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By Paul Losch

About this blog: I was a "corporate brat" growing up and lived in different parts of the country, ending in Houston, Texas for high school. After attending college at UC Davis, and getting an MBA at Harvard, I embarked on a marketing career, mai...  (More)

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On Things Collective

Uploaded: Oct 3, 2009
On Things Collective—Wisdom, Bargaining, Folly, and Sailing

Many of us in Palo Alto have sailed in San Francisco Bay. I had a week's vacation in the mid-1990's when I took daily sailing lessons out of Sausalito. I learned and poorly executed the numerous intricacies around captaining and crewing in a little vessel in the big water of San Francisco Bay.

While I may be inept as a sailor, I did learn that someone in charge of a sailboat has to manage to the winds, the tides, and the current. You cannot change those forces. Someone sailing against the forces of nature will at best have an unpleasant experience, and at worst, be put in a perilous situation. And the captain is in charge, the crew follows direction.

City governments are in financially perilous waters, and navigating them right now appears to include the problematic matter that the crew and the captains don't see eye to eye. On a sailboat, this leads to catastrophe.

There is talk of more unions representing Palo Alto employees who are not currently part of a collective bargaining agreement. This occurs at a time when many who are represented by SEIU are negotiating with City management about their next contract.

I have nothing in principal against unions, nor do I have a problem in principal with collective bargaining.

What concerns me about our City employees, many of whom I know and work with in my volunteer capacity as a Parks and Recreation Commissioner, is that they are seeking a refuge in unionization and collective bargaining in an attempt to "sail" against the environs that they, City management, and we as citizens must navigate at the present time.

If I were a City employee, I sure as hell would not want to have anything that I have had as part of my compensation "cut." A perfectly understandable point of view.

And if I were a senior manager or a City Council member, I sure as hell would not to be running actuarially unsustainable budget deficits, nor current budget deficits.

This is not a problem exclusive to Palo Alto. It is a problem all over the State, and in local governments all over the country. But we clearly have been facing it squarely here in recent weeks.

I don't think that there are "good guys" and "bad guys" in this matter. I can cite numerous examples of corruption and malfeasance amongst Enron, Bear Sterns, and the like. What was once collective wisdom became collective folly by the "smartest guys in the room." Now in jail is some cases, and deservedly so.

So when I hear about the SEIU at a national level having some dirty laundry, it doesn't really mean much to our conversation locally, as far as I am concerned.

Here is how I perceive the situation in Palo Alto:

--The City has to re-calibrate its finances, the operating budget will run deficits for the foreseeable future otherwise

--Part of addressing this re-calibration is adjusting the compensation, benefits and retirement packages that City of Palo Alto employees receive.

--The SEIU appears to be unwilling to "crew the waters" in light of current and going forward circumstances. Instead, the union leadership has chosen to dig in their heels, even if it means putting the ship of state at peril, near term, and more importantly, long
term (and please pardon the mixed metaphors)

--Other City employees at the management and public safety level are feeling fears that their compensation, benefits and retirement packages are facing changes, and are considering joining a union to provide themselves with collective bargaining as a way of protecting their interests and current compensation structure.

--There appears to be a lack of understanding by those in Labor leadership of how the going forward economic realities at the city level in California affects those they represent. They appear to be "looking for a fight." There are numerous examples of union leadership, such as the Auto Workers, the Steel Workers, the Airline Workers, where companies in decline or financial jeopardy have worked in good faith with people representing the workers to deal with how employees are affected with adjusted compensation packages and work force size. One can fault the likes of GM management, to cite but one, for inept management leading to loss of jobs for union workers, a point of view I agree with. While negotiations at a municipal level don't entirely compare, there are some lessons to be learned from what has occurred in US industry from a negotiation standpoint.

--Government employees at other levels have had their compensation and retirement packages restructured in recent years, reducing the obligation of their employers, and enhancing the retirement opportunities for the employees. With "grandfathering." My ex-wife is a federal government employee, whose medical and retirement package was significantly changed during the Clinton Administration. It still is really good, but it shifted some burdens, which is what I think the intent is here.

--My opinion is that Palo Alto is facing some structural problems on both the revenue and the expense side of the equation. On the revenue side, the "brand" Palo Alto is not going to get market share it may have had in the past, and consequently, will generate less revenue. This is not a current economy matter, it is structural. (It is potentially reversible, but it requires a huge change in how this City operates.)

On the expense side, we have a terrific set of employees who love to work for this City, and by and large are good and conscientious. They are caught up in a tide not of their making which calls for some serious course adjustments to how they continue to be compensated fairly. What made sense previously is up for question at this point, and those who represent them need to acknowledge that and proceed from that understanding.

We're all in the same boat.

What is it worth to you?


Posted by Walter_E_Wallis, a resident of ,
on Oct 4, 2009 at 8:12 am

Walter_E_Wallis is a registered user.

Once there was a lively South Bay sailing community - the Palo Alto yacht harbor. Behind the Birge Clark designed Sea Scout building, among a few larger craft, the masts of hundreds of El Toros cut the breeze as they awaited their afternoon skirmishes out around the Dumbarton railroad bridge, sometimes on a very high tide even tooting for that bridge to open for them. The South Bay had no better friends than those low budget boaters, as demonstrated when some of them blew the whistle on the raw sewerage discharge from the San Jose treatment plant. Some cynics believe it was that discovery that motivated the subsequent abandonment of small craft facilities South of Redwood City.

Posted by Dirk, a resident of ,
on Oct 4, 2009 at 3:38 pm


Yes, the problem is structural. Palo Alto is no longer a "brand", because it purposely defeated that brand. PA cannot be everything to all citizens, but it tries to be even more than that.

The Opportunity Center is a symbolic example of how PA wants to have it all: Prosperity along with taking care of street bums who are then enticed to set up camp in our Downtown. Somebody must explain to me why upscale shoppers want to shop Downtown, unless they are drunk night-lifers, if they are going to be accosted by these street bums. This is economic schizophrenia.

Palo Alto is renown for the "PA Process", which is abuntantly anti-business. Why would any business want to set up shop in Palo Alto?

The SEIU demands are typical of an aggressive union that wants what it wants. However, the CPA is very guility of giving in to those demands during flush times. Palo Alto has weak city council leadership, in general. Most of them just want to appear pleasing to various liberal causes. There have been a few exceptions, but very few.

Paul, you are beginning to bring some realism to the PA equation. Your captian/crew, on the seas, analogy is useful. However, if the captain is a recapitulation of the old model, the boat will sink. I think we need a captain that can avoid the storms, ahead of time. We don't need a captain that drives us into the monster waves.

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