I feel like I should cover the current issue making the rounds in the Omaha World-Herald (OWH) related to the Commission of Industrial Relations (CIR) and whether it should be revamped, reconfigured, have its binding authority taken away, or simply put out to pasture. This isn’t an issue I feel I know much about so I’ve been hesitant to write up a post on it, (I didn’t even know the CIR existed until recently) but because it’s become such a major issue lately, with myriad articles appearing in the OWH, I feel like I should offer my opinion on the subject.
First, for those of you like me who are just recently learning about the CIR, the CIR was created in 1947 and is a commission of 5 individuals appointed by the governor, which solves salary disputes between public sector employees and the government bodies those employees work for. In order to solve these disputes, the CIR “uses a formula based on what a group of comparable jurisdictions pays public sector workers to do the same job.” Something to note from that description is that the formula considers only comparable public sector salaries and not private sector salaries, though I’ll tackle that issue further down.
The first thing I want to tackle is the fact that the CIR currently does not consider benefits when comparing compensation of public sector employees. This is the type of thing that frustrates me to no end. How can it be that after all this time benefits were not being considered? This is absolutely inexcusable. A pox on all the former governors and legislators who allowed this policy to continue for so long (don’t worry, my poxes never work anyway). My understanding is that benefits make up something like 30% of total compensation, so to not take that into consideration is absurd. Let’s put it this way, would you take a job without considering the benefits package being offered? Neither would I. Governments across the country are in trouble because a blind eye has been cast on public sector benefits and unfortunately Nebraska has not been exempt from this mistake. I only hope that given a failed attempt to eliminate the CIR completely we don’t end up without any reform so this policy lives on.
With that out of the way let’s move on to this policy of not including private sector compensation in the formula used to determine fair compensation by the CIR. In a Midlands Voices editorial the writer, Chip Maxwell, makes a good point when he notes that in “the private sector, managers and owners playing with their own money have more incentive to bargain hard than do managers and politicians in the public sector playing with other people’s money.” Public sector compensation seems to be getting out of control due to this very fact. Government officials don’t always have the proper incentive to limit compensation to a reasonable level in order to keep costs down, because the profit motive is not there like it is in the private sector.
Now here’s where I disagree with Chip Maxwell. Chip and many others are becoming hell bent on eliminating the CIR completely. I can’t help but wonder if the CIR could function adequately if total compensation and private sector compensation were considered in the formula used to determine adequate compensation in disputes. Critics of the CIR seem to think we should do away with the CIR and put salary determination in the hands of elected officials who can be held accountable if salary costs balloon. My fear is that in the fight to eliminate the CIR and collective bargaining (these would have to go hand in hand) there may be a risk that no reform gets passed. The unions have an awful lot of power, and are already digging in their heels. I believe that with the proper reform the CIR would no longer be able to award exorbitant salaries, so any exorbitant salaries obtained by public employees would have to come from elected officials. It appears to me the results are the same whether you get rid of the CIR completely or simply limit its ability to grant excessive salaries, but I have a feeling the latter battle is more likely won than a drawn out war to eliminate the CIR and collective bargaining entirely. Now whether I trust our elected officials to monitor compensation and keep it within acceptable, market-bearing levels is another issue entirely.
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