Friday, February 26, 2010

A word about furloughs

Lots of stuff in the news about layoffs and furloughs, most recently where Milwaukee's county board formally signed off on adding another 10 days of furlough for many unionized county workers, bringing the total to 22 for all of 2010. In previous jobs I've had as well as academic work, I've examined the efficacy of balancing whether to reduce salary expenses through reducing positions (layoffs) or keeping the positions are reducing paid days of work (furloughs).

Outside of the political questions that arise with these choices, the decision on which direction to choose comes down to three big variables: 1. How necessary is the job that is being performed (essential, optional, or excess) 2. How many people are required to perform the duty at the desired level of service? 3. What are the benefit costs to keeping employees? For example, if number 3 is a high number, maybe it makes layoffs the more likely choice (due to the current and future benefit costs being cut by job losses). But if the answer to No. 1 is "absolutely essential" and No. 2 is "the amount that is currently working" (or, as in the case of many government agencies. "more than you currently have."), then the answer is more likely to be to impose furloughs.

As the article notes, furloughs create a major problem for operations at a place like the Milwaukee County Zoo, which is open every day of the year with an inelastic need for care of animals. Reducing the number of people available for this means that some areas have to be closed at various times, as the manpower is not there for needed cleanings and supervision of animals. If this is an unacceptable outcome for running a zoo, you probably don't want to do furloughs, and find some place or way to reduce expenses.

But Milwaukee County's case makes no sense. The County is now giving 22 unpaid days off to many of its workers, which accounts for almost 8% of 5 days of work a week throughout the year (approximately 260). Now to those 22 days, add another 7 or 8 for holidays and an average iof 12 for vacation, and you're past 40 days of work that each employee is not actually performing his or her job- 15% of their days at work. This means that for every 7 workers in each of these units, the County does not get the equivalent services of 1 of these workers for the entire year.

Instead of cutting every worker by the 8% of reduction that the furloughs result in, why not just cut 4 or 5% of the workers in those areas? This would probably get you the same monetary savings when you combine salary and benefit costs (remember, benefit amounts DO NOT CHANGE with furloughs- those workers still get what's coming to them), and you don't have the long-term costs that go into providing retirement and medical benefits for these workers in the future.

From a pure money standpoint, there is only 1 reason you do not make those cuts- because the furloughed workers are needed, and the needed services break down by reducing staff (and/or revenue), to a point that it is well beyond the reduced costs and workers. And that is the hidden thing the privatization freaks don't want to bring up. That clearly these workers perform a valuable, needed service at a reasonable price, or else smart economics would say they should just be laid off or have the services sold off to an taxpayer-unaccountable bidder.

The fact that Scott Walker and co. don't do this, or are relatively unsuccessful in selling things off without having increased taxpayer costs or unacceptable levels of service, tells you that they don't believe their rhetoric that "the public sector doesn't work." It clearly does work, and the reductions given to County employees is done as a short-term, vegeneful way to get retribution on people they don't like- folks who do things that Gordon Gekko wouldn't go into business for. And it certainly does nothing to solve the long-term problems that continue to multiply with the broken county budget.

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