Several weeks ago President Obama declared in an Executive Order that bank executives who took federal bailout funds could not receive more than $500,000 in annual compensation.  The Order came after news reports of millions of dollars in bonus pay and hefty executive pay packages for the very same individuals whose companies had just received the monies.  The President’s reasoning was simple:  if taxpayers were going to provide billions of dollars to prop-up these failing institutions, there certainly should be some shared sacrifice.  Well if this logic follows for banks and Wall Street executives, why doesn’t the same hold true for public officials at the state level?  If federal taxpayers are bailing out the State of Minnesota to the tune of $4 billion, why should Minnesota’s public employees continue to collect salaries in the hundreds of thousands?

Some may argue that Tubby Smith’s $1.7 million pay package is justifiable, but let’s remember the University of Minnesota is a public institution, funded with taxpayer dollars.  It’s not just sports.  Is there truly the need to pay more than 100 professors at the University over $200,000 a year, which for some of them is a part time job?  The other question that needs to be asked is why are there almost 2,000 bureaucrats in state government making more than $100,000 a year? 

If President Obama believes there should be shared sacrifice, shouldn’t that include some sacrifice on the part of highly compensated public workers?  With the State of Minnesota facing a $4.6 billion budget shortfall perhaps it’s time to consider reducing compensation to some of the most highly paid public employees.

With almost 2,000 state employees making over $100,000 in annual salary and more than 2,000 employees at the University of Minnesota that make more than $100,000 per year, isn’t this a good place to start cutting?  There are thousands of public employees making more than $100,000 a year, while tens of thousands of jobs are being lost in the private sector.  While there has been talk of a wage freeze for state workers as one idea to help address the shortfall, my response is to impose a 10% wage cut for all public employees, making more than $100,000. 

If President Obama is going to limit wages in private sector banks, why shouldn’t the Legislature reduce wages for thousands of public employees who have virtual guaranteed employment and better health insurance and retirement benefits than most privately employed workers? 

Not that long ago, there was a public sector verses private sector job tradeoff equation.  Individuals knew that there was less risk involved in working for the public sector, meaning less risk of being laid off because of an economic downturn.  And for that reduction in risk, public sector jobs generally paid less than their private sector counterparts.  This simply is no longer the case.  Not only do public sector jobs generally have higher compensation than private sector jobs in terms of base salary, public employees also receive greater benefits in terms of their health care coverage and pension.  Today, private sector employment has more risk and less reward.  

If the Legislature truly wants to do the right thing they should remove most of the exceptions to the law that prohibits public employees from earning more than the Governor’s salary.  For many years, this cap on public employees’ compensation served as a useful tool to keep public workers wages in check.  Then in the 1990s one legislative exception in the law after another was granted and now there are more than 100 public employees making twice the Governor’s $120,000 annual salary.  The Legislature let this genie out of the bottle; now would be a good time to restore the governor’s salary cap for most of our public employees.

It is important to recognize that Minnesota does have thousands of state workers who labor for relatively modest compensation, and an across the board wage freeze might have an adverse effect on many lower wage workers.  On the other hand, however, a 10% cut for a public worker making over $100,000 a year won’t really create a hardship or be perceived as a draconian cut in comparison to what many private sector employers are currently demanding of their workers in terms of salary cuts, uncompensated vacation, and layoffs.

It’s time to really look at public sector compensation and the place to start is at the top.  A 10% reduction in salary for public employees making more than $100,000 would save tens of millions in taxpayer funding and help close the budget gap without yet another tax increase.