The California Experience

On December 19, 2008, Governor Arnold Schwarzenegger ordered California state workers to take 1 day per month as an unpaid furlough, beginning in February 2009. That has grown to 3 days per month at December 19, 2010, roughly a 15% decrease in pay and working hours. The California Supreme Court ruled on October 4, 2010 that the governor may not order furloughs and pay cuts for state employees, but these decisions require the legislature to act. A few days later, the California legislature passed the budget with an $896 million cut in pay for state workers and with furloughs.

Some workers covered by collective bargaining contracts have their pay reduced under different terms. Different agencies and departments use different approaches. Some agencies simply shut down three days per month. Others schedule individual workers' furloughs for different days. Sonoma State University told instructors to
keep the same classroom hours and take the furlough time by reducing office hours.

The affected employees express mixed feelings. They welcome the additional time to spend on personal interests and with their families. At the same time, they struggle with the pay cuts.

"A number of states are imposing furloughs and/or pay cuts for some state employees. These include Arizona, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia, and Wisconsin," according to the Center on Budget and Policy Priorities.

When an organization experiences reduced ability to pay for labor, it can respond by laying off workers. This sacrifices the public good of employment. Further, the organization survives at the expense of the laid-off workers. There are alternatives, and the State of California sets a good example for all employers, including private businesses. This approach minimizes unemployment.

The state's furloughs are roughly equivalent to instituting a 34-hour work week. If all organizations, whether prosperous or struggling, reduced the number of working hours to 34 per week, then they would have to hire additional workers to maintain the present level of output that results from a "standard" 40-hour week. Reducing the work week to a new "standard" 34 hours would truly create new jobs sufficient to solve completely our current unemployment problem.

Resources (retrieved December 19, 2010, except as noted):

California Department of Personnel Administration, Furlough Program - Answers to Employee Questions (http://www.dpa.ca.gov/personnel-policies/furloughs/answers-to-employee-questions.htm).

Johnson, N., Oliff, P. and Williams, E., An Update on State Budget Cuts (Center on Budget and Policy Priorities, April 19, 2010, http://www.mobilelottery.com/wp-content/uploads/2010/05/Update-On-State-Budget-Cuts.pdf).

Ortiz, J., The State Worker: Furloughs about to become Brown's headache, (The Sacramento Bee, December 16, 2010, http://www.sacbee.com/2010/12/16/3261515/the-state-worker-furloughs-about.html).

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