Furlough Fridays Found Falsely Foisted!

An analysis was conducted by a non-partisan and neutral economic research firm that discovered the furloughs are actually harming the California economy. Hear that silence? That is the sound of local businesses dying.

Advertisements

The California Supreme Court ruled today that furloughs on state employees are not illegal, but that the Governor does not have the power to impose them. This creates a window of opportunity for Californians like you to stand up and call to an end of this ridiculous practice.

What? You support the furloughs? Well, read on, dear Sacraggians, maybe I can change your mind with some hard facts.

GAS imposed these furloughs to help save the state money in tough economic times. An analysis was conducted by a non-partisan and neutral economic research firm to see if this goal was being met. Unfortunately, they discovered that the furloughs are actually harming the California economy. As mama stickie says, “We are robbing Peter to pay Paul.”

Each month, they found that the state was saving $125 million in withheld wages, which has averaged out as a 14% pay cut for each worker impacted. These pay cuts result in reduced spending, which has a ripple effect through the economy. When state worker Bob doesn’t buy his daily coffee and bagel, doesn’t go out to lunch or post-work cocktails, and doesn’t perform other incidental spending, this takes money out of the pockets of others. In turn, these others have less money to spend. The end result is a reduction in economic activity of $172 million, a net loss of $47 million each month to California’s economy. Also, the coffeeshop, restaurant and bar owners need fewer employees because their normally bustling business is empty several Fridays each month. California sheds 1,059 jobs each month due to furloughs. We also lose almost $13 million in pure tax revenue each month.

Sacramento and its concentration of state workers is particularly hard hit by furloughs. You don’t need an economist to tell you this, just go outside on a Furlough Friday and see the tumbleweeds rolling through town. Hear that silence? That is the sound of local businesses dying. The Sacramento Metropolitan Statistical Area (MSA, our economic region) of Sac, Yolo, El Dorado and Placer Counties loses $34 million in economic activity, 302 jobs, and $3.5 million in tax revenue each month.

Sacramentans should be screaming bloody murder that our leaders are pretending that furloughs are doing anything to help the budget situation or the California economy. With record unemployment causing unprecedented devastation on our region, the last thing we should be doing is taking money out of the economy and discouraging job growth. I encourage all of you rabble-rousers out there to defend our home turf against ineffective and harmful furloughs. Call up the Governor and demand their end. Call up your legislative leaders and demand the same. Call your Mayor, your City Council and Board of Supervisors and demand that they use their bully pulpit to lobby the state to end this stupid and short-sighted policy that is harming every one of us.

27 thoughts on “Furlough Fridays Found Falsely Foisted!”

  1. As a former state employee. I’m still not convinced. Economists use the same “multiplier” effect when they try to tell us that a governemnt funded kings arena in downtown is actually good for the economy.

    While it is true that spending is good for the economy, generally government spending is less efficient and therefore less good for the economy than private sector spending. Public sector spending also tends to squeeze out private sector investments. GAS is using one of the few tools at his disposal to rein in spending.

    Also, during my tenure as a state employee, I saw how impossible it was to shrink payrolls. In 2005 they had “layoffs” but I believe the state payroll still grew (I don’t know of anyone who was actually laid off)

    TL;DR I’m still for the furlough and roast beast.

    Like

  2. If I take a hit on my own income, I can’t continue to spend at the same levels just so I don’t affect Starbucks’ bottom line.

    Like

  3. Saconomics РForgive me if I casually dismiss your casual dismissal of the multiplier effect as it is only one of the basic principles of macroeconomics as first discussed by Fran̤ois Quesnay in 1759, revitalized by De Lissa, Wulff and Johannsen and described in modern economics by Kahn, Keynes, Giblin, and others.

    Also, this isn’t measuring government spending. It is an analysis of private sector spending from lost wages to ordinary people. Money is money, and in this case it is coming from private households.

    Like

  4. If the multiplier effect was as dramatic as most of these consultants make it out to be, then we could build two stadiums downtown, one on K street and one in old sac and we could generate twice as much economic growth in the region.

    Roger is a perfect example of why the multiplier effect isn’t that great. He wants to spend his money at Starbucks.

    The money he spends at starbucks will be going towards some local labor, but a big chunk of Starbucks revenue is going to go outside of the local economy to suppliers, insurers, corporate owners taxes etc. Roger’s $4.45 in spending at starbucks on a venti white mocha with whip generated about .40 in take home pay for a sacramento worker. Some of that will be reinvested in the local economy, but there is no way that roger is going to create $9 in economic activity by purchasing a mocha.

    TL;DR Starbucks is evil, buy your coffee at a local brew house. Or peets.

    Like

  5. The one month where I got my full pay check I used the money to: pay my past due vehicle registration, bought the text books I needed rather than try without them, and finally fixed the broken non vital things on my car and house. With furloughs its not just cocktails and cheeseburgers. People are passing up on things that were once considered needs(the car is making a funny sound but still runs, so ignore the sound). My tires are technically safe, but I need to check them every day. I have never had them get to that point. Am I starving? No. Are companies I use to fund going out of business? Yes.

    Like

  6. If I take a hit on my own income, I can’t continue to spend at the same levels just so I don’t affect a local brew house’s bottom line.

    Like

  7. @Nick and @Roger, the furlough isn’t fair. Nothing you did resulted in the cut-back in your hours of work. They are equitable. They allow the government to keep providing essential services. Think of the bright side. You have kept your position and your retirement benefits at a time when many couldn’t say the same.

    If 14% of state employees had been laid off to acheive the same savings, you both might have been forced to reinstate at a previous classifcation and would have had your pay reduced. You would be missing out on all of those 3 day weekends (and roast beast), your retirement would be impacted, and you still wouldn’t be enjoying starbucks or well maintained cars.

    Private sector employers have shed 10% of their employees in the same period. Talk to your friends about conditions at their private sector employer. Most have had job losses, wage freezes, loss of bonuses and incentives at least equal to the 14% furlough, if they are lucky, they are still working full-time. Their employer expects the same work for less money. Your employer is paying you exactly the same amount of money for the work you do (does not apply if you are in a “safety” classification and aren’t allowed to take your furlough days)

    TL;DR sorry your car broke, I need new tires too

    Like

  8. Stickie
    Your conclusion is based on the false premise that “GAS imposed these furloughs to help save the state money in tough economic times”.

    Relative to the recent general fund shortfalls, furloughs save relatively little money. Through voter propositions we have boxed in GAS (and every other governor) so they have very few levers available to balance a budget with. The threat of public employee furloughs is the biggest stick the governor has to drive budget concessions from the legislature.

    In an ideal world, our governor (D or R) would have more executive power to actually manage and control the state budget, and wouldn’t need to resort to rather ineffectual levers such as worker furloughs.

    Like

  9. I would honestly be happy is 14% of my coworkers were fired. Especially if it was done based on quality of work, and punctuality. I really think more would get done. There would be fewer distractions. Plus that 14% only does 3% of the work.

    As a tax payer first, and always, friend, and family member to residents in this state I would vote for Meg Whitman if I thought she could actually do what she plans. I just witnessed Arnold attempt to fix it all when we had money, and fail to build a consensus. I witnessed him try to fix it while we were in a crisis, and fail to build a consensus. We need a 40 year plan from the Republicans. We need a Republican Party of California, one that is independent of the national party platform. I loved Arnold’s more libertarian slant. Maybe if the unions didn’t mortgage their buildings to defeat every idea he had, we wouldn’t be furloughed. Thank you unions for making sure he didn’t take 20 dollars from me, and forcing him to take 8k.

    As a state employee all I should expect is competitive compensation. I shouldn’t expect a pension, more holidays than a grade school kid, a sick day a month, more vacation time than I can afford to properly enjoy, and “good enough” to be the gold standard on my work reviews.

    And for the love of god, take away internet access to all state employees. Place internet in a central access point right next to the boss. Make having a cell phone out during non break times a punishable offense starting with glares, verbal warning, counseling….Post everyone’s break times and start times right next to their name tags on the cube walls.

    I hate to say it but, we have earned our reputation. We almost need a union of good employees who agree to be dicks to the bad ones.

    Like

  10. P.S. I blew my knee out. I am sitting at home, not work. I have 5 years in state service, I have enough sick time to be off for 40+ days. That is stupid. I mean– I love that I am not going to go broke, but so many of my coworkers use that time for “baby bonding” well after the new baby smell has worn off. Dads have always had to work(hunting and gathering) away from the baby for 8+ hours a day. Why are today’s babies such big pussies? Get over it baby. Your dad has some TPS reports that need to be generated, no one will ever read them but just in case, in 5 years someone will shred them.

    Like

  11. Since furloughs have been inacted, has anyone noticed any real impact on state business and/or effectiveness. Sure, there are probably little internal issues here and there, but anything really meaningful?
    I didn’t think so.
    Doesn’t that tell us something about the usefulness of our bloated state payroll?

    Like

  12. I have noticed. There is a ton of overtime at my work now. Seeing as how we must be there 24/7/365 I have noticed a lot of overtime being offered. I have noticed people are taking a month off at a time. I have noticed that people who make the bottom of the pay scale are taking 3 extra days a month off, then a guy at the top of the pay scale is being paid to do the same job at his time and a half rate. I have noticed safety issues from the tired workers.

    Like

  13. In fact my injury is a direct result of an overtime employee making an understandable mistake, that the regular would not have made.

    Like

  14. Thank you for this. My brother has been a state employee for most of his adult life. He doesn’t make much money as a warehouse clerk, but it’s been a steady paycheck for 30-odd years. With it he’s been able to buy a small house in West Sac and occasionally go out for dinner and movie on the weekends. He goes into work at 7 a.m. and leaves at 3:30 p.m., and contrary to the stereotype of the lazy state bureaucrat who milks the system for all it’s worth, he rarely takes vacations or sick days and doesn’t spend his day surfing the internet and going out for two-hour lunches. He’s an ordinary grunt in the trenches and works hard in return for a lot of grief.

    Since the furlough was enacted, he’s seen his annual salary cut 30 percent. He’s now contemplating filing for bankruptcy in order to save his house, which has just 10 years left on the mortgage. (Unlike a lot of people during the real estate bubble, he didn’t hock his house to buy a new car or a home theater system.) He’s cut his living expenses to the bone, so restaurants and even movie rental places (are there any left nowadays?) aren’t seeing his money anymore.

    But given that the state of California is the biggest employer in Sacramento, why aren’t more of us outraged by this? I’m sick of watching political commercials that make Sacramento sound like a disease that needs to be eradicated. It doesn’t seem to occur to these people that state employees take care of the state beaches and parks, teach at the state colleges and universities, patrol the highways all over the state, and inspect hospitals and certify doctors and nurses. Are these services we want to see eradicated or handed over to private firms like Xe aka Blackwater or Haliburton?

    Also, take a look at downtown on Furlough Fridays: it’s a ghost town, even when the city schedules festivals and street fairs on those days. I took a friend out for lunch on an FF, and half the restaurants and cafes there were closed. This is not the future I want to see for this city.

    Like

  15. Sundog
    If we really wanted local businesses to thrive we would angrily demand that the state double or triple their payroll.

    Obviously that would be a selfish demand. Likewise for the idea that we should be outraged because of the local economic impact from furloughs.

    Like

  16. Cogmyer,

    How about if we get mad at all of the local businesses who are laying off workers and reducing their hours. Think of the impact that local businesses have on local business.

    If every starbucks would hire 3 more baristas, the multiplier effect would kick in and we would have a roaring economy in the sac metro area. Then we can all put on iron shoes and hold a magnet over our head and fly to work. Bam! no more commute traffic.

    Like

  17. sundog
    I have no reason to think you are a selfish person, and I appreciate your sympathy for fellow state workers who are suffering.

    But recognize that the economy is in the crapper, and there are few public or private employees in California who have not been affected. Its not just state workers who are stressed you know.

    And consider for a moment how screwed up state employment would be if workforce decisions were based on depression/suicide risks for the affected employees!

    Like

  18. @wburg – don’t be crazy. Everyone knows that you can’t lift yourself by bootstraps. I’m talking about FLYING with MAGNETS. You’re probably right though. Just like the multiplier effect, magnet powered flying shoes probably don’t work either.

    @sundog – Why do you have to call me names just because I disagree with you? Of course I have compassion for individuals who are feeling hardship in these TET. I have trouble with arguments against the furlough based on these individual impacts. I’m too lazy to search the budget for a social program that is the same size as the furlough savings, but I bet I could find something that has to do with orphans. Should we take away the money we are using to feed orphans to keep state employees at work on Fridays? Why do you hate orphans so much?

    Like

  19. Actually its a bit a stretch to consider the Shanghai Maglev as part of the “real world”. I ride it on every visit to Shanghai and sure its cool as hell, even though the minute the Olympics were over they lowered the max speed from 424 km/h to around 300 or so.

    I really appreciate that totalitarian China dropped a couple bil so that comparatively rich tourists could get to Pudong airport 30 minutes quicker (there is already train service to the airport).

    Based on the dollars spent vs. common good, the Shanghai Maglev actually ranks right down there with the idea of limiting cuts to state payrolls if they adversely effect local Sacramento businesses!

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s