenched mentality of never cutting back the FTEs or budget of a manager.  

    From the employee standpoint, a 20% cut is rough but you still have insurance, retirement and other benefits which are a large portion of overall compensation.  In addition, many people have way to much of their “self esteem” wrapped up in their job, which can be painful.  On the other hand, if you are a productive worker, you can benefit from a clean break.  Plus, the “self worth in your job” problem can be worked through breaking the institutionalization and promoting freedom of thought.

    Just read this last night from Paul Graham commenting on the regrets of the dying complied by a nurse

    “If you had to compress them into a single piece of advice, it might be: don’t be a cog. The 5 regrets paint a portrait of post-industrial man, who shrinks himself into a shape that fits his circumstances, then turns dutifully till he stops.”
    The Top of My Todo List

    A clean break, pulls the cog out, where it can lie rusting or useless or with heat and hammer be remade into something different if not greater.

  • Danny Lemieux

    JKB put his finger on it – it isn’t the work hours that are the problem as much as it is the benefit packages.

  • http://ymarsakar.wordpress.com Ymarsakar

    Like Congress’ benefit packages.

  • lee

    Ditto. Well put, JKB.
     There are a lot of unnecessary agencies in Sacto, agencies that would be better as private entities, and duplications of entities. A lot of moolah could be saved by just going through the list and slashing. One of the big problems California has is the benefits packages, and unless the state goes thrugh bankruptcy, those are going to be hard to touch. Even making changes for as-yet-to-be-hired people is going to be hard because of exisitng union contracts. Unions leaders will kill a goose laying a golden egg, even if it screws their members–just to get the gold NOW.

    The state also needs to reevaluate regulations. Not only because thare are so many that are job- and business-killing. Some just add more chaff to the state payroll for oversight of the regulations. Some put people on state payrolls for jobs that could be perfomred by vounteers, or independent non-profits. For example, a lot of trails were “made” by volunteers–boy scouts did a lot of work like that. Now, any new trails or trail upkeep, must be performed by professioanls on the public dime. Public parks could be maintained with more volunteerism and less money. But for Regulations! Rules! Laws! (and litigation run amok.)

  • http://furtheradventuresofindigored.blogspot.com/ Indigo Red

    Gov’t has robbed Peter to pay Paul and now Paul is being robbed. Financially strapped states are diverting mortgage settlement money meant to help struggling homeowners to plug budget gaps.

  • Ron19

    About 25 years ago, Hewlett-Packard was faced with this problem, and discussed it with their employees.  I think everybody was asked for input.  What the employees wanted most, and got, was longer hours for less pay, no change in benefits, and nobody lost their job.  That seemed to work out very well in the long run; they kept all their trained talent, and everybody bought into it.

    The large (10,000+) division of a Fortune 100 defense contractor that I was working for at the time, faced more drastic circumstances a few years later: the division was closing within a few years, and almost everybody had to go.  The unions’ workers got what the law and existing contracts required, no more.  The non-union workers got what the law required, an equivalent to what the union contracts required, and some additional consideration.

    As a salaried worker, I have been laid off several times.  The larger companies kind of shrugged their shoulders and did what they needed to do, including keeping up good press and no blow-back as best they could.  The smaller the company, the less kind and gentle they were.  The smallest one I wouldn’t recommend to anyone.

    As for California cutting departments, I seriously believe that realistic cutting would involve a lot of knowledge that doesn’t exist in one place about what is really going on in any state organization with more than 5 people.  Making inelligent cuts of departments, programs, etc. would take years of meetings and wrangling before thay could actually do anything.  And endless committee meetings between the governor’s office, the two legislative houses, department and other fiefdom heads, multiple employee unions and advocates, lawyers, lobbyists, and an infinitude of public hearings.  It would probably cost more than it would save to “talk with the employees.”

    I think the biggest obstacle is the Senate and Assembly and the union bosses that drive them to preferred legislation.  And then it would have to get past our courts.

  • Oldflyer

    Went through this in the private sector.  The airline I worked for was in dire straits, and was talking about furloughing pilots.  The senior Captains took a voluntary 20% pay cut to save the jobs of junior pilots.
    First, some of the junior Captains, who were neither in immediate danger of losing their jobs, nor asked to take a cut, complained because the Senior Captains made more than they did.  (They flew much smaller aircraft, and had been in the business a much shorter length of time.)  They apparently wanted the more junior pilots to be fired, and any money saved applied to their own pay.  Their attitude created hard feelings all around.
    Second, it did no good.  Layoffs in large numbers eventually occurred, and the airline finally went broke and shut down.
    As a new resident of California, I watch with dismay.  I think California is in much the same straits as that airline.  Drastic action is necessary; but will be avoided as long as possible, and at all costs.
    One prediction I will boldly make.  Any cuts in services will be made to  those that the tax paying public depends upon the most.  That will teach us not to support higher taxes when the Politicians next demand them.