Published: Wednesday, February 23, 2011
Public sector should have to compete
When money is scarce, legislators often look to other areas of policymaking to deliver for their constituents. A recent example comes to mind this week.
Out of the dot-com recession a decade ago came 2002 legislation expanding collective bargaining rights for state employees. The first round of bargaining began in 2004 for the next budget cycle. Even though they didn’t see general pay hikes at the time, the unions won big during the tight-money days.
As part of that 2002 agreement, the state ended prohibitions on contracting out work that had traditionally been performed by state employees. Not much has been done. As a 2007 analysis by the Joint Legislative Audit and Review Commission reports, there are two reasons managers don’t contract: procedures are cumbersome and labor negotiates whether and how to put the work out for bid.
Fixing that piece of Washington’s law makes sense now. Think about two paths policymakers can take to reduce the cost of delivering state services. One path focuses on reducing compensation for the existing workforce. The other emphasizes competitive markets, contracting out and getting the best deal for taxpayers.
In the last week, Wisconsin Gov. Scott Walker’s proposal to sharply curtail that state’s collective bargaining law has sparked nationwide attention, complete with walkouts and massive protests. Fourteen Senate Democrats fled the state to deny Republicans a quorum. Eventually, this standoff will come to an end, most likely with Walker prevailing on major provisions.
Initially, the Wisconsin “budget repair” legislation preserves state jobs by cutting employee compensation. Walker says the cuts and curtailed bargaining powers would save as many as 12,000 state and local government jobs.
Labor groups and their Democratic supporters have said they will accept the reduced pay. But they adamantly oppose Walker’s efforts to limit collective bargaining to wages, eliminate automatic payroll deduction for union dues, and allow employees to decide whether they want to join the union at all. Walker will also surely explore restructuring state services, but this fight begins with compensation control.
The coalition government in the United Kingdom is looking for more fundamental transformation. On Monday, British Prime Minister David Cameron announced his government’s intent to restructure, expanding choice by turning to the marketplace.
“We will create a new presumption … that public services should be open to a range of providers competing to offer a better service,” Cameron writes in The Daily Telegraph. “This is a transformation: Instead of having to justify why it makes sense to introduce competition in some public services … the state will have to justify why it should ever operate a monopoly.”
Cameron would hold on to government’s role in national security and the judiciary, but takes an expansive view of where competition should prevail. And, he acknowledges the state’s responsibility to ensure fair funding, competition and access to services.
There’s no mistaking the national significance of what’s going on in Madison.
President Obama said it looked like “an assault” on unions.
Conservative groups recently mounted their own demonstrations to back Walker. Governors and legislators who want to reform collective bargaining and win compensation concessions now watch Madison with interest. The stakes are high.
Government employee unions come under increased scrutiny as budget shortfalls force cutbacks in public services. Public employee compensation — after health care the largest expenditure in most state budgets — becomes an obvious target.
The target grows larger when government workers insulate themselves from competition. There’s something about a monopoly that triggers resentment. Captive consumers control costs by capping revenues, cutting compensation. When customers have choices, we worry less about how much the provider is paid. Our focus shifts to the cost-benefit tradeoff.
Cameron says it well: “…the best way to raise quality and value for money is to allow different providers to offer services in an open and accountable way. Our public services desperately need an injection of openness, creativity and innovation.”
True there, true here. If government unions want to regain public confidence, they should embrace competitive contracting. Their monopoly assures continued discontent.
Richard S. Davis, president of the Washington Research Council, writes on public policy, economics and politics. His e-mail address is rsdavis@simeonpartners.com.
Out of the dot-com recession a decade ago came 2002 legislation expanding collective bargaining rights for state employees. The first round of bargaining began in 2004 for the next budget cycle. Even though they didn’t see general pay hikes at the time, the unions won big during the tight-money days.
As part of that 2002 agreement, the state ended prohibitions on contracting out work that had traditionally been performed by state employees. Not much has been done. As a 2007 analysis by the Joint Legislative Audit and Review Commission reports, there are two reasons managers don’t contract: procedures are cumbersome and labor negotiates whether and how to put the work out for bid.
Fixing that piece of Washington’s law makes sense now. Think about two paths policymakers can take to reduce the cost of delivering state services. One path focuses on reducing compensation for the existing workforce. The other emphasizes competitive markets, contracting out and getting the best deal for taxpayers.
In the last week, Wisconsin Gov. Scott Walker’s proposal to sharply curtail that state’s collective bargaining law has sparked nationwide attention, complete with walkouts and massive protests. Fourteen Senate Democrats fled the state to deny Republicans a quorum. Eventually, this standoff will come to an end, most likely with Walker prevailing on major provisions.
Initially, the Wisconsin “budget repair” legislation preserves state jobs by cutting employee compensation. Walker says the cuts and curtailed bargaining powers would save as many as 12,000 state and local government jobs.
Labor groups and their Democratic supporters have said they will accept the reduced pay. But they adamantly oppose Walker’s efforts to limit collective bargaining to wages, eliminate automatic payroll deduction for union dues, and allow employees to decide whether they want to join the union at all. Walker will also surely explore restructuring state services, but this fight begins with compensation control.
The coalition government in the United Kingdom is looking for more fundamental transformation. On Monday, British Prime Minister David Cameron announced his government’s intent to restructure, expanding choice by turning to the marketplace.
“We will create a new presumption … that public services should be open to a range of providers competing to offer a better service,” Cameron writes in The Daily Telegraph. “This is a transformation: Instead of having to justify why it makes sense to introduce competition in some public services … the state will have to justify why it should ever operate a monopoly.”
Cameron would hold on to government’s role in national security and the judiciary, but takes an expansive view of where competition should prevail. And, he acknowledges the state’s responsibility to ensure fair funding, competition and access to services.
There’s no mistaking the national significance of what’s going on in Madison.
President Obama said it looked like “an assault” on unions.
Conservative groups recently mounted their own demonstrations to back Walker. Governors and legislators who want to reform collective bargaining and win compensation concessions now watch Madison with interest. The stakes are high.
Government employee unions come under increased scrutiny as budget shortfalls force cutbacks in public services. Public employee compensation — after health care the largest expenditure in most state budgets — becomes an obvious target.
The target grows larger when government workers insulate themselves from competition. There’s something about a monopoly that triggers resentment. Captive consumers control costs by capping revenues, cutting compensation. When customers have choices, we worry less about how much the provider is paid. Our focus shifts to the cost-benefit tradeoff.
Cameron says it well: “…the best way to raise quality and value for money is to allow different providers to offer services in an open and accountable way. Our public services desperately need an injection of openness, creativity and innovation.”
True there, true here. If government unions want to regain public confidence, they should embrace competitive contracting. Their monopoly assures continued discontent.
Richard S. Davis, president of the Washington Research Council, writes on public policy, economics and politics. His e-mail address is rsdavis@simeonpartners.com.
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