Averting State House Layoffs

January 24, 1991

Faced with an 18-month shortfall of $650 million, Gov. William Donald Schaefer had two choices: fire thousands of state workers or impose a pay freeze and longer hours on Maryland's public work force. Mr. Schaefer chose the latter option but still has received stinging criticism.

During the 1980s, state workers came to expect healthy cost-of-living raises, improved benefits and a shorter work week than in the private sector. Many believed a pay raise was assured each year.

They were wrong. In recessionary times, payroll costs must fall. You don't hand out across-the-board raises when your corporation is $650 million in the hole. You seek ways to trim overhead and, as a last resort, begin firing workers.

So far, Mr. Schaefer has avoided large-scale layoffs. But that means taking other steps to lower expenses: no pay raises, no cost-of-living allowances, no seniority raises, no overtime, a slightly bigger employee contribution for health insurance and longer work days. These moves could lower overhead by $300 million -- and, most important, do so without adding to the unemployment lines.

The governor is making this relatively painless for state workers. Simply by upping the work week from 35.5 hours to 40 hours -- less than an extra hour per day -- he cuts overtime costs and adds the equivalent of 24 extra days a year per employee. That is enough to avoid hiring 5,000 extra workers. Overall savings: $183 million.

It is not surprising that employees are unhappy with the governor's moves. It will be harder for some to meet expenses. The longer hours could disrupt private lives. It hurts morale. But it is far better than being out of work.

County executives are likely to follow Mr. Schaefer's lead when they put together their own budgets this spring and stave off massive layoffs by holding the line on employee wages and benefits. This won't please county workers, naturally. But compared with the large number of plant closings and firings in the private sector, those in the government work force are riding out the recession with a minimum of discomfort.

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