My company like many others has reduced employee head count, instituted wage freezes and forewarned of lower compensation in 2009. (ie small to no expected bonus) The management has made these very difficult decisions in order to ensure that the company will still be in business and employing people after this economic down turn. As it has been for 100+ years...
Another reason this makes sense is that employee compensation should conform to the laws of supply and demand. As more workers become unemployed during this wide spread downturn, wages and costs should drop due to the larger available labor pool. Which in turn allows the companies to improve profitability, start growing, and start hiring again...
With this in mind: How does this apply to the Public sector?
Should Federal, State and Local government employees get raises this year even though the majority of companies and citizens are not? Of course, holding Teacher and Administrator pay stable during this downturn will be a key issue within the RAS community after just passing a referendum.... Or at the State level as cuts are made due to the deficit....
My thought is raises should be stopped if the employees are correctly compensated per the market. However raises should continue if the employee compensation lags the market. Now how do we decide the correct wage for Principals, Teachers, Legislators, Park workers, DOT employees, etc? Since Unions, laws, seniority and other complicating factors prevent true capability based competition for the positions.
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