For many years, executives being laid off from major corporations have been offered so-called golden parachutes, generous severance packages designed to ensure that no management personnel goes away angry or impoverished because the company has fallen on hard times. These multi-million dollar arrangements drew widespread criticism because rank and file workers were often given little more than 2 weeks notice when their contracts were terminated.
Those days are over.
The Ford Motor Company - since its creation a pioneer in labor relations - has once again bucked the trend, this time by offering generous optional buyouts to some 75,000 hourly workers as it downsizes.
Ford has been hit hard by competition in the U.S. market, and in an effort to cut costs and slough off unneeded capacity, it has started closing plants. Many feared that these firings would mean financial ruin for thousands of workers, particularly those who were approaching retirement and were too old to relocate and find new work. Without getting into the structure of the buyout program, the bottom line is that Ford has been able to significantly downsize without leaving families in the gutter. In fact, many workers were positively ecstatic about the opportunity to go back to school or start their own business with the money and support they received from Ford.
Downsizing is a serous challenge for any large organization. People plan their lives around their jobs, and pulling the rug out from under thousands of families can have effects that ripple across the economy. Moreover, the political and commercial consequences of such decisions are such that many organizations continue to operate with large numbers of obsolete or unnecessary workers rather than face the media firestorm.
In my opinion, our beloved government is one such organization. It is the nation’s largest employer with something like 20 million Americans on the payroll at the local state and federal levels. Despite labor saving information technologies and the rise of private firms offering to perform traditional government services for profit, the size of the government has continued to swell.
Even the most “small government” administrations have proved incapable of popping this pimple because firing people is just plain unpopular. We have entered an era when government not only provides public goods but also secure jobs paid with public funds. This “make work” mission, largely a product of the New Deal, has infected our civil service corps with a sense of entitlement instead of a sense of responsibility.
I believe that job security and just compensation are important to attract the best people to government, but when it becomes impossible restructure the public workforce, political reform itself becomes impossible.
This idea of the “silver parachute,” selective, attractive, optional buyouts that leave both workers and taxpayers better off, may be a powerful tool to enact the kinds of public sector reforms that our country so obviously needs.
When it comes to governments, that which does not evolve is dying.
