Thursday, February 21, 2013

Local Politics, National Perspective

An evolving basket of public goods

The Bureau of Labor Statistics says in a recent report that "federal government employment has remained essentially unchanged" since July 2008. By contrast the nonfarm employment sector shed over 8 million jobs from January 2008 to January 2010. Since then 5 million Americans have regained employment; federal employment has remained constant.

Let's contrast that model of consistency with some words by two local Congressmen. House Minority Whip Steny Hoyer from Maryland said, "It is simply unfair and unwise to target America's public servants after they have already accepted a two-year pay freeze, an increased pension contribution, and a reduction and delay of a cost-of-living-adjustment this year." Representative Jim Moran of Virginia objected to placing "the brunt of deficit reduction on the backs of our federal workforce. ... It is time for Congress to find a comprehensive deficit plan that asks others to pay their fair share."

When we in the private sector can't raise prices or become more productive, we can't pay employees more. When a good or service is no longer in demand, people get laid off. Sometimes we're able to hold on to valuable employees and put them back to work when business gets better. If business remains slow, employees become unproductive and become unemployed. That may seem unkind. But business is in business to stay in business and cannot pay employees that do not produce the revenue needed to pay wages and salaries.

USPS is a case in point for government employees. Whereas we used to rely on our six-day-a-week mail service to get checks, bills, and letters we now have automatic deposit, automated and online bill paying, and emails. We no longer get the same economic utility from hand-delivered mail because there are substitutes we value more highly. Arguing that we need the same level of service from USPS and letter carriers as we did 20 years ago is ignoring economic reality and changing consumer preferences.

Trust me: I get the politics of the subject. Federal employment is a big part of our local economy and federal employees vote for and contribute to local Congressional campaigns. But unemployment in Fairfax County barely crossed 4 percent in the depths of the Great Recession while the national average touched 10 percent early in 2010.

My argument with Mr. Hoyer and Mr. Moran is not that federal government spending on goods and services remains strong in a down economy; I think that's a proper countercyclical fiscal action. What I find objectionable is the notion that federal employees have sacrificed greatly in comparison to the rest of the country.

If voters (through their Congressional proxies) decide on a smaller basket of government services, the breadth and depth of services must narrow and the government must shed employees. If voters like what they're getting, they need to pay for what's in the basket. At a minimum it's incumbent on Congress to pare the excesses, the antiquated, the inefficient, and the overhead to make government more productive. It can start by looking at itself and the structure of government.

Uncertainty for federal employees caused by Congressional inaction is unfair and imprudent. But change is inevitable. Better to frame the future ourselves than get trapped under glass.