The company my husband works for, like every other capital
equipment company in Silicon Valley, had a bad year.
The company my husband works for, like every other capital equipment company in Silicon Valley, had a bad year. Its sales declined from $8 million to $3 million. No one is buying manufacturing equipment. Everyone is waiting for the economy to turn around. Everyone is hurting.
Last year, the company faced a hard decision. Business had become so bad that the company’s income was only paying for 80 percent of its expenses. The CEO called a company-wide meeting.
“We need to cut salary expenses 20 percent,” he explained. “We can either lay off about one-fifth of you, or we can cut everybody’s salary 20 percent. That’s everybody’s. Mine. The assembly workers’. Everybody’s. I want you all to vote on this: layoffs or salary cuts. This afternoon. Secret ballot.”
Now, just imagine that you are a competent employee, the best in your department, and you know you will be the last person laid off in your department. How would you vote?
Well, when the vote was counted that afternoon, it was unanimous for a 20 percent salary cut. Now the company has till March to make some money before we go bankrupt. So my husband is working 50 and 60 hours a week, no OT pay, to design the new machine. In April, we may be back on full salary, or we may be looking for work.
Lots of people are looking for work these days: friends, relatives, acquaintances, strangers. Some have been out of work for a long time. Some have taken jobs that pay less well, just to get the desperately needed health insurance, or to pay the mortgage. Such underemployed people no longer count in the unemployment statistics.
The unemployed are not paying income tax. The underemployed are paying less income tax than they used to. All the companies that are making less money or no money, or teetering on the edge of bankruptcy, are paying fewer taxes. All the unemployed and underemployed individuals, and the hurting companies, are buying less than they used to, and hence paying less sales tax.
The state is suffering a $34.8 billion shortfall because income tax, sales tax, and capital gains tax are way down.
The state is talking about raising taxes, which would kill many teetering companies, and drive others out of the state. They are also talking about cuts in services, which may be necessary. They are simultaneously giving raises and perks to various bureaucrats.
Santa Clara County just gave 6 – 7 1/2 percent raises to most county employees, including Sheriff Laurie Smith ($181,072), District Attorney George Kennedy ($222,422), Assessor Larry Stone ($150,605). County Counsel Ann Ravel and Public Defender Jose Villareal netted 15 percent raises; Clerk of the Board Phyllis Perez got an 11.6 percent raise.
The story is the same at the state level, where Gray Davis wants to cut services and raise taxes, but is not offering to take a salary cut or trim his office staff. Our state legislators are happily ordering luxury cars at taxpayer expense: a $47,000 Ford Expedition for Bill Leonard of San Bernardino, a $41,000 Caddie for Carole Midgen of San Francisco.
And Gilroy’s own City Administrator, Jay Baksa, has been awarded a 5 percent raise, to $156,264.
Now, if any government bureaucrat deserved a raise, it would be Jay. He’s a great money manager. He saves in good times, so the city can draw on its reserves in times like these. He writes the best budget I’ve ever read – unlike some local government bodies, he doesn’t hide unpleasant truths under ambiguous headings.
It’s even true that Jay could get a better salary if he accepted an offer from another city, though probably not with private industry. It’s much harder to compete in private industry. One can’t just raise taxes or float a bond when times are tough. One has to actually work for a living. Any government employee who thinks he could make more in private industry should try it. You may find it’s not as easy as you imagine.
But right now, not even Jay deserves a raise. No government employee deserves a raise. For right now, they need to make the same kind of sacrifices my husband’s CEO is making.
