Wayne County, where Detroit resides, is finally taking steps to rein in its budget. They have negotiated for two years in an attempt to get wage concessions without success. The county is now forcing a 10% cut in pay for each of the last two years.

Via Mike Shedlock

Wayne County Michigan (Detroit + 35 Cities) Imposes Huge Wage Cuts on AFSCME Union Workers

Wayne County Michigan, fed up with two years of failed negotiations on wages and benefits for public union workers, has decided to impose wage cuts on AFSCME union employees.

The Wayne County News Release states “Wayne County will implement a 10% reduction the union refused to take in budget year 2009-2010, as well as the 10% reduction for the current 2010-2011 budget year.”

The wording is somewhat ambiguous as to whether the cut is 10% or 20%. The Detroit News reports 10% while the Detroit Free Press reports 20%.

The Detroit News reports 10% pay cut for Wayne Co. union workers

Wayne County Executive Robert Ficano said he’s left with no choice but to implement cuts to pay and benefits for union workers effective today.

The American Federation of State County and Municipal Employees will take a 10 percent cut after refusing to do so for nearly two years, Ficano said in a released statement. The sides are at an impasse on several issues, including key economic and benefit issues, he said.

The Detroit Free Press reports Wayne Co. imposes 20% wage cuts on workers

Wayne County Executive Robert Ficano today imposed what amounts to a nearly 20% wage reduction on 1,400 employees in the county’s largest union after two years of failed negotiations.

Employees’ checks will be reduced 10% for not accepting wage cuts for the last budget year and an additional 10% for the 2010-11 budget.

“Our efforts have been tireless, and unfortunately, it’s painfully clear this action must be taken due to the fiscal reality we’re all living in,” Ficano said. “These decisions are neither easy, nor taken lightly. We’ve continued to act in good faith throughout this process, which included rescinding layoffs, hoping proposed concessions would be accepted by the membership. Unfortunately, time and time again, they were not, and we’re left with a disappointing and devastating situation.”

Not everyone is sharing in the cuts. Michigan teachers continue to thrive compared to our neighbors to the south.

Via the Michigan Capitol Confidential

Michigan Teacher Pay 16.5 Percent Higher Than Indiana

Paying teachers wages comparable to Indiana’s could save $780 million annually

By Ken Braun | Dec. 2, 2010

The average pay of a Michigan public school teacher is 16.5 percent higher than it is in Indiana, according to the most recent salary comparison from the U.S. Department of Education. If Michigan were to compensate its average school teacher at what the federal government reports as Indiana’s wages, annual savings for the state budget would equal $780 million.

A family of four in Michigan is annually paying $312 to make up the difference.

A budget cut of this magnitude would be sufficient to wipe out a significant chunk of the Michigan Business Tax, which kicked $726 million into state K-12 school spending in 2010. Nearly all of the salaries for public school employee wages in Michigan are paid out of state government’s budget. K-12 schools are the largest single expenditure funded by general state tax dollars.

In a recent interview with MichCapCon.com, Governor-Elect Rick Snyder noted that he wanted to cut the MBT by $1.5 billion, to reduce the size of the state government and to reign in the cost of public employee compensation. U.S. Department of Education data shows the Great Lakes State to be paying its average teacher 6.3 percent more than the national average for the 2009 reporting period, and 16.5 percent higher than Indiana’s average.

This is happening as Michigan has become one of the 10 poorest states in the nation, as measured by its ability to produce goods and services.

When asked by MichCapCon.com which state governor he considers most worth emulating, Snyder singled out Indiana’s Republican governor, Mitch Daniels.

The average teacher wage reported for Michigan was $57,327. This is $3,417 above the national average and $8,129 above the average pay for Indiana teachers. The Department of Education reports just over 96,000 public school teachers in Michigan.

And these may be conservative calculations. The Michigan Department of Education issued a revised figure for 2009 teacher salaries, stating a new average of $62,272.

Measuring by the ability of Michigan taxpayers to afford these salaries, it would appear to be more reasonable to compare Michigan to Indiana, rather than to the nation as a whole.

As reported recently at MichCapCon.com, Michigan’s annual gross domestic product per capita in 2009 was just $34,157. The national average of $42,031 is 23.1 percent higher. This places Michigan in the bottom 10 of the 50 states for this measure of economic prowess, after being as high as 21st best back in 2000. GDP per capita measures the total goods and services being produced in Michigan and is thus one good measure of the state’s relative ability to pay its public employees.

The U.S. Bureau of Economic Analysis reports that GDP per capita for Indiana in 2009 was $37,495. This is still 9.8 percent higher than Michigan, but also well below the national average. Because Indiana is a stronger producer of goods and services per capita than Michigan, it is even arguable that a comparison with Indiana’s teacher compensation still overstates Michigan’s comparative ability to pay its teachers.

It is unclear how far Michigan’s new governor will go toward bringing public employee costs down in Michigan.

“We are talking about people and their families,” said Snyder to MichCapCon.com, as he was noting that public employee pay would be a significant part of his plan to reduce the cost of state government. “We have to do it in a constructive fashion and realize that we are asking people to make sacrifices. And we need to all share in those sacrifices.”

When deciding how much was needed, Snyder said two questions should be asked:

1.       What is comparable with the private sector?

2.       What is financially affordable?

“I don’t think you can check either of those boxes today,” he noted, in answer to his own questions.

Incoming Governor elect Rick Snyder certainly doesn’t have the bar set high. According to the Bureau of Economic Analysis, Michigan was the worst performing state in the nation over the last decade. The economy is actually 8% smaller in 2009 than it was in 2000. That’s amazing. Not only did Jennifer Granholm accomplish nothing in her two terms in office, she succeeded in shrinking the state GDP.  Who would’ve thought that we would be happy today if she merely delivered zero growth after 8 years?
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