Facebook
Fark
Digg
Reddit
Stumble
By Dave Toplikar (contact) 
Published Wednesday, May 5, 2010 | 1:17 p.m.
Updated Wednesday, May 5, 2010 | 2:31 p.m.
Sun Coverage
- Mayor: More mergers needed between Las Vegas, Clark County (4-29-2010)
- Mayor: City job losses could double earlier estimates (4-22-2010)
- Mayor: City to move forward on employee job cuts (4-21-2010)
- Mayor: Time short for 141 Las Vegas city jobs to be saved (4-15-2010)
- Mayor: Some Las Vegas city jobs might have to be privatized (4-7-2010)
- Union leader hopeful about reaching agreement with city on salary cuts (3-26-2010)
- City employee union offers to take furloughs, pay cut (3-23-2010)
- Goodman cites ‘gridlock’ in union negotiations (3-18-2010)
- Goodman backs off proposal to fire, rehire city employees (3-15-2010)
- Mayor ‘serious’ about firing/rehiring city employees (3-11-2010)
- Council advances budget that would leave 146 jobless (3-10-2010)
- Council advances budget that would leave 146 jobless (3-10-2010)
- Las Vegas mayor: Salary cuts needed to save 171 city jobs (3-4-2010)
- Goodman: City could save 171 jobs if unions agree to pay cut (2-25-2010)
Don't follow the lead of the private sector and lay off your employees — it just contributes to the economic problem.
But do follow their lead in freezing employees' cost of living allowances, longevity pay increases or step increases in salaries -- those also contribute to the problem.
That was the clear message local economic guru Jeremy Aguero gave to the Las Vegas City Council this morning after the council heard how the private sector has been dealing with the recession during the last 29 months.
The "worst-case scenario" for the council to take "would be to lay employees off, and simply allow an escalation of wages and benefits for the employees that remain," Aguero said.
However, Mayor Oscar Goodman pointed out "it takes two to tango" -- the city must deal with the contracts it has negotiated with the unions. And if the unions won't budge, then the city has no other recourse but to lay off employees, Goodman said.
"Unless our employees who are members of these collective bargaining units come to the table and recognize what we've heard this morning and accept it as the truth and change their mindset, we are at a loss of doing anything other than laying people off," Goodman said.
"Because unless they're ready to open up their contracts, unless they're ready to make the concessions, which apparently are necessary -- maybe necessary evils, but necessary -- then we have no alternative but to lay people off," Goodman told Aguero. "And that, once again, as you say, contributes to the problem. That's where our dilemma is."
Aguero, a principal analyst with Applied Analysis, a local financial advisory and economic consulting and research firm, was part of an hour-and-45 minute presentation the council heard this morning about how the local private sector has been dealing with the recession.
The council, which is trying to handle an estimated $80 million revenue shortfall, wanted the information as a prelude to its May 18 final hearing on the city's 2011 fiscal year budget.
The council approved a tentative budget in March that would cut 141 city employees and eliminate and scale back some services in the fiscal year that begins July 1.
Since that time, Mayor Oscar Goodman and the council have been trying to get the city's four unions to make concessions to help balance the budget.
But the unions have not conceded to the city's request they take an 8 percent salary cut this year and next year, plus freeze cost of living increases.
Private sector salaries fall 7.6 percent
Aguero told the council that when the current recession began in December of 2007, Southern Nevada's unemployment rate was 5.6 percent. Today, the unemployment rate stands at 13.8 percent.
During that same period, private sector employment has fallen from 834,000 to 697,000 jobs, or 137,100 positions, he said.
"We have given back better than six years of employment growth," he said. "Roughly one out of every six private sector employees have been displaced since this recession."
Those who remain in the workforce have seen their pay rates reduced, he said. In August 2007, the average private sector worker was working 37.4 hours per week. As of March 2010, that has fallen 8 percent to 34.4 hours per week, he said.
The result is an effective "underemployment" rate in the community now approaching 21 percent, he said.
The U.S. Bureau of Economic Analysis reported total private sector earnings in the fourth quarter of 2007 for Nevada of $68.5 billion. In the fourth quarter of 2009, that dropped to $58.3 billion, a reduction of $10.2 billion in wages and salaries going to private sector employees, or decline of 14.8 percent, he said.
"The average private sector employee is also earning significantly less than they did when the recession began," Aguero said.
In the fourth quarter of 2007, the average private sector employee reported earnings of $720 per week, or $37,400 per year. As of March, that has fallen by 7.6 percent to $665 per week or $34,590 per year, he said.
Although there aren't any reports about cuts made to benefits, national trends indicate there have also been cuts made to retirement, health care and other benefits, he said.
"The current economic downturn has required private sector employers to cut nearly 140,000 jobs," Aguero said. "At the same time, concurrently, reducing hours, wages and benefits for their remaining employees. There is no precedent in Southern Nevada's modern history for the changes that we've seen since this recession began."
Demand increasing for city services
In terms of looking forward, Aguero said the city, like other local governments, lives on commission.
"The economy that generates your revenue is 20 percent smaller than it was a couple of years ago," he said.
And the revenue sources, which come from construction-related activities, local consumption and tourism, he said.
While there have been some signs of life in the tourism industry, wages and salaries are down nearly 15 percent, meaning consumption will be limited, he said.
In the construction industry,"there is no next project, not in the foreseeable future," he said.
Aguero said the city gets some of its revenue from property taxes. But the state created property tax caps that have limited the amount of taxes that can be collected, if property values rebound, he said.
"The expectation that it's going to be better in the next 12 months to 18 months seems to be inconsistent with the evidence available to us today," he said.
Aguero said that the plight that faces a local government is different than what the private sector has faced.
"They are laying people off and reducing revenue as a result of less demand," he said. "Exactly the opposite thing happens to you. Your demand is not lower than it was before.... Overall the demand for city services, police, fire and the like, is not less than they were and as a matter of fact, are probably greater than they were."
Also, Southern Nevada has fewer public employees compared to almost anywhere else in the country — and are also among the highest paid, he said.
"It seems to me to almost defy any reasonable logic that we would even consider reducing the workforce," Aguero said. "We have an economic problem first. We have a fiscal problem second. So my response to the question of what we do is 'Don't add to the problem.' You should try to keep as many people working as possible for as long as possible."
Aguero said he understood that some of those matters are subject to negotiation and outside the city council's hands.
"In reality, the worse-case scenario, other than continuing the status quo and the current course, would be to lay employees off, and simply allow an escalation of wages and benefits for the employees that remain," he said.
Are the unions listening? NO. They want theirs and don't care about fiscal reality. They want taxes raised on everyone and every business that is already earning less to keep them from being effected.
It isn't even most the workers, it is their leadership. I wonder if the unions have dropped the dues to their members and cut wages at union headquarters.
If you have the chance listen to Aguero in person, go and hear what he has to say for yourself - he gives you the cold hard facts and he gives them to you in a way where you understand exactly what he is try to convey to an audience.
He is not the person you want to listen to if you want to hear things sugar-coated for you. What he is telling the city-council flat out is to lower the wages and stay employed, much like the strategy has been in the private sector.
He's telling you government employees to finally take one for the team, like others have, and help get us out of this mess by earning less and doing the same amount of work - there is no reason for you to exempted from what many private sector employees and employers are dealing with each and every day.
And believe me, I'm sure that for a government employee, you want to tell me to shove it, that you have made this much for a long time and already have allocated your salaries to the necessary expenses. I get that. You know what though? So did I, and so did the many out there who are now doing more with less. I suggest, for the sake of our city and county services, that you do the same. Or else you will be doing more for NOTHING (or unemployment money, i suppose).
It's not that I'm anti-union but I bet that had the city employees been not unionized, all these personnel budget issues would have been solved long ago. The entire purpose of a union is to preserve the wage and benefit gains they've made in the past, not to preserve actual employees or even members. I would even suggest that many city employees wouldn't have a problem with the majority of concessions the city is asking for in order to save theirs' or their co-workers' jobs.
What makes things even more complicated is that the city has 4 separate unions, if I read the article correctly. This means that politics are unimaginable. You'd get cases where one union may refuse a 10% pay cut because the other unions aren't taking it themselves. Most people will probably assume that unions are generally controlled by its members and that these members have complete power on making decisions. I've been a union member on past employments and at best, all I get to do is vote yes or no on a set of proposals presented by union leadership. I have never been asked for specific opinions on what should be voted on.
I would suggest that we be careful not to demonize city employees as most of them are probably not the ones who don't want the concessions the city asks. It's the union leadership and the fact that there are 4 unions involved here that's a problem. I'm sure I'll get flamed for my opinion here so let me say now that I'm not a city employee and hence, I don't really know first hand what the situation is and how city employees currently feel. What I say here is simply my insight on the matter from someone looking from the outside.
Agreed, Mr. Aguero is right on. Plenty of private sector enterprises have reduced hours for existing staff rather than wholesale layoffs. Are they earning less? Sure, but it's better than being unemployed completely, and they can at least keep body and soul together, maybe stay on the health insurance plan, and so on...
The public employee unions need to step up.
Mr. Aguero is also correct that the next year or two don't look great for LV.
The problem here is that union employees, by virtue of their contracts, have always "taken one for the team". While no one likes the fact that their contracts are now "protecting" their jobs, no one complains when union employees don't get arbitrary raises based on higher "profits", (revenues in the case of government), don't earn bonuses (like many private sector emplyees), and have to abide by stricter work rules than the private sector. As always there are a few union employees that abuse the system, but the majority are honest, hard working people that decided to compromise their earnings over the years for the security they now feel they have earned. It was as if they sacrificed to have insurance against economic downturns.
FIRE THE ENTIRE FIRE DEPARTMENT AND START OVER!! That alone will save millions!!!!!!!
Analyst: Don't cut Las Vegas city jobs.
Hey Analyst, where are we suppose to get the MONEY to pay the city workers???
Re-write NRS-288. Get rid of collective bargaining for public sector employees. Failing that, at least require that contracts may not run for more than two years.
Public sector employees do not have the right to strike, so ultimately failed negotiations wind up in abitration, which usually means the unions win more than the government. And the taxpayers are on the hook.
Speaking from the knowledge of a laid off City employee and Union member, we agreed to take all kinds of cuts INCLUDING furlough days and shortened work weeks and/or work days, just please ensure that no layoffs would occur! That deal was turned down. It was 8% pay cut for the next two years or NOTHING. I would love a shortened work week and a furlough day, no it wouldn't bring in the money that I made but I would make the necessary adjustments!!
And neiman1...hush up. You know nothing of the unions and it shows!! We paid $15.00 per pay period for Union membership which amounts to about $30.00 per month.
Listen people. The city is supposed to hold over 8%- 9%, this last year they held over 16%. THEY HAVE THE MONEY. THEY ARE POLITICIANS. THEY LIE TO YOU! Stop being the little heard of sheep and pay attention..
Mob museum --- $50 million---Where's the money coming from?
City Hall Furniture---$45,000,000--- Where's the money coming from?
THEY HAVE MONEY!!!!!!
AMEN to Croc1!
Nevada... where we can't see the forest for the trees!
Union Bashers, if you only knew.
If you only, only knew. Them UNIONS are responsible for MUCH OF THE ECONOMY.
Why don't people pay attention? You rant just rant!
DO A LITTLE RESEARCH!
Chances are VERY GOOD that YOU PERSONALLY have benefited GREATLY due to UNIONS. If not directly, then likely through your parents, or grandparents, or whatever the case may be;
UNIONS MADE THE MIDDLE CLASS.
I don't know if you've NOTICED; The middle-class is DYING. And YOU are ADVOCATING FOR IT.
Nevada; "We can't see the forest for the trees!"
union lovers...unions are bad for everyone not involved with them, including your own members who get laid off because higher wages no longer allow them to be employed.
While we're at it why don't we unionize walmart, let the union leaders collect 30/mth from a million employees (30 million for the simple minded) with the end result being global inflation, when any wage increase is passed on to the consumers (everyone else). Unions get in the way of a free flowing economy and do not allow for necessary adjustments to be made.
Think my example of walmart unionizing causing global inflation is extreme? Walmart keeps all other stores prices low as they try to match their prices. The consumer, as the end user, is the one that benefits. The consumer, las vegas residenta, are the ones that suffers when services stop or are reduced because of unions hard stance on maintaining higher then normal wages.
I would rather not have any fire stations closed because I know you provide a valuable service. Due to the unions, wages cannot be reduced to the prevailing wage (wage where all jobs could be filled), and we as consumers suffer
I have never said that unions should be abolished, just that they have no place in the public sector. I do believe they have a right to exist and participate in the private sector. I personally don't like them, but I do recognize that they are a legitimate part of an open market.