Life Without Civil Service Protections? Ask Georgia

As new OMB Director Mick Mulvaney, in consultation with the Director of OPM, prepares a plan for reducing the federal civilian workforce, attention will focus on successful reform models.

Georgia’s civil service reforms are most the extensive of any state government reforms attempted in the past 30 years. They have been in place for more than 20 years, and two of Donald Trump’s cabinet-level appointments have extensive Georgia-related experience.

Tom Price is a current Georgia congressman and former state senator who is slated to head HHS, and George “Sonny” Perdue is a former two-time Georgia governor now nominated to serve as Secretary of Agriculture.

In 1996, Georgia took its civil service system and turned it upside-down. Employees hired after July 1, 1996, serve at will with no civil service protections and no seniority rights.

A five-member State Personnel Board appointed by the governor is responsible for setting statewide HR policies. The state’s centralized personnel system has been abolished, and agencies have responsibility for recruiting and selecting new workers, as well as for setting pay, job duties and promotions. Employees have limited rights to appeal.

Employment post-civil service

The impact of the elimination of most civil service protections in the state is most apparent when comparing state government employment following the most recent 2007-2009 recession.

Traditionally, government workers were less affected by economic cycles. In recessions, while private sector employment would fall, government employment would act as a stabilizer on the overall economy acting countercyclical to the private sector.

For example, nationwide private sector employment fell by 8.5 million between January 2008 and January 2010, federal employment rose by 132,000.

In Georgia, private sector employment dropped by almost 10 percent over that same time period, but instead of acting as a stabilizer, without civil service protections state government contributed to the downturn through a combination of not filling vacant positions and layoffs.

State government employment fell nearly 3 percent between 2008 and 2010, and then continue to fall. By July 2015, Georgia state government had shed a total of 9 percent of its jobs, and is only now recovering as the state economy rebounds.

Without traditional protections, Georgia’s state employees became a procyclical drag on the state’s economy as layoffs in the private sector were extended into state government as well.

Minimal Impact on Wages

While employment declined, those state workers keeping their jobs saw their pay keep pace with the private sector counterparts and their fellow state employees in other states.

From 2007 to 2015, average weekly wages in Georgia’s private sector grew by 17.7 percent, while the average weekly wage of a Georgia state employee rose by 21.7 percent, about the same as for state employees nationwide.

Before the recession, average pay for Georgia state employees was roughly 14 percent below the average paid by private employers in the state, and that relationship was unchanged by the economic downturn.

Georgia state government employees have gone several years without pay raises, but states with greater civil service protections also delayed increases, so the loss of protections did not affect wages as much as employment.

Fears of Political Patronage May Be Exaggerated

Civil service reform always raises the specter of greater political patronage affecting the hiring and promotion process in government.

Since 1996, Georgia has been led by two Democratic followed by two Republican governors, but by most accounts, political patronage has not increased in Georgia despite the lack of civil service protections.

While state government tends to be more political than the federal bureaucracy, changes in the governor’s office has not led to greater politicization of state employment.

Despite the change in parties, the state remained politically conservative throughout this period. Whether there would be a wholesale discharge of state employees if the state’s governor suddenly swung from politically conservative to liberal is impossible to predict.

With its 20-year history of radical reform, Georgia’s attempts to create a more responsive, less centralized state bureaucracy may become a model for President Trump’s plans for the federal government.

This article originally appeared on FedSmith.com.

New overtime rule will have significant impact on Georgia’s budget

Georgia’s decision to join a 21-state lawsuit to stave off the U.S. Department of Labor’s new overtime rule is more than a matter of political philosophy.

If the new rule goes into effect as planned on December 1, a significant number of the current 137,000 state employees will become eligible for overtime as the threshold for exemption from overtime pay moves up from the current $455 to $913 per week.

In a study conducted in the first quarter of 2016, the average weekly wage for a state employee in Georgia stood at $868. Even with the 3 percent pay raise granted effective July 1 raising the average wage to $894, the average state employee's weekly wage would still fall $19 below the planned new weekly wage threshold meaning that thousands of state employees would become newly eligible for overtime pay.

Taking the data from the first quarter and adding 3 percent to the average rates, only eight counties – Carroll, Chatham, Clarke, Fulton, Heard, Lamar, Peach, and Richmond – show average wages for state employees exceeding the new exemption threshold of $913.

In contrast, in 135 counties the average state employee’s salary fell below the exemption threshold. Sixteen counties did not report wages for state employees separately.

Impact on state budget

The level of impact on Georgia’s budget depends on how the state reacts to the new rule.

In the statement announcing the lawsuit, Georgia Attorney General Sam Olens stated that

“The rule will force many state and local governments to substantially increase their employment costs. Some governments may be forced to eliminate some services and even lay off employees.”

The state could minimize impact by tightening up rules on overtime but this might impact state services, especially in times of emergencies such as ice storms or other natural disasters where state workers are expected to put in extra hours.

Georgia could also raise its personnel budget to cover increased overtime costs, but with other costs rising, such as Medicaid, this will make balancing the 2018 budget more difficult.

Georgia state employees relatively low paid compared to other industries

Part of the reason the state is so impacted by the new rule is that state employment is a relatively low paid form of work compared to a number of other important industries in Georgia.

For example, while state employees averaged $868 per week in the first quarter of 2016, the average weekly wages for construction workers was $1,009. Workers employed in the insurance industry in the state averaged $1,694 and those employed in the real estate industry averaged $1,110 per week.

Among the industries paying on average less than state employment were arts and entertainment ($602), retail ($565), hotels ($473), and food and drinking establishments ($313). Average pay excludes tips, which explains the relatively low pay in the food and drinking industry where many workers’ pay is subsidized by customer tipping.

Averaging $739 per week, local government workers in the state make slightly less than state employees.

If Georgia does not win the lawsuit and the new rule goes into effect December 1, the state will have to reconsider its current approach to human resources and make changes to ensure that personnel costs do not go up substantially to avoid a budget problem next year.

You can read the actual lawsuit that was filed in the U.S. District Court here.

New overtime rule will have significant impact on Georgia’s budget

Georgia’s decision to join a lawsuit brought by 21 states to stave off the U.S. Department of Labor’s new overtime rule is more than a matter of political philosophy.

If the new rule goes into effect as planned on December 1, a significant number of the current 137,000 state employees will become eligible for overtime as the threshold for exemption from overtime pay moves up from the current $455 to $913 per week.

In a study conducted in the first quarter of 2016, the average weekly wage for a state employee in Georgia stood at $868. Even with the 3 percent pay raise granted effective July 1 raising the average wage to $894, the average state employee's weekly wage would still fall $19 below the planned new weekly wage threshold meaning that thousands of state employees would become newly eligible for overtime pay.

Taking the data from the first quarter and adding 3 percent to the average rates, only eight counties – Carroll, Chatham, Clarke, Fulton, Heard, Lamar, Peach, and Richmond – show average wages for state employees exceeding the new exemption threshold of $913.

In contrast, in 135 counties the average state employee’s salary fell below the exemption threshold. Sixteen counties did not report wages for state employees separately.

Impact on state budget

The level of impact on Georgia’s budget depends on how the state reacts to the new rule.

In the statement announcing the lawsuit, Georgia Attorney General Sam Olens stated that

“The rule will force many state and local governments to substantially increase their employment costs. Some governments may be forced to eliminate some services and even lay off employees.”

The state could minimize impact by tightening up rules on overtime but this might impact state services, especially in times of emergencies such as ice storms or other natural disasters where state workers are expected to put in extra hours.

Georgia could also raise its personnel budget to cover increased overtime costs, but with other costs rising, such as Medicaid, this will make balancing the 2018 budget more difficult.

Georgia state employees relatively low paid compared to other industries

Part of the reason the state is so impacted by the new rule is that state employment is a relatively low paid form of work compared to a number of other important industries in Georgia.

For example, while state employees averaged $868 per week in the first quarter of 2016, the average weekly wages for construction workers was $1,009. Workers employed in the insurance industry in the state averaged $1,694 and those employed in the real estate industry averaged $1,110 per week.

Among the industries paying on average less than state employment were arts and entertainment ($602), retail ($565), hotels ($473), and food and drinking establishments ($313). Average pay excludes tips, which explains the relatively low pay in the food and drinking industry where many workers’ pay is subsidized by customer tipping.

Averaging $739 per week, local government workers in the state make slightly less than state employees.

If Georgia does not win the lawsuit and the new rule goes into effect December 1, the state will have to reconsider its current approach to human resources and make changes to ensure that personnel costs do not go up substantially to avoid a budget problem next year.

You can read the actual lawsuit that was filed in the U.S. District Court here.