Make state worker compensation average

50 ideas to fix Michigan
Make state worker compensation average
The Detroit News is highlighting ideas from various groups to promote discussion on reform, restructuring government and the economy.
Make state worker compensation average

Idea 6: Reduce state employee compensation to the average compensation of state workers in the nation or the average of Michigan private-sector workers.

Why: Employee pay and benefits make up one of the biggest costs of state government. Michigan had 52,769 workers as of March and a state classified payroll of $4.73 billion for fiscal year 2007-08. When the auto industry was larger, Michiganians were among the top 20 states in per-capita income. But that income has declined to 11 percent below the national average. The state with the nation's worst unemployment rate can no longer afford to pay above-average compensation. Michigan state workers earn 6 percent more than the national average in salary and benefits, according to the U.S. Bureau of Economic Analysis. Michigan private-sector workers make 29 percent less than the national average for state workers.

Benefit: Reducing state worker compensation to the national average for all state workers saves an estimated $287 million. Cutting compensation to the average of Michigan private-sector workers saves $1.38 billion a year, according to the Anderson Economic Group.

How: Governor either would try to reopen the three-year contracts that end Dec. 31, 2010, and renegotiate with state employee unions or wait to negotiate in 2010. Or the state Legislature could require an across-the-board wage or benefit reduction with two-thirds approval of both the House and Senate.

Obstacle: Michigan State Employees Association, Michigan Corrections Organization, Michigan Public Employees SEIU Local 517M, Michigan State Police Troopers Association, Michigan Council 25 AFSCME, UAW Local 6000, Michigan AFL-CIO and other unions. They have argued that workers already have sacrificed. Cutting pay and benefits also would reduce the amount of money being injected into Michigan's economy, they contend.

Source: Business Leaders for Michigan

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