Girard Miller is the Public Money columnist for GOVERNING and a senior strategist at the PFM Group.  In a recent article Miller stated, “So the compensation system is clearly dysfunctional here. We have massive labor supply and no demand, yet public employee compensation and benefits remain “sticky downward” as the great economist John Maynard Keynes observed.”

Miller is proposing that the arbitration methods have led to a strong downward decline in the ability to offer compensation packages that make sense in the long term.    As an example Miller points out what has happened in California:

“If you look back at how California got itself into its current pension mess, a lot of it came from the “me-too” bargaining strategies of public safety unions that worked their way up into irrevocable pension formulas, granting them lifetime income at 3 percent of salary times years of service once they reach age 50.”

In the end Miller is looking for drastic changes in the arbitration rules simply because as a nation we will be looking at dire circumstances unless these changes happen.  Miller finalized his thoughts with, “Something has to change in the states’ arbitration laws, or we will find ourselves becoming more and more like Greece and other European states that have dug themselves into inescapable financial holes.”

To read the entire article:

The Arbitration Game