Jeff Pelline: A dollar a year for the top dog
In corporate America, some of the head honchos cut their pay to as little as $1 a year during tough times.
Lee Iacocca of Chrysler did. So did Frank Borman of Eastern Airlines. (I freelanced that story for the New York Times in September 1983. Back then, you dictated the story by phone into a voice mailbox and somebody transcribed it. You got paid about $50).
More recently, the top brass of successful companies have cut their pay to next to nothing. Steve Jobs of Apple and the co-founders of Google also have cut their pay to $1 a year. Jobs cut his pay when Apple was in trouble and hasn’t yet reinstated it to the typical $1 million annually that CEOs can make ” despite Apple’s resurgence.
Look, I didn’t fall off the turnip truck: I know that CEOs and others all make up in stock and stock options what they give up in pay. Jobs and the Google “boys” are billionaires.
Still, in an era of overpaid CEOs, the pay cuts make a symbolic statement to shareholders and the rank-and-file that the head honchos are willing to make a sacrifice.
I wonder, though: When was the last time you heard anybody in the public sector cut their pay to a buck a year to make a statement to their constituents ” the taxpayers?
As it turns out, many public-sector honchos are well off and have also already “made theirs” ” typically by “double dipping,” drawing dual salaries and pensions. We’ve reported on the double dipping in our community as well as many other places
including the Bay Area, San Diego and the Midwest.
Sure, the top public-sector officials aren’t billionaires, though some definitely are millionaires. But when times get tough for their constituents, they still grant themselves big pay raises. You don’t need to be a billionaire, much less a millionaire, to have a wonderful life in many rural cities.
In many cases, the pensions are extremely generous, too. In California, many of the top public officials, law enforcement officers and courthouse honchos can retire at nearly 100 percent of their full salary. They also receive ” well, healthy ” health benefits.
To be sure, we have many hard-working, public-sector officials, just as in private industry. In the case of law enforcement, many of them have risked their lives during the course of their careers for the rest of us.
In other cases, however, the pay raises don’t seem justified based on economic times. They reek of entitlement. I also notice how they get slipped by without much fanfare ” you typically have to comb public records to find out about the increases or rely on tips.
In business, by contrast, shareholders get mailed a proxy statement outlining the increases.
Nevada City pay hikes
Around here, I was surprised to hear about the proposed pay raises in Nevada City, my hometown. As we reported last week, city officials, including the police chief, city manager, public works director and others, may receive significant pay increases during the next three years. Possible pay raises of up to 11 percent this year alone may begin the multi-year process.
The city manager already earns $79,500, the police chief makes $73,000 and the public works manger earned $63,750, excluding generous benefits. This already is at the top of the heap when it comes to county wage earners.
The city argues that the pay increases are needed to remain competitive with other cities, including Grass Valley, Jackson, Sonora, Placerville, Auburn, Nevada County, Oroville, Colfax and Marysville.
I would argue most of the cities listed are considerably larger than Nevada City.
I also worry about the timing of the proposed increases. Not only is the county in a slump, the Nevada City government has run into recent criticism. A harsh grand jury report criticized the city’s handling of its finances, and some residents have complained about inadequate police enforcement of panhandlers and alcohol and drug abusers in city parks and downtown.
The grand jury report was titled “Asleep at the Wheel.”
To the city’s credit, officials are working hard to put many of the problems behind them. They say they have collected “hundreds of thousands” of dollars in city fees in recent months and also hired a new finance manager. The police department also has hired two community service officers to write parking tickets and deal with loiterers and panhandlers.
But some residents worry the pay increases are premature. Nevada City is still facing a lawsuit from its long-time city clerk, alleging wrongful termination, whistle-blower violations, defamation and numerous other allegations. Like other cities, Nevada City also faces a huge pension liability. (We’ll soon be writing more about this).
Here’s an idea: Give the rank-and-file the pay raises they deserve, but ask the head honchos to volunteer to postpone their increases until the city puts more of its problems behind it. Maybe one of them will volunteer to take a pay cut to $1 a month until the dust settles. This would send a strong message to the constituents.
I also noticed that the board of the NID just voted to double their stipend to $15,000 annually. While it was the first increase in 16 years, I admired the remarks of 25-year board member R. Paul Williams: “Being on the board is a civic responsibility.”
In our community, we have a large number of highly experienced but semi-retired people who are willing to work for less, so they can live here and contribute.
The other day, I had lunch with a retired strategic planner of a multi-national corporation who offered to help the county form its own strategic plan. He said he was turned down. I ran into another guy, a lifelong aviator and retired airline captain, who offered to help the county draw up a plan to make the county airport more profitable. He also said he was shown the door. (“Go away son, you bother me,” as Foghorn Leghorn put it.)
China’s “One Buck Chuck”
Maybe it’s time to think more creatively when it comes to tapping the expertise we have in our community to help run our public sector ” providing fresh ideas at a more manageable cost.
China is experimenting with “officials with the one-dollar annual salary,” as People’s Daily Online puts it.
“The three part-time one-dollar officials (in the Xuhui district of Shanghai) have their own offices in the foreign trade and capital invitation departments of the district,” the report said. “They decide work style by themselves, such as irregular visits to offices, or work by Internet, telephone or letters.”
It adds: “They are responsible for making suggestions to the work of the district government, help the district in attracting foreign funds and developing related sectors, participating in related work entrusted by the government, and provide advice and feasibility suggestions on government-related work. The salary of one U.S. dollar is symbolic, a title indicating an experience and a social status, and a channel for serving the public.
“While for government departments, these senior professionals could bring fresh ideas and help settle some problems in work.”
Maybe this idea ” call it “One Buck Chuck” ” could be adopted more widely in the
public sector. The future is certain: The public is starting to spend more time probing the public sector the way they probed corporate America in recent years, when overpaid CEOs drew widespread attention, bringing about changes in corporate governance.
Just this week, The San Francisco Chronicle ran a front-page story titled “S.F. incurs huge costs for public retirees ” Governments began to grapple with unfunded health care.” It read: “The city, like most local governments and school districts in California, has put aside no money to cover the fast-growing cost of delivering on health care coverage promised to its workers once they hit retirement age.
“Now, however, governments across the country are being forced to acknowledge the approaching financial tsunamis. Beginning this fiscal year, a little-known agency, the Government Accounting Standards Board, will require them to at least spell out the amount of unfunded future health care benefits in their budget.”
More articles like this one are coming ” not just focusing on health care but a wide range of costs ” and the outcome is inevitable: Changes in the way the public sector does business, with or without volunteerism. The bill for all this is just getting too big.
Jeff Pelline is the editor of The Union. His column appears on Saturdays. Contact him at 477-4235, email@example.com, or 464 Sutton Way, Grass Valley 95945.
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