Public employees’ pay keeps rising

Government employees in Nevada continued to get healthy raises during 2009, while the average privately employed Nevadan took a pay cut, according to a new report from the Nevada Department of Employment Training and Rehabilitation. The raise gap was especially evident for those employed in Clark County.

"Nevada Employment and Payrolls 2009," when compared to the 2008 edition of the report, shows the average private sector wage declined $13 a week, from $804 to $791. Local government employees, however, got about $47 more a week than they did in 2008; their average pay increased from $949 to $996.

That's a pay cut of 1.6 percent for private workers, compared to a raise of nearly 5 percent for local government employees.

Federal employees at Nevada work sites got a small average increase from $1,201 to $1,216, and state employees went from $989 to $1,006.

In Clark County, the contrasts were more pronounced. Private sector wages dropped from an $808 average to $790 a week, while local government wages climbed from $990 to $1,052.

That's a 2.2 percent cut for private workers, compared to a 6.2 percent raise for the local government employees.

Las Vegas City Manager Betsy Fretwell said she wasn't surprised by the report.

Fretwell pointed out that over the last two months the city has negotiated agreements with city marshals and the firefighters' union that will cut labor costs.

Asked outright if she saw a moral wrong in public employee pay continuing to rise even as taxpayers' earnings diminish, Fretwell responded carefully.

"That's a harsh criticism," she said. "We have a long history of having a few people doing a lot of work, and of paying them more because they do a lot. But when we're in the position that expenses are out of control, we must get them back under control."

One who did see a wrong was Mike Ward, research director for the Service Employees International Union of Nevada, who says private employees are getting shafted by their bosses.

"Looking at those numbers, it would appear that the private sector needs to organize more," Ward said. "The lack of union density means they are not going to get the kind of wages of those who have unions to advocate for them."

SEIU represents about 18,000 Nevada workers, about half of them employees of various local government agencies in Clark County.

Fretwell said automatic increases typically included in public employees' union contracts, including "cost-of-living adjustments" or COLAs -- raises given regardless of whether the cost of living has increased or decreased -- are largely responsible for the escalation of public employee wages.

"Anything that is automatic, that we have to live up to regardless of revenue sources, will contribute. Whether it's a COLA, or step increase, or longevity, it will create that disparity," Fretwell said.

"I am not aware that many private sector companies build in automatic raises," she said, but added that a local government can't open negotiations with the position that it will never again agree to a COLA or step increase.

"We are required to negotiate on wages by state law, and past practice is a key to what issues we have to negotiate. There have been decades of past practice that affect that."

That said, Fretwell pointed out that the two agreements the city reached recently, after negotiations with firefighters and marshals, do not contain COLAs.

County Manager Virginia Valentine said Thursday, "As a result of either concessions or expired contracts on July 1, no county employee group will receive a COLA. During 2008, though, 90 percent of county employees received a 3 percent COLA in addition to increases for merits, steps, and longevity."

Management employees don't receive COLAs and haven't had merit increases since 2008, Valentine said.

She noted that rising average salaries for public employees are at least partly a by-product of public agencies' efforts to bring costs into line with revenues.

"When we have a hiring freeze, we are not bringing in any new employees at the bottom of the salary schedule. And when we lay off people, under the union contracts, we lay off people from the bottom of the compensation plan," she said. That increases average wages, though it decelerates total payroll growth.

Employees of the county itself were fewer than 20 percent of the local government employees within Clark County and counted in the study, Valentine noted.

That means county government policies can have a limited effect on the total picture, she said.

But Valentine said the county has worked hard to put its own finances in order, passing a budget for the new fiscal year that is 7 percent smaller than the 2009-2010 budget, and rolled back spending to the same level as fiscal year 2007.

About 500 general fund positions have been eliminated or held vacant over the last two years in response to declining revenues, she said.

Steve Hill, chairman of the state policy task force of the Las Vegas Chamber of Commerce, said the state data confirms a private-public salary gap the chamber has shown in its own studies.

"The local government pay would have been even higher if teachers had not been lumped in with everybody else," Hill said.

He continued, "Obviously, last year the conversation with local government employees was different than it was this year. Last year they were getting the same kind of raises they had in the past, while the private sector was already making adjustments based on economic reality.

"But that served to widen the gap between what taxpayers make and what local government employees make. There are 180,000 people out of work who aren't even counted in these numbers, and I would think it is difficult for them to not be offended by the fact that local government continues to get raises although they already make more for the same job than people in the private sector.

"It needs to be rectified. It will be painful and politically difficult, but the state Legislature controls the law that controls the collective bargaining process.

"A starting point is making changes to NRS Chapter 288, the collective bargaining law. Right now it says that if they don't reach agreement, it goes to binding arbitration. And that fact has limited local government's ability to rein in costs."

Hill said an arbitrator will typically set disputed wages near what other local jurisdictions have set for the same work. "So whichever one takes the weakest position sets the floor for bargaining."

State law should also require that contracts be subject to reopening in times of economic distress, he said.

"Combined with automatic increases over long contract terms, not having a right to reopen when conditions change can lead, and has led, to the unsustainable situation we are in."

Besides the contrast in wages, the reports showed that the number of people employed by surveyed private companies dropped by some 111,000, from more than 1 million to 985,000.

That's a 10 percent employment drop in a single year. Yet local governments statewide, employing 105,095 people in 2008, shed only 3,528 jobs, a 3.4 percent decrease.

Even that was almost twice the proportional cutback made by state agencies, who eliminated or left vacant only 570 of the 33,771 positions occupied in 2008, a 1.7 percent decrease.

The federal government was still hiring, though. Federal employment in Nevada grew from 17,256 in 2008 to 17,620 in 2009.

The payroll of private enterprise in Nevada dropped from $46 billion in 2008 to $41 billion in that year, but state, county, and local government payrolls all grew despite the limited layoffs.

Knight Allen, a stock market investor who frequently publishes letters in the Review-Journal, first called the low-profile report to the Review-Journal's attention.

Allen said the new contract negotiations in local government were a step in the right direction, but won't go far enough. "How many will come down to the 20 percent across-the-board cut that is really needed? How many will actually tie the COLAs to the kind of cost-of-living adjustments they give Social Security?"

"The key issue here is the lack of an economic connection between the people and the government," Allen said. "When you can be in the middle of an economic downturn like this, a society where the average wage goes nowhere, at the same time the state wage goes up 5 percent and local almost 10, you have a real problem. It is a crisis in political and social justice. A moral crisis. You cannot have a government so completely disconnected from the people."

Spokesmen for two gubernatorial candidates, and for unions representing local firefighters and police, two of the highest-paid groups of public employees, did not respond to invitations to comment on the findings.

One who did accept the invitation, though, was Amber Lopez-Lasater, chief of staff of SEIU Nevada, a union which represents many employees of local governments in Clark County, as well as Reno and Elko.

"It's unfortunate that public-sector employees have become the punching bag. They are the people who keep the community running, " said Lopez-Lasater. "You didn't ever hear employees from the private sector crying foul during the boom years, and it seems crazy now that we would get in a position where it's a race to the bottom."

Even in prosperous times, she pointed out, Southern Nevada's local governments were known for their lean staffing. "Now the employees are being asked to do more and more with fewer people.

"Don't forget how we got here. Whoever started this recession, it wasn't us."

Contact A.D. Hopkins at adhopkins@reviewjournal.com or 702-383-0270.