Mke County 2010 Budget - Wage Concessions

For anyone that pays attention to the news it’s hard to miss the stories on private companies that have to cut employee pay and ask for larger contributions towards benefits. Just recently Hewlett-Packard’s EDS division employees were asked for the third time in a year for pay cuts…these most recent cuts are up to 30 percent of pay. There are hundreds of similar stories out there. The recession may be over, but we’re going to see residual affects of this economy for years.

Government entities are now in a position where they have no choice. They MUST seek pay concessions from employees. They can’t raise taxes enough (legally, they can’t do it) to cover the deficits they are facing. Just this week the County Executive for Dane county asked for a 5% pay cut for county employees.

Scott Walker has proposed a budget that asks for a 3% across the board reduction in base pay and an elimination of salary step increases for all employees for 2010. This is an effort to “create a balance between the wages and benefits received by public and private sector employees”.

For those of you not on the public payroll, let me explain a bit about county employee pay ranges and “step increases”. All positions have a pay range assigned to them.

There are some positions that are called ECP (executive compensation plan), generally upper management and department heads, where one is assigned a salary when hired that falls within the pay range and raises only come when specifically approved (usually these positions are given the same raises in the budget process that were negotiated by the unions). They do not receive any other automatic increases.

Next, there are the union positions, which make up the largest number of the Milwaukee County workforce. When hired, these people are assigned to a step (level) within the pay range for that position. They receive two types of pay increases. The first is the “step increase” where each year on their anniversary date they advance to the next step in the pay range. This automatic advancement stops when the individual reaches the top step in the range. The second is the annual increase(s) that is required under the negotiated union contract.

Finally, there are mid-level management positions that are not represented by a union. These positions are also assigned to a step within the pay range when hired and receive annual advancements to the next step on their anniversary dates and in addition are also generally granted the same annual increase that is required under the union contracts.

As a side note, these annual increases are implemented by applying the percentage of increase to each step of the pay range as in the example below. This example assumes that the negotiated salaries increases were 2% annually.


The other interesting thing to note in this example below, which looks at an actual compensation example of someone hired in July of a specific year, is the true impact on salary level of the annual and step increases.



The unionists would have been out there whining that they only received 2% a year (referring only to the negotiated cost of living increases), when in actuality they would have seen a near 9% increase to this particular employee after just two years of employment.

These changes, along with the health care components and other minor changes proposed by Walker, would result in a $32.0 million tax levy savings for 2010 alone.

Of course, the unions are already stomping their feet threatening to hold their breath until they get what they want. They won’t even consider that they should put Milwaukee County first and do what the rest of us in the real world are doing…having our wages cut and paying more for health care. (I don’t even have a pension plan. I’d be thrilled to have one and wouldn’t mind paying a measly 5% of the cost as Walker has asked them to do.)

If you don’t like the pay and benefits that are being proposed, go find a job in the private sector and see how you like that.

I don’t see how what Walker is proposing could be seen as anything other than fair – both to County employees and to the taxpayers that get stuck with the bill.

BTW...I was stunned to see that the Journal Sentinel agrees with Walker on this. They had an editorial that said:

It also is reasonable to ask county employees to take a pay cut and to contribute more to their pensions and health care benefits. Taxpayers throughout the county have lost jobs, taken pay cuts, been required to take unpaid furloughs and have had to pay more for their benefits. They will have little sympathy for government employees who resist taking at least some hits.

Of course, then they went off on their usual mantra about tax payers not paying enough...but I think this is a good start for them.