There's a trade-off if state workers are denied pay raises

State employees have been made well aware during the political and economic roller-coaster ride of the last decade that pay raises aren't a sure thing. Still, they must be stung by a joint legislative panel's rejection last week of two proposed new labor contracts bearing pay increases for the year that began on July 1 and the one that follows.

The proposed annual increases for the nearly 30,000 members of the two largest state employees' unions, AFSCME and the Minnesota Association of Professional Employees (MAPE), were 2 percent this year and 2.25 percent for the year beginning next July 1. Average annual pay would be $45,163 for AFSCME members and $66,941 for members of MAPE.

The increases compared with 3 percent average wage increases in the past year for private-sector workers in the Twin Cities, where the bulk of state employees work. All six Republicans on the 10-member panel voted to block the new contracts. All four DFL members voted to approve them. That vote doesn't necessarily mean state workers won't eventually see raises in this fiscal year. But it does mean that those raises will be delayed until at least late February, when the Legislature's regular session resumes.

It also shows that in the current political environment, it doesn't take a state budget deficit — or an election year — for state employees to feel a compensation squeeze. That squeeze could prove costly for taxpayers in the long run, if it makes attracting and retaining a skilled workforce more difficult in an increasingly tight labor market. Already, it's taking more than three months to fill many state positions, state officials report.

At least one Republican, state Rep. Steve Drazkowski of Mazeppa, told Minnesota Public Radio that he could not accept raises "at the expense of people who don't work for government." That's an argument that could be leveled against any pay increase for government workers anytime, and it seems bound to set some talented state workers packing. A 2014 study by the right-leaning American Enterprise Institute found there's already a wage-and-benefit tug in the private sector's direction. Total compensation, wages plus benefits, for public workers in Minnesota then lagged 3 percent behind comparable private-sector workers.

The legislative panel's chair, Rep. Marion O'Neill of Maple Lake, offered a more nuanced explanation for Republican "no" votes. The Dayton administration supplied too little evidence that the new contracts would be affordable within the confines of the state agency budgets the Legislature approved in May. Agency-by-agency information was lacking, she told an editorial writer. She also voiced concern that the contracts would lead to tuition increases or program cuts in the Minnesota State Colleges and Universities system, where about 4,800 employees would be covered by the two new contracts.

O'Neill's attention to maintaining state fiscal balance is well-placed. But if a wage freeze is the consequence, it will have consequences that Minnesotans shouldn't ignore. A 2016 report by the state demographer warns that the state workforce is older on average than the private sector's, and that the coming years will witness "a dramatic wave of retirements."

State Management and Budget Commissioner Myron Frans said that the contract cost projections supplied to legislators are more detailed than in any previous year. They put the total cost of the two proposed contracts at $137 million, below a budgeted $170 million. Of necessity, those are estimates, Frans said.

In a letter to Republican members of the Subcommittee on Employee Relations, Frans said the proposed contracts were negotiated "with the understating that agencies can manage their contract costs within their existing appropriation, absent unexpected circumstances." He told an editorial writer: "These are really good contracts — some of the best we've ever negotiated."

If that's so, it should be possible in coming weeks to persuade fair-minded members of the GOP legislative majority of that fact. The parties to these contracts should keep working toward a response other than a flat "no" to state workers' reasonable expectation of pay raises during healthy economic times.

O'Neill signaled that she is open to persuasion. "I would never say we are against raises for workers," she said. The new contracts' affordability is "our entire concern." Minnesotans should let GOP legislators know that while they too care about costs, they also understand that maintaining high-quality state services requires competitive compensation for state workers.