The public sector’s fair share of risk

This opinion piece was published in The Oregonian on Tuesday, May 31st.

Risk is the fundamental difference between working in the private sector and working in the public sector. Two recent editorials in the Oregonian (Running a business is hard work, Oregon’s fiscal crisis: a budget built on illusions) point out that the public sector does not know these risks and is not restructuring to accommodate the elastic economy, glossing over the fact that the public sector treats risk differently in good times as well as bad.

My business partner and I run a nine-employee tech startup and know the stress of coming up with payroll every single month. I pay several of my employees more than I make in order to attract the right talent, and I will be the first to go without a salary if the money does not add up at the end of the month. I also know that if I work very hard, make good decisions and build an exceptional team, my company can grow without limits and my salary will grow with it. Financial opportunity and potential for failure are two sides of the same coin: risk. I am a daring entrepreneur. Much of the day-to-day work is mundane, but occasionally I sit down with my team and we make a decision that will make or break our organization. The risks are stressful, the opportunities are enormous; this is the exhilarating private sector.

My parents, on the other hand, chose to be public school teachers, and they always knew that their only opportunity to become rich was to change careers. We always had food on the table, and we always had health care. My parents knew that they would be taken care of in retirement. They chose a career with fewer risks and fewer financial opportunities so that they could enjoy a secure lifestyle focused on family, the outdoors and athletics, as well as doing something for community in The Dalles.

Nearing retirement now, they have lived through several economic booms that made many Oregonians rich, but as public employees my parents did not get to say, “Hey, school board, Oregon’s economy grew by 7 percent this year. Do you think you could put a large Christmas bonus in my retirement account?” It simply does not work that way in the public sector. They get paid the same when a class is unusually large or difficult, no matter how strong the economy is that year.

Many in the private sector will say, “I also lived through boom times and my business did not expand,” or “I did not receive a bonus from my employer.” I can just as well tell you that my organization is growing right now, despite the tough economic climate. The fact that specific individuals and organizations in the private sector are or are not able to take advantage of opportunity or insulate themselves from risk says nothing about the fact that those opportunities and risks did exist in a way that they simply do not exist in the public sector.

Every day Oregon’s private sector steps up to the plate, swinging for the stars. In the most recent fiscal crisis, an awful lot of us struck out — that failure is why we had to tighten our belts and restructure our companies. Seeking profits too great, we took risks too great, and the chickens came home to roost. The public sector never took imprudent risks because it did not have the potential for payoff anyhow. Asking those public sector workers now to take their fair share of cuts overlooks the fact that they already did; they forfeited their opportunity to create a large private nest egg when they chose to serve the public.

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