> Don't federal and state workers effectively have tenure? Isn't it
virtually
> impossible to fire a government worker covered by civil service in
America?
>
> DBL
>
It's hard to fire government employees, especially civil service employees,
partly because we wanted to remove most of these jobs from the political
spoils system. Another factor is that government's top management does not
worry about their "firms" going out of business nor do they expect to
maximize their own profits or careers by maximizing production or minimizing
costs. They know they can better get their customers to shell out their
votes and campaign donations by promising more services than by cutting
costs. There is a more limited or less enthusiastic market for
cost-cutting. Also, making government employees' jobs seem less secure will
tend to lose them the votes of government employees, and that is a lot of
votes.
For education, because supply of teachers tends to exceed demand, tenure
will naturally have great appeal for prospective employees. If some
colleges or universities decided to eliminate tenure, by how much would they
have to increase pay or costly fringe benefits to attract and keep the best
talent?
Private employers have occasionally tried something like tenure--it has been
widely aspired to in Japan since WW2 (although only the larger employers
have been able to apply it in practice) and IBM was for many years famous
for the degree of employment security it offered--but the cost-pressures of
a highly competitive marketplace have eroded these policies. Some business
management theorists believe that lifetime employment policies were one of
the secrets to the management success of Japan's better corporations.
Certainly, some firms (as well as some non-profits) must find that, under
the right circumstances, employment guarantees offer substantial benefits to
employer as well as employee. Otherwise, such policies would be even less
common than they are. Tenure-type practices seem only to be workable when
the organization has ways to buffer itself from extreme swings in financial
conditions. Educational institutions, in addition to government and
private subsidies, may have large numbers of untenured personnel who could
be "sacrificed' in a financial pinch. Big corporations typically have
access to generous lines of credit at favorable rates, and, in Japan,
usually employ large numbers of temps who can be dismissed in hard times.
(To buffer its own employees, the government can either sell bonds or raise
taxes during tight periods.)
When lifetime employment is viable for the hiring institution, it is a
cheaper way to attract and maintain the best talent, it makes it
economically feasible to invest heavily in employee training, trade secrets
or other sensitive information is more secure, skilled personnel are not
lost during cyclical downturns, and employees will offer less resistance to
innovation, automation, and re-organization. One downside is that fear
becomes a less effective motivator; but the most serious downsides are that
the cost of retaining employees during cyclical downturns may not be fully
compensated for during cyclical upswings, that structural adjustments may
make some employees permanently superfluous, and that the cost of retaining
employees during a downturn may lead to a liquidity crisis before the cycle
turns up again.
One area where tenure is very common is in family businesses. They can use
flexible wages, minimal debt, and the option of flexibly redeployeeing
"personnel" (family members) elsewhere during a crunch. The joint
household, a fairly common institution in India and some other parts of the
world (although rare in European cultures), might be viewed as an economic
institution with tenure-type "employment" policies. Are there any studies
of the economics of joint households (or communes such as those of the
Hutterites)? If so, they might shed some further light on the conditions
necessary for tenure systems and lifetime employment policies.
~Alypius Skinner
