Sunday, May 1, 2011

Tough Budget Choices in Los Angeles Include $150 Million in "Stealth" Bonuses

The Torrance Daily Breeze had a story yesterday about budget data released by Los Angeles City Administrator Miguel Santana. According to the data, the city of LA paid out $150 million in random bonuses last year. For a city spending 85% of its budget on employee compensation, and trying to resolve a $350 million budget deficit, these bonuses have gotten remarkably little scrutiny. Few at City Hall are even aware of their size or scope.

Los Angeles gave me a $5,000 bonus for driving through the smog to take this picture!

Unlike bonuses in the private sector, which are intended to incentivize hard work, innovation, and efficiency, and are tied to companies' profitability, these bonuses are written into union contracts and apply rigidly to workers in certain jobs or with certain skills. Unlike private-sector bonuses, these tend to become permanent, even if the special skills become obsolete or the city has no trouble recruiting. And, of course, they're not tied to the city's financial well-being. In other words, they're just a way for unions and the agencies employing them to disguise workers' base pay. The article's author, Kerry Cavanaugh, starts with the example of a waste-truck driver for the city who receives an annual bonus of $3,000 based on the sheer unpleasantness of her job. Some other examples include:
When masonry workers use a jackhammer on the job, they get an extra 75 cents for each of those hours.

A police officer who can shoot a gun well (marksmanship) gets $104 a year.

A firefighter who is required to enter the water to perform a rescue gets an extra $2 per hour for the full shift during which the rescue takes place.

A public works engineer can earn a $2,871 bonus for having a professional license.

If a boss calls an employee after hours with a question, the worker could get an hour of overtime pay.

A port pilot who makes around $217,000 a year to guide ships in the Port of Los Angeles can earn an average "efficiency bonus" of $36,100.
So, to review, the city of Los Angeles is broke. It's broke enough that Mayor Antonio Villaraigosa just imposed 8 weeks of unpaid furloughs on 4 unions representing half of LA's public employees, and bankruptcy is still a possibility. Yet there's no reason to expect that the city's labor unions are going to give ground on $150 million worth of extra pay they get just for showing up at work.


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