No, Public Managers Shouldn’t Get Business Manager Salaries

Author’s note: This article is a result of my recent foray into local activism, investigating the situation of my dysfunctional local agency that provides water to myself and thousands of my neighbors. The results of that investigation are a bit too locally-specific for this website (however if you too are in this locality I’ll be glad to tell you about it elsewhere). However, the whole experience of interviewing local officials and trying to write up the results did lead to the larger argument that I make below.

I did try to write this up for some local publications, who chose not to use it. Here I am keeping the initial paragraphs that refer to the local political situation in 2013, however here are some notes to make things more clear for my global readers. Clackamas County is the local government where I live, with an overall population of about 384,000 people over a fairly large geographic landscape with a variety of urban, suburban and rural communities. It is one of 3 counties (with Multnomah and Washington Counties) that make up the “metropolitan Portland” area, which contains a third or more of Oregon’s population. Tri-Met is the local regional government agency, first formed in 1969, which provides bus and rail public transit services to the most urban portions of the 3-County metropolitan area. In the most recent elections, Clackamas County’s governing board of 5 Commissioners was won by a new majority group generally representing the Republican Party, right-wing “tea party” movement which claims to favor smaller government and lower taxation in nearly all circumstances.

No, Public Managers Shouldn’t Get Business Manager Salaries

Is TriMet trying to ensure that Clackamas County voters will ban their already-deeply-into-construction light rail expansion into Milwaukie and Oak Grove, setting up years of legal and political conflict to come? It seems that will certainly be one result of the news that came last week, that TriMet was secretly giving top managers a collective $910,000 salary increase – while raising fares, cutting routes, and publicly claiming that they had a pay hike freeze in effect.

That’s all very interesting to speculate on, and as a Clackamas County progressive activist I feel slapped in the face by TriMet’s fiasco. How can I stand up at a Board of Commissioners meeting and defend light rail after this fiasco? It was bad enough last June, when the little-noticed confab of labor and environmental activists revealed that even the progressive activists of the Laborers Union, who are getting some of the TriMet construction jobs, thought that TriMet was too focused on light rail and not enough on buses. Still, I defended TriMet’s light rail as an investment in the future – even though it was already clear that TriMet didn’t share my grandparent’s sense of thrift as a virtue. Now that we see it was an investment in a select clique, why should I give up my time for activism to fight the hordes of tea-partiers in any upcoming Clackamas County special elections against TriMet?

TriMet’s latest snafu, however, is only an entry point to a larger argument that I would like to make: we need to push back against the argument that is so often heard, “We need to pay public managers the top rates ever earned in the private sector, to attract the best people.” No, absolutely not, for two major reasons. The two environments of private business management and public government management are completely different, and we do not need to attract the greediest people to public government management.

I have been a self-employed (micro) businessperson full-time for 29 years, and have continued as a part-time businessperson another decade. Much of that time I have been an activist observing local governments. The two environments are completely different.

Private businesses experience a much higher degree of month-to-month and quarter-to-quarter fluctuation of basic revenue than public government administrations ever do. Perhaps the revenue fluctuations of the slowest, most stable industries can be compared to government revenues – but those are the businesses where most managers still make significantly less than six-figure salaries. Public government administration is generally far more stable than the business world, revenues will fluctuate with the most major ups and downs of the economy as a whole, but usually not too much more.

And in business environment, the manager’s decisions appear to be much more important for the entity’s revenue results than in public government. Now in the reality of millions of people engaging the marketplace in American life, many people are mediocre and many things even out over time, that’s how people and capitalism survive. Yet it can happen that if you the business manager make one or two bad guesses, while your competition rolls out a popular new product, you really suffer. And on the other hand if your latest brainstorm is a hit, while the competition’s new line stinks, you’re celebrating in the best restaurants. Government administration is generally not like that, a welfare agency or a water district doesn’t have competitors actively trying to take away their “customers.” A transit agency like TriMet does have to “compete” with cars and other alternatives in general, are they really doing such a great job that their managers deserve the top rates of pay of any categories of business managers? Further, when revenues do fall in the business world, managers are much more likely to be de-budgeted or sidetracked, if not fired — even if the shortfalls are not directly their fault. This happens much less often in the government environment, even if lagging results are in fact management’s fault.

A business plan does need to be tweaked every 30 to 60 days; intensely competing businesses are constantly responding to each others’ moves. A well-designed government policy and administration should need much less marketing attention: the revenues are coming in because the population needs your government service, and/or the population is legally required to pay their taxes. And while many types of government agencies have some legitimate need to maintain good public relations, frankly the decline of the print journalism industry offers the chance to pick up very experienced people for public relations management for less than six-figure salaries. If government managers are so great they need top rates of pay, why are they so seldom as cost-conscious and bargain-seeking as business managers can often be?

Frankly we don’t need the most selfish, most “gimme” managers in public service. Which brings up another part of the problem (and further illustrates the difference in the public and private environments). While being a highly successful business manager has many rewards, there are limits to how far the most selfish can “institutionalize” their power. Sure, this year your business is booming and you’re head of your industry group and you’re a big wheel in your political party, but in 10 or 12 years you probably won’t be all those things. On the other hand, the clever and selfish government manager, well-versed in the arts of the misleading press release, the rewarding of friends and the punishment of enemies, can entrench themselves in local government and politics and be a “power” for 15 years or more. Those powerful public managers are precisely the reason that bureaucracy is a dirty word, and that many citizens feel that government doesn’t listen to them. Do we really need to recruit and encourage such selfish managers with the top rates of pay for any industry?

Every citizen, every elected official needs to stay awake and fight back against the argument that “we need to pay government managers the top salaries of the most lucrative industries to attract good talent.” No, absolutely not. We should be able to offer public management jobs at rates 10-15% less than private managers in comparable categories are getting, and we should consciously be seeking people who see value in stability, who appreciate the lesser risks generally encountered in government service, and who feel rewarded by knowing how they are of service to their community.

I do believe that government workers making less than $50,000 annually should probably be getting raises; and saving money by getting better public agency management for less money is a great way to fund that goal. We don’t need the most selfish managers; if they really think they’re worth it, they need to go find those big bucks in the private sector. We do need managers who understand that the taxpayer is their ultimate employer, and that the taxpayer’s need for cost-conscious, service-oriented government is paramount in the public environment.

Business doesn’t exist to provide government or wisdom; it exists keep us all fed, sheltered and entertained, and give people incomes to do those things. Government does exist to do tough jobs that business can’t take on profitably. Let’s not get the two very different environments mixed up.