Wednesday, August 1, 2012

How Do You Spell Money? O-b-f-u-s-c-a-t-i-o-n

Boy, there have been a lot of people talking about money and the economy since Nick Jones came out with his analysis. Sharon Kivisto reported that unemployment is down. Howie Rosenfeld reminisced about Ernie Gann and claimed that there were few jobs here back in the day.  Our Prosecuting Attorney (PA) has an article depicting how underfunded he is, too, relative to other counties. Also, I understand the Journal and are refusing to print letters from citizens who dare to criticize the recent County raises, and yes, the Trojan Heron has confirmation that the raises did happen. In fact, yesterday our Auditor and our Acting County Administrator defended those raises at a Lions Club event on San Juan Island. The Auditor and Administrator said that we had to give out those raises, otherwise we might lose our valued County employees ... they would pack up and go somewhere else.

Let's examine some of these statements by our public officials.

Let's begin with the pay raises. First off, I think someone needs to remind our Acting Administrator that he occupies his current position because his predecessor left to take a lower paying job on the mainland, not a higher paying job. How many County employees, exactly, have left because of low wages here? Name them. I doubt there is a single one. If there are any, compare it to the number of people in our private sector who are out of business or who have left to find a decent wage elsewhere. The compensation analysis done by our County HR Manager was deeply flawed, as is the custom around here. Our HR Manager compared San Juan County salaries to those of other counties, instead of comparing our County employee salaries to the prevailing wage within our County.  Our average weekly wage is one of the four lowest in the state, but we're compensating our County employees as if they lived in an average-wage County. Compared to their neighbors working in the private sector here, our County employees are living large. Too large, and no one in government seems capable of confronting that issue.

On to the Prosecutor's analysis, and I have to say upfront that I believe the Prosecutor's office is probably one of the better run offices in the County, at least from a fiscal perspective. Nevertheless, in his analysis, the PA computes his budget expenditures as a percentage of the overall County budget, which I believe is the wrong way to look at it. Since we have a bloated overall County budget that has expanded rapidly in recent years, a relatively small percentage of that bloated budget can still be an adequately large figure. For example, our PA compares his office to Pacific County (a la Nick Jones), and our PA implies that he has less money than Pacific County. That's not true. He may have a lower percentage of the budget, but he has more actual money. Pacific County's budget is so small (or should I say cost-effective?), and San Juan County's is so bloated, that our PA ends up with more money despite having a lower percentage of our budget. As Nick's analysis showed, our PA's office receives upwards of 30% more in real dollars than his counterpart in Pacific County. The bottom line is that our PA wants you to think in terms of percentages relative to a bloated County base, but his budget is allocated in real dollars, and by that measure, he's not so bad off.

Let's look at unemployment (see figure below) . According to the Bureau of Labor Statistics, unemployment here in 1990 was 2.8%. Last year, it was 7.1%. During the summer high season, our unemployment drops, and it currently stands at 6.5%. A look at employment here over the years (see below) looks like a plot from an oscilloscope or a heart monitor because of the dramatic seasonal swings. Our area is historically agricultural and cyclical, and on top of that, we're promoting eco-tourism, which is also highly cyclical. Why are we doing that? Employment here has grown very slowly over the years; unemployment is considerably higher; and there are precious few year-round jobs, except, of course, for our highly compensated government workers. Looking at the graph below, the time period with the least cyclic behavior lasted from 2005 to 2008, during the construction boom. However we might feel about development, it appears to have provided stable year-round employment better than anything else we've done.

The prospects for our economy are grim. Today the Fed announced that our national economy has slowed. On the local front, we're promoting highly cyclical eco-tourism on top of an already sick and cyclical economy. We hardly produce anything here except grant writers, and we're about to pass land use laws that severely restrict the use of one of our fundamental factors of production, land. To top it all off, our County cannot seem to control spending, either on projects or government salaries (or consultants).

We are headed in completely the wrong direction, and our public officials can do nothing but sing the same old tune.
San Juan County Unemployment 1990 to 2012, Bureau of Labor Statistics

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