“Un-breaking the Circle”

OK, let’s be transparent with one another for a while, shall we? How many of you in the service provider industry know anyone who is still working full time who hasn’t taken a pay/perk/benefit reduction of some kind over the last 18 months? For those of you who haven’t, kudos and congratulations, and may the force be with you. For the rest of us, who, from what I can tell, constitute the vast majority of all professionals, sacrifices have been made in the interest of mutually supporting our peers, or in some instances, even our organizations.

Here in California, as you may have heard, our state leaders struggled mightily but ultimately produced a new budget that reduced state spending (at least in theory) by enough to close our highly publicized $24 billion deficit. (Yes, that’s for ONE YEAR.) Despite any other judgmental misgivings about the results, the governor and legislators are at least to be commended on the fact that THEY GOT THE DARN THING DONE.

Ahem. Now comes the screaming part. There was, as might be expected, a group of people who screamed long and loud over the period of months in which we went without a budget (to the point that the state was issuing IOUs, even for income tax returns in some cases. Sure glad I filed, and received my refund, early.) The approaching financial “event” (I can’t even find the right word here, exactly: Fracas? SNAFU? Tsunami? Armageddon? Mere words don’t seem to do it justice) was daunting to all, so in the end, our fractious lawmakers finally cobbled something together, albeit with a substantial serving of smoke and mirrors by some accounts. (What else might you expect from the state that is home to the motion picture industry?)

Ah, but the screaming. Last week there were several reports on the public radio station of employee unions who were already threatening to sue the state over the proposed pay cuts they were going to have to take, which in some cases amounted to nearly 15% of their pay. While the dispassionate NPR reporters, I’m sure, endeavored to remain neutral in reporting this phenomenon, I believe a little of their agony crept into the accounting of the situation. Perhaps I have already been hardened by the current economic predicament, but I must confess that on some level I felt a bit cynical about the whole business. Typical of my thoughts about this was, “Hey, what are you griping about? Many of my peers have been laid off or taken pay cuts, and they can’t sue anybody. What’s up with that?!”

Which brings me to my point: we’re all in this together. Like the awe-inspiring daily draining of the Bay of Fundy, all boats have sunk in sync. Well, at least most boats. The public employees sector, which is typically abnormally resilient to these economic cycles, has finally felt the pain and humiliation of the kid left standing when the music stopped. In my brief twenty-three year career, I can’t remember when I ever saw this happen before. (Which is not to say it didn’t happen. The most likely time was back in 1991-92, but I was so pre-occupied with my own under-employment that I may not have noticed.)
Credit was the tide that retreated. For a while, it was funding everything, and it seemed like an epoch of unbelievable opportunity. Well, sadly, I guess unbelievable was the operant phrase there.

But back to the point. As the resumption of job creation in these cycles typically trails the bottoming of the S&P 500, surely the constriction of government payrolls and services has got to signal the end, or nearly the end, of our current melt-down. With this final piece of the puzzle finally tightened at the same level as everyone else, perhaps the field has finally flattened enough that some upward progress might be discernable, though at a re-set rate with very different expectations.

I don’t mean to begrudge the real pain and suffering that will befall our civil servants as they, too, look at personal and family belt tightening to endure the remainder of this downturn. And, naturally, as they were late to the party (so to speak) in terms of layoffs and concessions, I know they will be some of the last to return to business as usual when events finally turn around with certainty. Nevertheless, I think the symbolic importance of the “business” of government coming to terms with the same issues that have plagued the rest of us bodes well for determining where we are in the cycle of this drastic downturn.

After all, is there anybody left to be affected? With the other positive economic indicators we’ve see this month, I think there is real reason for our hope to get some grounding.

C’mon, tomorrow I love ya. You’re only a day away.

(Daniel Gehman is principal at Thomas Cox Architects. He can be reached at DanielG@tca-arch.com)