City of Maywood Lays Off All Government Workers

Maywood, California, a small bedroom community just outside of Los Angeles, may soon be viewed as the poster child for how to deal with the budget deficits faced by states and municipalities across the country.

"Tiny Maywood, Calif., laid off every single one of its city employees on Wednesday.

But that doesn't mean the city is closing up shop. City Hall will still be open, as will Maywood's park and recreation center. Police will continue to patrol the streets.

They just won't be staffed by Maywood employees. The city can't have any staff because it can't get liability or worker's compensation insurance for them. Maywood's carrier, the California Joint Powers Insurance Authority, dropped it earlier this month in part because of several police-related claims.

Instead of declaring bankruptcy, Maywood officials decided to outsource all city functions. The Los Angeles County Sheriff's Department will patrol the streets, while the neighboring city of Bell will cover other city functions, such as staffing City Hall.

Maywood already relies on contract workers and outsources many city services. The director of parks and recreation, for instance, is a contractor, and the city's lights, landscaping and street sweeping are handled by private companies. Los Angeles County maintains the library and fire department."

It is notable that Maywood is making this change not necessarily to slash costs but rather due to its inability to obtain insurance coverage at an agreeable price. Seems that the local police force has been a little, ahem, overzealous in enforcing the law.

The massive budget deficits that have occurred at the state level are largely due to excessive pay and benefits that have been lavished on state workers. And it's no surprise why this has been the case. Public employee unions tend to vote as a block, so any state lawmaker who wants to be reelected knows he or she has to make nice with the union.

The big upside for state governments across the nation is that fixing the pay scale and the cost of service they provide goes a long way towards fixing the budget deficits.

From my perspective, there does not seem to be a reasonable objection to Maywood's move.

Public employees across the country have so completely overreached in recent years in demanding significant pay increases and outsized pensions, that any cries about the dislocation this wholesale change will cause should fall on deaf ears.

To the extent that society has an interest in ensuring a particular service is provided, it does not follow then that the government itself has to perform that service. Contracted labor is just another means of providing the service, and because the labor can be purchased in a competitive process from potentially multiple providers, as opposed to a single entrenched bureaucracy, it should reduce the overall costs and in effect give a tax cut to the citizens that ultimately have to fund these costs.