Imagine it’s 10:30 am on a typical weekday during the school year. At that time New York City is paying 211,843 members of the NYC teachers’ retirement system (or was a couple of years ago). What are they doing? If you made a pie chart, what would it look like? How many are retired? (We know that, it was 88,507, or 41.8% of the total). How many are out sick? How many are in preparation periods? How many are on break? How many are in out of classroom assignments or administrative posts? How many are on release time? How many are on sabbatical? How many are the second pedagogical employee in a classroom? How many are doing not much useful because they are waiting for something from someone else, because of some disorganization that wasted their time? And finally, how many are actually doing something useful with regard to the education and child care of children?
What if, instead of the pie chart being based on the number of people, it were based on the total cost of the NYCTRS members in each category – their cash pay or pension, their health benefits, their other benefits? Now imagine the same charts being produced for all the other city and state agencies – police, sanitation, fire, transit, corrections, judiciary, parks, social services, hospitals, etc.
Good management seeks to ensure that workers have the qualifications, motivation, training, tools, organization and scheduling to do useful work almost all the time they are being paid, and to limit the amount going to those not doing such work, to the extent possible. So that the workdays fly by, and the maximum (or at least a fair) amount in services is produced for a given about of cost. By that standard, how good was the management in the Cuomo and DeBlasio Administrations? How fair is the deal the employees and contractors of the City and State of New York provide to other New Yorkers, compared with what public employees, retirees, contractors and their retirees expect to be provided with by private sector workers in exchange? What would happen if an organization such as Consumers Union (Consumer Reports) were to examine the quality and value of public services provided by state and local governments the same way it looks at the goods and services provided by private corporations? That is the topic of this post.
This post is going to discuss three aspects of management: the motivation and credentials of the workers, relative to their cost; the organization and the efficiency of their deployment; and the tools that they are provided with. Followed by a discussion of the role of voluntariness.
Before that, however, it’s worth thinking back to the time when the Cuomo and DeBlasio Administrations first came in, in 2011 and 2014 respectively.
The State of New York is a corrupt and exploitive organization through which those working the system rob everyone else and the common future, before departing to Florida. All the real decisions are made in back-room deals with no public debate, and those deals are irrevocable.
The deals are done in secret because they could never stand up to public scrutiny. At some point more than a decade ago, however, it became clear that things had gone so far, with rising taxes, collapsing services, and state legislators going off to jail for corruption, that it was at least conceivable the people would rise up and rid themselves of the incumbent state legislators and their designated replacements (usually former members of their staff), and force the special interests that control them to give something back.
For incumbents, and the special interests, the goal was not (and is not) change or progress, but rather the preservation of their political positions and ever-expanding privileges. For the politically active and New York’s media, the goal was (and is) preventing any blowback over the raw deal here from affecting the issues that seem to actually matter. Issues such as where LGBQT people go to the bathroom, for example. It’s forgotten now, but during the 2010 election the cry of pretty much everyone on the inside with regard to Cuomo was — “Andrew save us!” He was basically anointed Governor because, given that New York politics is a closed club of self-dealing insiders, there seemed to be no alternative.
Cuomo had a reputation as a thug. That is the literal word I heard a fellow bureaucrat use to describe him in the early 1990s, when he was at HUD, and the reputation apparently went back much further. The powers that be apparently decided that it took a thug to make the de facto mafia work just well enough to prevent significant change, given just how bad our state legislature was (and is). That’s what Andrew Cuomo promised – to make the system of back-room, three men in a room deals work somewhat better. Not seeing any other options, I even thought so at the time. Cuomo set up a Moreland Commission to investigate state corruption, but then terminated it when he found out that just about everyone was guilty, including everyone around him.
Unlike Cuomo, who was virtually appointed Governor by the insiders (a trick they are trying to turn with Hochul as his replacement, because that’s what they do up there), DeBlasio actually had to run for election as Mayor. He didn’t do so based on any discussion of making public services better. Instead, the basis for his campaign was opposition to “stop and frisk,” opposition to horse drawn carriages, opposition to bike lanes that had spent several years in review because “the community” had not been fully consulted, and a willingness to take on the rich to benefit – as it turns out, earlier hired public employees and government contractors.
Once elected, DeBlasio immediately got a reputation as a slacker who showed up to work late.
I don’t usually interact with politicians, but I actually sent his office an e-mail pleading with him to show up on time. While I know that Mayors have commitments in the evening, they absolutely cannot be seen as slacking off. Because he now had 450,000 people working for him, many of whom would like nothing better than to show up late and slack off. And his image was poisonous to his ability to get unionized, tenured, civil service workers to do their job. Why bust your hump if the boss is taking it easy?
Nonetheless, the slacker reputation is one that he maintained throughout his administration.
The point is that neither Governor (Andrew) Cuomo nor Mayor DeBlasio came into office as a successful operations manager with knowledge of how to improve the operations of organizations with (roundly speaking) 250,000 and 450,000 employees, respectively. According to this website,
If they were private companies, the City of New York would have had the 10th most employees of any in the world, and the State of New York would have been 50th. Then consider their budgets. Just including direct expenditures (not including money sent on to other governments) that would have been $119 billion for the City of New York and $129 billion for the State of New York, back in FY 2019. That would rank among the highest expenditures among U.S. companies, if their expenditures on goods purchased wholesale for retail resale (by Wal-Mart or Amazon for example) were excluded.
All this under the control of politicians with no concept of operations management whatsoever. And that’s OK, because as I pointed out the job of a public chief executive is actually three jobs: policy, leadership, and management. And they could have a high-powered direct report in charge of each one. Does anyone recall who that high powered top executive was with regard to management in the Cuomo and DeBlasio Administrations? No? I recall a competent transit manager who lasted a little while.
Come to think of it, does anyone know who the de facto COO (chief operating officer) would be in a Hochul Administration, or in the administrations of her challengers? Is any top executive willing to retire from business because they have made “enough money” and enter public service anymore? And no, a former Wall Street executive would not be useful, as the City and State of New York have enough asset stripping going on as it is.
But let’s move on.
Motivation and Qualifications
In theory if an organization pays its workers more, they will be more qualified, more motivated, and more determined to do a good job than are the employees of organizations that pay less. The organizations that pay more, in theory, attract “self-starters” who will do the job because they are doers who want to accomplish things. Those that pay less have to exert extensive management effort to get less qualified and motivated workers to do the job, and overcome high turnover despite attracting less qualified applicants.
Is that the way to works in the City and State of New York?
First, let’s consider the total compensation of public employees (including benefits) compared with the private sector workers (including those in the gig economy) who pay for them.
Bureau of Economic Analysis (BEA) data shows that in 1969, the mean earnings per worker in Downstate NY (adjusted for inflation in $2019) was $61,370 for the Finance, Insurance and Real Estate sectors, $60,233 for the rest of the private sector, and $69,463 for state and local government employees. State and local government employees earned, on average, 15.3% more than those in the rest of the private sector.
In 2019, on the other hand, the mean earnings of those working in the Finance, Insurance and Real Estate sectors was $122,813, and falling. The rest of the private sector averaged $81,575. The mean earnings for state and local government workers Downstate, meanwhile, was $124,095. That is not only 52.1% higher than the mean for the rest of the private sector, including all the one-percenters outside finance, a record high difference. But also – for the first time – more than the Finance, Insurance and Real Estate sectors.
The situation is even more extreme in Upstate NY, where the average state and local government worker earned 10.5% more than the average private sector worker in 1969, and 72.1% more than the average private sector worker five decades later.
So, New York’s public employees must be vastly more qualified and motivated than private sector workers, on average, must be showing up to work with a feeling of enormous gratitude and obligation, and must be vastly more productive, right? Especially after a Great Recession when none of them were fired, followed by a weak recovery in which inflation-adjusted pay fell for most private sector workers, many of whom ended up “self employed,” followed by a COVID-19 shutdown during which, once again, no public sector workers were fired, not even those with nothing to do. Even as millions of private sector workers were laid off.
In exchange for that level of support and consideration for public sector workers, New York’s working serfs get this…
Angered by the lack of workplace flexibility and facing a strong job market, city workers appear to be exiting en masse. An analysis by the Independent Budget Office (IBO), a nonpartisan public agency, found that as of early May the total number of full-time city workers was 282,000, a 6% drop from pre-pandemic days when head counts rose above 300,000.
The exodus, which comes as hiring has slowed, is raising questions about a flight of talent at a critical moment in New York City’s recovery…This isn’t just normal attrition … The city’s struggling to keep up with the rate of attrition with corresponding new hires.
There it is – public workers and contractors feel cheated, and we need to pay higher taxes or accept worse services as a result. No one contradicts this. Nor does anyone ask – what is normal attrition? And take three minutes on the Bureau of Labor Statistics website to find out.
You can find a spreadsheet with the data here.
And speaking of propaganda on behalf of the already privileged, and looking at the spreadsheet, where did that whole “Great Resignation” thing come from? Exasperation that low wage workers were leaving for somewhat higher paying jobs? The nerve! How come no one coined the term “the great termination” and asked why private sector workers should remain loyal to organizations that shrank their pay in a growing economy and them laid them off in a recession?
The outcry from city workers began last fall when de Blasio ended remote work for roughly 80,000 municipal office workers…But the decision to nix remote work enraged many city workers, who argued that they had proven during the pandemic that they could perform the same functions at home.
They could, and many would, but plenty would not. And given civil service protection, unlike private sector workers, no one could make them. Others would simply have to cover for their age 35 pre-retirement to some other state with lower taxes and better public services.
As it is, some these workers do some work only because since they have to be there anyway – not showing up is one thing that can get you fired in government – they might as well do something. That’s why there are all these battles over time and attendance in civil service – because it’s one thing that could perhaps be measured well enough to get rid of someone who isn’t doing the job in general. For tenured teachers, I’m not even sure that not showing up is enough. In an irony, it seems that thanks to tenure, the only reason a New York City teacher can lose their job is a political reason – saying something, even in their private life, that embarrasses the powers that be.
Like saying something out loud that many of them were thinking.
So it is one thing for an at-will private sector workers who can be replaced if they can’t get the job done to work at home, and quite another for a unionized, tenured, civil service employee. And as for the case with DeBlasio’s lateness, if some workers stop doing the job, and others are pressured to make up for it, eventually most of them will get aggravated enough to stop doing the job.
When I was laid off during pandemic, I waited months to file an unemployment claim, because I was receiving severance, I knew they were backed up, and others needed the money more. But it still took another five months after I applied to process my claim. I could afford to wait, but what about those less well off? And despite all these delays for those actually entitled, there was still massive fraud among those that received benefits.
Failures like these aren’t even an issue, it seems, because most people don’t expect New York’s public agencies to actually work. State Department of Labor workers were working from home at the time. You don’t think that had an effect on their ability to do their jobs?
In any event, if a New York City or New York State job could be done by someone anywhere in the country, why not just contract it out to those in another place, and save hugely? That’s what I have said about work from home in the private sector: beware, the next logical step is work from India, at Indian wages.
So here you have this contrast. The media and unions report resentful, demotivated public employees who are quitting, leaving behind even more resentful, demotivated and less qualified colleagues. Even as the average total compensation of public employees has soared compared with the serfs who pay for them. How is this possible, and who created this situation? One could read this for a clue.
And consider this chart of the cash wages and salaries of state and local government employees – those actually on the job – compared with the total personal income of all residents.
From FY 2000 to FY 2007 (peak to peak in the economic cycle) the state and local government tax burden soared in NYC as a percent of personal income, as shown in the prior post…
And this chart.
But public wages and salaries stayed about the same as a percent of city residents’ personal income.
Then from FY 2007 to FY 2019, peak to peak covering the DeBlasio and Cuomo Administrations, the NYC state and local government tax burden stayed at about the same level (at a level far higher than anywhere else), but public wages and salaries went down per $1,000 of city residents’ personal income, from $81.76 to $73.46, a 10.2% decrease.
Some of that was the result of a huge increase in taxable personal income from young and immigrant working serfs who did not require, or at least did not get, much in the way of public services. But the number of public employees fell compared with the city’s population, particularly outside public education, and there since were no offsetting productivity gains, public services fell also. And, it is now emerging, some titles faced long-term wage freezes, which meant cuts in real cash pay.
So there is your choice – soaring taxes for the same public services (and decreasing benefits for the poor) in one economic cycle, and decreasing public services for the same taxes in the DeBlasio-Cuomo administrations. How should New Yorkers be made worse off in the next cycle?
Much of the blame goes to the repeated rounds of massive retroactive pension increases for those cashing in and moving out over the period from 1995 to 2008, before DeBlasio and Cuomo even got there. Pension increases for those who already had the richest pension benefits, compared with private sector workers, allowing many to retire with full tax-free pensions seven years earlier than they had been promised when hired. This, and soaring debts, and soaring health care costs, meant more and more of working serfs’ taxes was going to tax free bonds and pensions and private (mostly non-profit) health care organizations, leaving less for the wages and salaries of public employees still on the job.
Both Governor Cuomo and Mayor DeBlasio had a chance to reverse some of this. Neither did so, because they wanted public union support for their next career move.
Cuomo could have publicly tallied the damage from all the retroactive pension deals (and debts) before he took office, held that the deceit and self-dealing around them put the beneficiaries out of solidarity with other workers, and demand that the social injustice be mitigated by having the actual beneficiaries of these deals give something back. Instead, he went the union-friendly route of drastically reducing pension benefits for new hires only, those in Tier VI, to less than members of his Generation Greed had been promised to start with.
It’s 7:50 am, the sun is rising and Assembly members have just hustled to the elevators after approving the governor’s Tier VI pension plan. The initial vote tally was 95-44.
All of this, of course, happened in the dead of night while most people were fast asleep.
“It was all done in darkness and under a message of necessity,” Jordan said. He added that this is, ironically, Sunshine Week which is supposed to be a celebration of openness in government.
The pension increases for those cashing in and moving out had passed the same way, also with bi-partisan support. And you don’t recall the public unions taking to the streets to demand that all their members including those existing be part of the shared sacrifice, do you? They were in on the deal, as were the state legislators who got pay raises as part of it.
Cuomo also froze reimbursement rates for some services, and Cuomo and DeBlasio froze the pay of some workers, for years – a 20-30% real decline when adjusted for inflation. These savings went not to pay for better services – we got worse – or lower taxes – they had soared and stayed the same. Just to pay for all those big union pension scores, debts, and a few other things.
I’ll credit another Streetsblog commenter, who thoughtfully said that with regard to the transit system, Andrew Cuomo was the worst of both words. On one hand, unlike the state legislature and Bill DeBlasio, he didn’t want our already high taxes to go further. On the other hand, in order to gain union backing to stay in office, he forced public sector managers to accept deals that allowed workers to do less and less for the same money. Notably when he stepped in to prevent MTA managers from reforming one of the most corrupt and rapacious agencies in New York – the Long Island Railroad.
It’s worth noting that the MTA’s offers to date have been generous, and I don’t believe the MTA should move from their position. According to materials the agency released after talks fell apart on Monday, the MTA has promised 17 percent raises in exchange for some health care contribution concessions. It’s unclear if badly needed pension and work-rule reforms are on the table, but so far, the MTA hasn’t shown a willingness to fight for much reform in a way that would overhaul the labor problems the agency currently faces.
I’m worried about Cuomo’s interference because the MTA almost needs the strike. In the short term, it would mean headaches for subway riders and major hassles for Long Island commutes (including reverse commuters), but in the long time, the MTA has to fix systematic problems with LIRR work rules, pensions and other benefit obligations. They won’t be able to do so if Gov. Cuomo is putting pressure on to settle before voters get upset. Such are the travails of labor relations during an election year. Can we look beyond the next three months?
We can look back beyond three months now, and find that NYC riders ended up paying for the Long Island deal Cuomo cut, along with other deals with unionized employees, contractors and consultants who commute in to city and city contractor jobs from places like Long Island.
In fact, Cuomo never again stood up for a fair deal for public service recipients, after the organization that controls the state legislature, the New York State United Teachers, showed it was willing to spend as many taxpayer paid-in dollars as it took to ruin his reputation, if he didn’t go along with paying more for less.
NYSUT President Karen E. Magee said the ad campaign is designed to educate New Yorkers about the damage the governor’s “billionaires’ agenda” would do to teaching and learning. “The governor should be listening to the true experts – students, parents and educators – about what’s really needed. It’s not more emphasis on standardized testing, but fair and equitable funding that benefits every child in the state and more support for our already strong public education system,” Magee said.
In another case of accidently saying to what they were all secretly thinking, Magee once said NYSUT would never accept any teacher evaluation system that could lead to a negative effect on any teachers’ career – no matter what they did or didn’t do.
This after Cuomo had questioned why, after spending more and more and more than anyone else, New York didn’t have the best schools. He would never ask that question again. Nor would he talk about how much of that increase went to the pension increase the teachers’ union pushed through.
Mayor DeBlasio had an even better chance to reverse some of the damage from all the pension increases — for taxpayers, service recipients, and even later-hired public employees. Tier VI, with lower pension benefits and higher contributions for new hires, had already passed when he came into office. Mayor Bloomberg had also agreed to contracts with lower cash pay increases (teachers) or even big starting pay cuts (police, fire) for new hires, to fund bigger increases for those at the end of their careers (and thus their pensions), while thinking of running for President.
Then he reversed course and tried to limit the damage by demanding some givebacks. So the unions simply refused to negotiate new contracts, and simply waited until he was replaced by someone willing to follow orders.
DeBlasio could have said that since those in Tier VI will be retiring later after paying in more, all the money available for raises should go exclusively to them, in higher starting and early career pay. And that if those in Tier VI wanted raises, they would have to agree to offset them with higher retiree health care contributions for those who got to retire years earlier than they had been promised when they were hired – with up to 10 years of high costs before Medicare picked up most of the bill, rather than three.
This would have evened things out between tomorrow’s, today’s, and yesterday’s public employees, at least a little, and made a city job more attractive to newcomers. Including those Gothamist claims are leaving because public employees are “underpaid” (in starting and early career cash pay, which is all anyone is allowed to talk about). They would have had higher cash pay to offset later retirement and higher pension contributions, but would have had the option to contribute some of that higher pay to a 401K if they wished.
Instead, DeBlasio did what the unions ordered, and agree to wage increases in excess of inflation for all public employees – including the existing employees who go the richer pension deals and lower employee contributions (even as the wages of the serfs who pay for them continue to fall behind inflation). And claim it was partially paid for by an agreement for health insurance cost reform that never actually happened. (He may have cut a deal just before he left, eight years later, that was actually never implemented).
And then jacked up the property tax burden, and allowed those employees to produce worse services.
(Come to think of it, Mayor Adams has the same opportunity that Mayor DeBlasio had – no wage increases during my term except for Tier VI, or in exchange for higher health insurance payments for those who got to retire earlier than Tier VI or the initial Tier IV promise. Think he’ll do it)?
In an echo of Tammany Hall, if anything Cuomo and DeBlasio are associated with having private government contractors also get richer and richer compared with the serfs who pay for them, rather than just public employees.
In Cuomo’s case this includes the construction unions and construction contractor management, who have been allowed to pay for most of the cost of their own retroactive pension increases around the year 2000 by charging vastly more for public projects. Especially the MTA, now extra $billions in debt to pay, in effect, for work done in the long ago past on private development projects.
New York has long has “prevailing wage” rules, which require that the equivalent of union contract wages on public construction projects. In the 1980s and 1990s that mean cash wages only – public projects were kept affordable because excessive benefit costs and goldbricking work rules were avoided. That’s how all that affordable housing was built at affordable prices back then. Ask Kathy Wylde, who is still around, and oversaw the program, and hired many minority non-union workers to do the building at a time when the construction unions were racially exclusive.
Then the managers of the construction companies and their unions cut deals to retroactively increase their pensions around the year 2000, creating massive underfunding and raising the possibility of pension plan bankruptcy, before retiring to Florida. Soon after the “prevailing wage” law was changed to include benefits, even as private development went non-union to avoid the cost of the pension increase. Most of the cost of the pension increases was shifted to the public sector. (As in the public sector, later-hired construction workers were also screwed to pay for those cashing in and moving out). This also benefits private developers, who avoided those costs. Both Cuomo and DeBlasio were funded by the real estate industry as well as public unions and contractors.
This is what is meant by “practical solutions” and “creative solutions.” Screw the future and those who will live in it. Cuomo expanded “prevailing wage” even further, to benefit those still commuting from the suburbs for construction work, retired, or already dead.
In brief, when a project is subject to prevailing wage requirements, workers must be paid set hourly wage rates and hourly benefit amounts as determined by the fiscal officer of each New York county. These rates are substantially higher than minimum wage and also traditionally far greater than average non-union rates largely due to the added benefits amount.
Under the Budget Bill, S.7508-B A.9508-B, signed into law by former Governor Cuomo on April 3, 2020, workers must be paid prevailing wages on “covered projects,” which refer to “construction work done under contract which is paid for in whole or in part out of public funds where the amount of all such public funds, when aggregated, is at least thirty percent of the total construction project costs” and “where such project costs are over five million.”
Previously, projects were subject to prevailing wage requirements only if a public entity was a party to a construction project and the purpose of the work was to benefit the public.
This is very much like the multi-employer pension changes passed at the federal level. Later hired workers who don’t even get pensions – and probably won’t get Social Security either – will be forced to pay for already retired or soon to retire workers who got retroactive pension increases compared with what they were promised. Members of Generation Greed promised themselves more and more, and then forced those coming after to pay for it. New York’s multi-employer pension funds won’t need that federal bailout, because New York’s serfs have already bailed them out through inflated prices on government contracts.
Among those private entities to whom DeBlasio handed over extra $billions in taxpayer dollars were the private school bus companies, long the largest contributor to members of the City Council in exchange for automatically renewed no-bid contracts. New York City has long spent vastly more per student on bus transportation than anywhere else as a result.
When Mayor Bloomberg tried to change routes to cut costs, the school bus companies used the politician-controlled court system to stall until winter, and then dropped handicapped children off at the wrong places in freezing weather, threatening their lives. “President” DeBlasio undid even Bloomberg’s mild reforms, and then gave the school bus companies nearly $1 billion in taxpayer dollars when their services were no longer needed during the COVID-19 shutdown.
The price of NYC school bus services per student soared further from 2007 to 2019, from already high levels.
The $billions stolen on behalf of contractors just adds to the extent that the total wages and salaries of public employees who are actually working have to go down compared with the income of city residents. And the city’s inability to provide help to its poorest.
Having given away the store to the unions and contractors, did Cuomo and DeBlasio at least leave them happy on the way out? Hardly. Achieving something only former Mayor John Lindsay had previously achieved, Cuomo and DeBlasio left office despised by those they had in fact favored over everyone else, as a result of their failure to challenge that entitlement. In DeBlasio’s case it seems as if every public agency was, de facto, on strike, or at least a slowdown, during his last year on the job. Yes, some of that was the pandemic, but the attitude predated it. What does winning look like for those on the inside? How about the Department of Corrections, with 30% of the workforce on paid sick leave, leading to an overstaffed (relative to the number of prisoners) agency forcing later-hired corrections officers to work 24 hours in a row – put themselves and the prisoners at risk of severe harm.
And while the presence of public workers who don’t do their jobs is one issue, the attrition of fed-up workers who actually want to do their jobs is another. Imagine five levels of motivation – “on a mission,” “proud professional,” “just a job,” “that’s not my job,” and “beat the system.” Because the bureaucracy, the unions, and the politicians, whatever level you come into public service with, it will be knocked down one level per decade. Eventually, many who had hoped to work in “public service” leave because they realize that the service part will not happen.
The Cuomo and DeBlasio Administrations left us paying more, for a resentful and entitled workforce that believes it is being paid less. No one who hopes to have a political career will say otherwise.
Organization and Efficiency
There is a way that one group of workers can grab higher compensation than other workers, without forcing those other workers (in their other roles as taxpayers and consumers) to pay more for less. Or retain the same compensation while allowing other workers to pay less for more. By increasing their productivity – the services they produce per hour that they work. Through less wasted time and effort, and more efficient use of time and resources.
It is only because of rising productivity across the economy that people have been able to able to achieve the standard of living we have today, as opposed to the standard of living of 100 years ago. Having benefitted from the higher productivity of others, I believe that public agencies, employees and contractors have an obligation to increase their own productivity – bit by bit, year-by-year – in exchange, to benefit those others. Fairness requires a little more in exchange for a little less, not the other way around.
It is a measure of the disinterest in “productivity” in the public sector that the word isn’t even used for what it actually means – more and/or better work done in the same amount of worker time.
When there is a budget crisis, and thus a sudden, temporary need to pay attention to costs, the word “productivity” is at times used to describe cuts in public worker compensation. No wonder the workers are against it. I recall a day’s work in city government to be eight hours, with one hour for lunch – seven hours of work. In the early 2000s, after the dot.com bust and 9/11, there was a proposal to require eight hours of work, perhaps 8 ½ or nine hours in total, with no increase in pay. That would be a 14.3% increase in hours worked for the same compensation, or a cut in compensation per hour worked. This was described as a “productivity gain.” But it would not be an actual “productivity gain” unless the actual work done (or quality thereof) went up by as much or more than the time spent to do it. Since this is a public sector situation, a more likely outcome would have been little or no increase in actual work in despite in the increase in time working (or at least on the clock) — a productivity decrease.
The word “productivity” is also used to describe cuts in public services. Subway stations that were previously staffed become unstaffed overnight? A so-called productivity gain. Stations and parks cleaned less often, even as garbage piles up? A so-called productivity gain. Preventative maintenance cut? A so-called productivity gain, even if the transit system later falls apart. The 311 system devolving into a joke, like those “push to cross” buttons at traffic signals that don’t actually connect to anything? A so-called productivity gain.
The truth is that lower quality services in exchange for less hours worked is not a productivity gain. In fact, if the decrease in services exceeds the decrease in hours worked – as is usually the case because there is generally no reduction in overhead costs – what you actually have is a productivity decrease.
Real productivity gains cannot be had instantly in response to a budget crisis. They require year by year effort at slow, continuous improvement – in training, in organization, in less time spent on background tasks and more on direct service provision, in less time wasted. That’s what high quality private sector organizations do. More commonly, that’s what the new businesses that replace low quality private sector organizations do. That’s why at any given point one-third of private sector jobs are in business establishments that had not existed five years previously.
Sometimes private sector organizations go too far. For example, the abusive labor practice of requiring workers to be available – without pay – to start working for pay only when there is a need for them, instead of having a schedule set in advance. That is clearly shifting the cost of inefficiency – not knowing when there will be more or fewer customers – to the workers, rather than reducing that inefficiency. It could be considered “productivity fraud,” and there has been a legitimate blowback against it.
Fraudulently or not, however, operations managers at private companies are always seeking ways to produce more and better work in less time and with less waste and effort, because that’s how they get ahead in the marketplace. At the very least, there is always an economic incentive to get a full day’s work for a full day’s pay.
In government the political incentives are different.
Since there aren’t many real elections at the state and local level, what matters is campaign contributions. The more unionized public employees there are, the more dues the unions receive, and the more they can pass on to politicians in the form of campaign contributions. The same may be said of contractors, who are often paid on a cost-plus basis, and their unions. They are always pushing for more people to do the same work, or the same people to do less work, because that gets them more money.
That’s why the number of active members of the New York City Teachers Retirement System increased from 113,258 in 2007 to 124,000 in 2019 even as enrollment fell – more workers serving fewer children. That’s why New York City has 2.2 times as many police officers per 100,000 residents as the U.S. average and more than any other city other than DC. That’s why the NYC Department of Sanitation has more employees per 100,000 people than almost all other cities with public trash pick-up. It’s why there are always large groups of police officers, or road workers, or sewer workers, or something, waiting around to get their equipment, materials orders and organization before actually doing something. It’s why upstate road crew employment and upstate and suburban school administration employment is off the charts.
Consider this example. In New York City there are currently two employees on every subway train, one to operate the trains, and one to operate the doors. Meanwhile, multiple companies are trying to create systems that allow motor vehicles to drive autonomously on local streets filled with pedestrians, bicycles, intersections, and other complications. Why couldn’t such a system drive the subway trains, with no pedestrians, cyclists, or intersections to contend with, even with the existing signal system? And if it did, wouldn’t one MTA employee per train be enough?
That would mean that about 2,500 MTA employees would no longer be needed. Or perhaps 2,000 fewer, because there might still be 500 second employees on trains as trainees, or in certain areas. Half the jobs could be eliminated to save money, perhaps, and half shifted to do more work. Perhaps to increase service, or maintenance. Who would be worse off? Not the workers. Not the riders. Not the taxpayers. They could be spitting up the gains from the savings. It is the Transit Workers Union itself would be worse off, because its dues revenue would go down, and that would mean less in campaign contributions for its incumbent politicians.
Let’s get back to the question at the start of this post. It’s 10:30 on a typical workday during the school year. What are all the city and state employees, and private sector workers the city and state are paying, doing? The State of New York and its local governments (including New York City) had 31,514 full time equivalent employees in the “financial administration” function in March 2019, according to the Census Bureau. You’d think this is something they could print out off a database somewhere. In reality, Comptrollers such as DiNapoli and Stringer are put in that job, by those who benefit from arrangements as they are, to not ask questions like that.
Even if public managers push for more efficiency, their bosses – the politicians – are cutting deals that go the other way. Deals to require even more employees to do the same work, or less work for the same number of employees, that are enacted into labor contracts that remain in place in perpetuity, whether fair or not, like all those abusive provisions in the Long Island Railroad contract.
And all the other contacts.
All this got worse under Cuomo and DeBlasio, because less work in the future is something they could trade away for political support in the present.
“President DeBlasio” agreed to create more out of classroom and administrative posts so United Federation of Teachers members could get an even earlier semi-retirement out of the classroom. The city’s schools once had one real productivity advantage — economies of scale meant that administrative costs were relatively low compared with the U.S. average. This was true even in the bad old days of 110 Livingston Street and the Board of Education. DeBlasio got rid of that, and by the time he left NYC administrative costs per student (adjusted downward for the higher cost of living here) was at the U.S. average (it is far above average in the rest of the state).
And public education had one big productivity gain in the past 50 years. As more women worked outside the home, schools that had once provided education instead provided both education and child care. During the pandemic, however, not only did the extent of education plummet, but also parents were shown they could never count on the schools for child care again. This is as candidate for Governor Hochul promises that New York will hire even more teachers, as enrollment falls.
In addition to the political incentives, there are the managerial incentives. Imagine that the workers and management in one public agency actually tried to do a better job at a lower cost. Their reward at budget time would be a reduced budget, which would be cut and cut and cut again until the quality of their public services collapsed.
Meanwhile, what of public agencies that do a worse and worse job? That is held to be proof that they need more and more and more money. That’s why the level of school spending actually benefits from worse education, the police budget benefits from higher crime, the sanitation budget benefits from dirtier streets, the corrections budget benefits from people dying in jail.
And that’s why, when asked to find efficiencies, public sector managers typical try to cut their expenditures in ways that do the most damage possible – even in those rare situations when they have a choice to do otherwise.
I saw this dynamic firsthand in the early 1990s, during the Dinkins Administration. The City of New York was facing the worst fiscal crisis since the 1970s. Dinkins’ COO, Norman Steisel asked city agencies to find ways to reduce their budgets. Yes sir Mr. First Black Mayor some of them said, including the Department of City Planning where I worked. Others refused, or played games. So, what was the easy path? Cut the budget of the agencies that cooperated even more, leading to layoffs.
Being a public employee and trying to actually do something means being constantly frustrated by complete wastes of time. I recall doing field work with colleagues back in the 1990s. First everyone went to the office, waiting for whoever was the latest to arrive. Then we got back on the subway to head over the city car lot at the Brooklyn Navy Yard, to get the agency car. We had to wait our turn, and then fill out all the paperwork. Then we traveled from there to the actual worksite. A little work and then guess what, it was lunch time. The car was ancient and in poor repair. Once the work day ended before it began with the car broke down.
I showed how starting with a brand-new organization, without all the built-up practices and inefficiencies of the existing organization, better scheduling, and some better tools, New York City could have a class size of 12, with plenty of time for the teacher to work with students in ones and twos, and a more desirable career for teachers, all for far less money.
And how with better coordination between agencies, picking up the trash could be made far easier for the workers, and also require fewer of them, despite providing additional services.
But no one in the public sector thinks this way. Instead, there are those who are constantly thinking, scheming, campaign contributing, lobbying for less rules and deals that increase the time paid for not working.
The bottom line is that in business, there is a year-by-year-by-year effort to eliminate waste, increase efficiency, increase output, and limit cost. And in New York City and State there is a year-by-year effort to reduce efficiency, increase waste, decrease output, and then demand more funding. It has been going on for decades. There is no pushback against it. It is often irrevocably set in labor contracts and even state laws. And it got worse during the Cuomo and DeBlasio Administrations.
In addition to organization, scheduling and training, businesses increase productivity by investing in tools. Better equipment allows workers to more work with less effort, often by doing repetitive tasks for them.
Seventy years ago, government agencies had the most advanced equipment of any organizations in the United States. Government purchases in effect created the computer industry and the internet, and the public sector was an early adopter of office automation. The post office once had sorting machines that were far more efficient than the private logistics organizations of the time. Today, however, public sector workers work in lousy buildings and other worksites using obsolete tools. There are several reasons for this:
- In the press of interest groups grabbing for money, long-term investments in labor-saving technology lose out. The benefits will come in the future, when Generation Greed expects to be retired to Florida.
- Why invest in labor-saving technology when civil service rules and contracts mean you won’t actually save labor?
- Even tools that will make things easier in the long run make things harder in the short run, as they are learned, fail, and are improved. Many public employees don’t want to make the effort. Tenure and civil service rules mean they don’t have to.
- The only people pressing for public investment in new tools are the government contractors who produce the tools. Like public agencies, it isn’t in their interest to actually deliver at a fair price, and they make campaign contributions too. Meanwhile, public sector managers generally lack the expertise to effectively purchase new tools, especially information technology tools. People say the private sector is more efficient. Unfortunately, one thing it is efficient at is ripping off the government.
- Investments in new tools take a long time to implement. Even the longest serving public sector managers are not around long enough to see them through. Especially since top jobs are often seen as places to put people for a year or two or three to increase their pension benefits, just before they retire. During those few years, most just hide in their offices.
- Investments in new tools are risky, even for those who know what they are doing. As a private executive, Michael Bloomberg made $billions buying information technology and using it to provide information for financial companies. As Mayor, however, his attempt to create a new payroll system to prevent timecard fraud by city workers ended in fiasco.
Although given the goal of the investment, sabotage from the inside, as well as contractor greed, may have led to the failure.
“The massive scheme” started as an outsourced city contract to design a payroll system that would precisely track the hours worked by city employees. After a couple of false starts with other vendors, defense contractor Scientific Applications International Corporation was awarded the job in a no-bid contract by the Giuliani Administration.
Under Mayor Bloomberg, the contract ballooned from $63 million where it had started out in the Giuliani years, to more than $700 million. Federal prosecutors now say at least $600 million of that was “tainted.” At every level, federal prosecutors allege grafters had honeycombed CityTime in to a paragon of corruption.
“Between 2003 and 2010, the CityTime payroll project served as a vehicle for an unprecedented fraud, which appears to have metastasized over time,” said Baharara.
The prime contractor was the defense contractor Scientific Applications International Corporation. The city’s contract database notes SAIC has been the subject of “multiple investigations by the Department of Defense, the U.S. Department of Justice, NASA and the General Services Administration.”
The contract went from a fixed-price contract to a fixed-price level of effort contract. What that meant is that from then on, it would be the city – not SAIC – that would become largely responsible for future cost overruns. What followed as described in the indictment was a dramatic acceleration in costs with the city on the hook for all of it,” explained Baharara..
The city’s lobbying database shows a small army of former prominent city officials who did work for SAIC and Technodyne. Defense contractor SAIC has retained former City Comptroller Liz Holtzman, Peter Powers, who served as Mayor Giuliani’s top deputy Mayor for operations, and Seth Kaye, who worked in both the Giuliani and Bloomberg administrations. Technodyne’s lobbyists include former Bloomberg Department of Information Technology and Telecommunications Commissioner Gino Menchini and Agostino Cangemi, who also held key posts in both administrations.
The CityTime scandal, WNYC said, is a cautionary tale. And public agencies and politicians are nothing if not cautious about spending today’s money on tomorrow’s needs – since so much of today’s money is going to yesterday’s privileges. Under the circumstances, the safest course is to do nothing. But if nothing is done over decades, you end up with public agencies having information systems that run on COBOL, which no one even knows how to program anymore. And that’s where we are, especially in public financial agencies such as the IRS.
The federal tax collector runs some of the oldest IT systems in government, including the 60-plus-year-old Individual Master File system that intakes and processes individual tax returns. While that system runs on Assembly, many of IRS’ other systems run on a slightly younger programming language: the common business-oriented language, or COBOL.
Despite its age, COBOL continues to get widespread use in some sectors, particularly finance. And as banks and other financial systems connect to the IRS, the agency’s systems must be able to communicate and process the incoming information.
But the IRS also has to make sure those systems are secure, which can be difficult when dealing with older programming languages that aren’t supported by modern security tools.
Consider the only unemployment insurance application I ever filed after a career if paying in. It was rejected because, according to the New York State Department of Labor, I had not worked in the prior year. That happens to be the year I worked for a different employer, though in the same job, because the company I had been working for was bought.
What the Department of Labor should have been able to see, but apparently could not, is that I paid state income taxes on the work that I supposedly didn’t do. It would appear there was no link between the New York State Department of Labor and the New York State Department of Taxation and Finance, and with both agencies working at home in 2020, no way for the workers to get together and create one.
Meanwhile, the State Department of Labor had to implement a new unemployment benefit for self-employed people who lost their incomes due to pandemic-related shutdowns. Since they hadn’t been paying in unemployment insurance taxes, how did the State Department of Labor know if anyone was, in fact, self-employed? Couldn’t anyone just claim to have been self-employed and lost income, even if they never were? Apparently, that’s what happened.
Could that have been checked? Anyone legitimately self-employed would have been paying FICA taxes on that income, even if the income was too low to require that federal, state and (in NYC) local income taxes be paid. The IRS would therefore know if someone was self-employed, and New York State Department of Taxation and Finance has a direct link to the IRS. In theory this could have been checked instantly. In practice, with three different legacy systems, it probably wasn’t’ check at all.
And come to think of it, why is your age and birthday different for the IRS, part of the Department of the Treasury, than it is for the Social Security Administration, part of the Department of Health and Human Services? Why does one have to apply for Medicare? Doesn’t the federal government know you hit age 65? Doesn’t it know when you are age 67?
The agency most connected to our (or rather their) state legislator hack politicians is the judiciary. Long before COVID-19 and work from home, law firms were downsizing their office space massively, all over the United States. Why? A shift from paper records to electronic records means that not only do law firms require less space, but also waste less time combing through all that paper. Office automation should also be accelerating judicial scheduling. In theory the number of cases the courts can handle, and the speed at which they are handled, should be soaring. Is that happening? I’m willing to guess the answer is no. We may find out the judiciary is the most backward and unproductive public agency of them all.
Despite the risks, private business has been transformed by information technology, and the gains are accelerating.
Take the case of two relatives who had to get hospital procedures a few years ago. In Hospital A, it was all paper records, written in doctor scrawl. With each new shift new doctors and nurses showed up who had no idea who the patient was, no idea what the problem was, no idea what the treatment was, no idea what to do. We had to explain it, as they thumbed through the paper records. It wasted time and did not inspire confidence. In Hospital B, all the records were automated, updated, and accessed. Every health care provider could check their device and have all the information in seconds before walking in the room, spending less time on finding out and more time on health care. It inspired confidence.
I wonder what the situation is at the New York City Health and Hospitals Corporation? Hopefully after Hospital A and Hospital B overcame all the hurdles, worked out the bugs, and implemented the systems, the HHC was able to then buy it a few years later as a discount. But that’s not the way to bet.
There is no media article about the productivity gains that have not occurred, or the services that are not provided, as a result of low and failed investments in better tools. No criticism of things that were not done. Were there any major new systems improvements during the DeBlasio and Cuomo Administrations? My guess is the answer is “no.” Is there any public criticism of this? Not that I can recall. In government you never get in trouble for the things you don’t do, no matter how little that is. Only for trying to do something.
The best management is self-management, and the best cause of self-management is voluntariness. It is the only check on human selfishness. If a relationship is voluntary, and one of the parties does not feel it is getting a fair deal, they can always take their business elsewhere, if there is an elsewhere. Monopolies always rip you off, whether they are large corporations, business associations, labor associations, mafias, governments, or political parties. Perhaps not in the short run, but always in the long run, if there is no consequence for failure, no reward for success, no reason to try to do better, no accountability for doing worse.
Consider some private sector organizations.
Google has done some wonderful things, for its users, investors, workers. Its search engine allows access to all kinds of documents one could not find otherwise. Its maps allow you to tour the whole world from your computer. Its advertising is for things you actually want to buy, as opposed to ads that try to manipulate you into blowing your money on things you don’t need. And best of all, its motto is “don’t be evil.” But look ahead 20, 30, or 40 years, when the founders are long gone and forgotten, replaced by those skilled in the art of office politics. If it maintains its near monopoly position, what are the odds that it will become evil? I would say 100%.
Vanguard has done more than any company to reduce the exorbitant fees that were once charged to investors, with an innovative mutual model that pays all its profits back to those same investors. Its market share has grown, and grown and grown as a result. But look ahead 20, 30 or 40 years, long after its founder has been forgotten. If it becomes even more dominant, don’t you think that those who control it will start thinking that perhaps they deserve a little more in exchange for a little less – just like the firms Vanguard replaced? You betcha.
Costco, another great deal. By going with a membership model, selling in bulk, limiting the choices, and going with barebones fit-outs, it slashed the cost of packaging, transportation and overhead, allowing better wages for workers, lower prices for consumers, and a solid return for investors. But look ahead 20, 30 or 40 years, when its founder and his associates are long gone. Don’t you think those who control it will decide they deserve a little more, in exchange for a little less? Don’t you think the sloth will set in? Don’t you think that it will end up like Sears, or Kmart?
Now think about some large private companies that offered a worse deal, but end up sticking around anyway. What do they have in common? Government mandates, government protection, government bailouts.
Like GM. Several relatives of my grandparents’ generation worked on the assembly line up at the Fischer Body plant up in Tarrytown, so I know what a dum dum is. Management would speed up the line to cut costs to increase profits. In response, unionized workers would stick some silly putty (the dum dum) in place where a bolt or screw was supposed to go, to make their work easier, especially on a Monday or Friday, when you didn’t want your car to be built. Enough cars came off the line that management got their bonuses, but half of them were sitting in the parking lot where other workers tried to find and fix all the defects before they were sold.
GM’s reputation never recovered, but people had the option to buy Toyotas. They didn’t have to buy lousy cars at high prices, so they stopped doing so, no matter how many flag waving commercials were put out for Chevrolet, and GM’s market share plummeted. (Full disclosure – I’ve owned four cars, a used Plymouth Horizon, a new Saturn, a used Ford Taurus, and a used Chevy Impala).
In the early 1980s, Toyota agreed to take over GM’s worst plant with its worst workers. A plant full of Oakland Raider fans, I guess.
With GM, you had managers and workers who thought they could dictate terms. With Toyota, everyone knew it was the last chance or they were gone. With the same workers, but different management, Toyota produced more and better cars than GM had.
Long after that, I recall my grandmother, long since retired, telling me about the latest GM labor deal. She was getting a pension bonus, and she thought it wasn’t right. The company is going down the tubes, and the last thing they need is to provide more to those who got enough already. Some years after that GM went bankrupt, and as part of the deal the later-hired were turned into temps at $15 per hour. Just like the public sector.
We won’t even talk about Wall Street, the bond raters, the accounting firms. Where are their replacements?
Voluntaryness and choice, not votes in favor of incumbents – generally the only people on the ballot — are the real power the little people can have to get a fair deal for themselves. That’s why private organizations seek to use the government to limit that choice.
In the public sector, on the other hand, lack of choice is par for the course. You want to know why opposition to charter schools and private schools and homeschooling is considered “progressive?” That’s why. Because new organizations and ways of doing things don’t have the built-up deals, favors and entitlements of the old, and are able to offer something better. And if something better is on offer, the argument that existing organizations need more money because they are doing a worse job doesn’t stand up.
So “President” DeBlasio was against choices, and “President” Cuomo was persuaded to stop being in favor. Because organizations that don’t exist yet, employing workers who have yet to be hired, don’t make campaign contributions and don’t threaten to runs ads against you, ad DeBlasio and Cuomo were careerists whose ideology was the advancement of their own careers.
Private organizations don’t offer a better deal because they want to, or because those who work in them are smarter. They do so because bad ones are continually replaced by better ones. Absent bankruptcy, absent choice, given monopoly, they’ll function the same way as New York City public agencies. And New York City public contractors, such as the school bus monopoly. All at the expense of less well-off serfs and later-born generations who could do a much better job, at a fairer cost, in place of those in on the deal, if allowed.
Mike Mulgrew, head of the United Federation of Teachers, once let slip that with regard to school reform (remember that?) his job was to screw things up. And they did.
But imagine state law forbid the same labor organization from representing workers at public agencies and competing private organizations (such as charter schools), on anti-monopoly grounds.
And imagine that the same labor organization was also now allowed to represent workers at two competing public agencies. And then imagine that instead of just re-authorizing Mayoral control, the state legislature were to leave half of NYC’s public schools under the Mayor (and without the UFT), recreate the Board of Education without Mayoral appointees to operate the other half (with the UFT), and lift the charge school cap.
Suddenly, even New Yorkers who didn’t have the money for private schools, or the time and social connections for homeschooling coops, would have three choices. I’d bet that instead of Mulgrew thinking it was his job to screw things up, he would instead suddenly decide he damn well better find a way to make things better, lest parents and teachers choose otherwise — and what is left of his dues revenues (other than from the retirees the UFT has actually represented) disappear. With voluntariness, the incentive structure completely changes.
You know what would make sense, based on the value New York’s serfs have received for their tax dollars? Take 75% of everything that is being done in house by public employees, and contract it out. And take 75% of everything that is contracted out, hire public employees, and bring it in house.
As it is, the only voluntaryness New Yorkers have is to leave. Stay here, and its their world and you are just living in it — their world even though many of them are living elsewhere, or retired elsewhere.
And as it is, only in an absolute crisis, as at the New York City Transit Authority in the mid-1980s under David Gunn, are New York’s public sector managers even allowed to try to make things better. Otherwise, public sector management is not a job I would wish on my worst enemy. But under Cuomo and DeBlasio, most agency heads weren’t appointed to engage in management. They were there to engage in political pandering. And so it remains.