Monday, March 21, 2011 – 10:58 a.m.

In a continuation of a post published last week. The discussion now proceeds to the economy, labor relations and pensions.

The Economy

Let’s face it. Things aren’t getting better.

No matter what the government says, as the number of people collecting unemployment benefits shrinks due to exhaustion of benefits, those people fall into the underemployment number.

The unemployment rate, reflecting those collecting benefits, and underemployment rate, reflecting people collecting benefits, working part-time, and those who have given up, is diverging.

Private measurements of the unemployment rate are significantly higher than U.S. Department of Labor estimates.

New and existing home sales as well as prices continue to erode, however at a slower pace. Property taxes dependent upon the falling property values is the primary source of revenue to the county.

Retail sales have improved but fluctuate along with roller coaster consumer sentiment numbers.

Wholesale and consumer price inflation, driven by higher food and energy costs, is accelerating.

Higher gas prices act as an artificial tax and thus a drag on the economy.

The situation isn’t good.

Labor Relations

San Bernardino County finds itself in a box with its labor unions.

Last year the county did a sales job on all but one of its labor unions.

The deal the county struck last year was to cancel any future negotiated wage and benefit increases and if things get better, which they weren’t going to, one might get a raise later.

The concessions would preclude the county from having to layoff employees / union members.

The county’s position then? If the situation worsened the following year then layoffs would be in order.

A few months ago, the county’s chief executive officer told a local newspaper that county employees deserve a raise, but said it would involve sacrifice.

A major misstatement. A raise?

Oh please! Talk about ridiculous.

Now the county wants major concessions and says it has no intention of resorting to layoffs.

Why you ask? Because of the impact to service.

Last time I checked, in bad economic times, the public expects impacts to government services. It’s just the way it is.

Unfortunately that pesky ‘standard of living’ argument comes into play.

The question being. Is it better to impact the standard of living of 19,000 employee workforce or ten percent of the workforce?

The case can be made that it’s better to reduce the workforce and streamline. Just as the county did in the mid-to-late 1990’s.

The workforce reductions was accomplished mostly by attrition.

The county has continued to hire, fill positions and promote. A reckless approach considering the continued state of the economy, the state budget and declining property values.

Even positions vacated by golden handshake have been filled.

Over the past two years employees have once again started to bear the inflation in health insurance premiums. Premiums set to rise substantially over the foreseeable future.

Most county unions have contracts expiring in 2012 or later. Unions that collectively have almost two million dollars in their political war-chests.

The county needs the unions to help with concessions starting in July 2011. Later compounds the situation.

Trying to ram cuts down the unions throats, which appears to be the county’s latest tactic, will definitely accomplish two things. No agreement and a political war with county supervisors.

Something neither side needs.

After all, employee morale already sucks. And bloodletting employees is the solution.

Pensions

The hot button, and most pressing problem for the county, is escalating pension contribution.

A multi-million dollar problem over the next five years.

The employee contribution for most San Bernardino County employees is picked-up by the county through negotiated provisions in the various collective bargaining agreements.

Most county employees have 7 percent of their required contributions paid for by the county. Safety Unit employees and Safety management & Supervisory Unit employees, representing law enforcement, receive allowances of $306 and $387 per month respectively.

Elected officials and exempt employees currently pay zero into the pension system.

In today’s economic times, and with the public view being what it is, it is appropriate for employees to start paying towards their pension.

Currently, the aforementioned Safety Units pay an additional 5 percent of the employer contribution rate into the pension system. A by-product of 2003 negotiations enhancing their pension formula.

Now the county wants to roll back the formula, but keep the 5 percent, and also have the Safety Units give back their fixed pick-up allowance.

That’s not going to happen.

The county needs to seek a middle ground in an effort to have employees rightfully pay into the pension system, but not go too far and wind up complicating matters.

Having employees agree to a permanent 5 percent contribution and the elimination of the pick-up allowance for the Safety Units, combined with a modest reduction in force, would seem reasonable at this point.

In exchange for the concession could be an extension of the existing contracts for an additional two years.

Should the county’s financial condition further deteriorate both sides could agree to re-visit in good faith.

Forcing impacts on employees to should the bulk of the county burden without truly implementing cost savings and workforce reduction measures is a non-starter.

County management could care less about the political futures of county supervisors.

However, the county supervisors probably do.

Employees appear willing to health “in good faith”. But they’re not willing to let themselves be raped.