One day, I received a phone call out of the blue from the Chicago Federation of Labor asking if I could help it put together a study on how to cut that city’s budget. This is not the usual union request—nor is it the usual efficiency study I get asked to conduct. But Rahm Emanuel had just been elected mayor and had set about slashing city spending, privatizing services, and reducing the city payroll. And he issued a challenge to the city’s unions: If you don’t like my plans, come up with another way to save as much taxpayer money.
And so they did. My favorite example: Construction workers repairing sidewalks were working the standard eight-hour shifts, five days per week. Pouring a load of cement, though, takes about five hours to complete, meaning they could only pour one load per day, or five per week. If the city went to a 10-hour, four-days-per-week schedule, however, as the unions suggested, the crews could pour two loads per day, eight per week—a 60 percent increase in productivity at no additional cost and with savings on fuel and equipment rental.
Under the leadership of Jorge Ramirez, the unions worked with my firm to develop a plan to save $242 million a year. It included many proposals like the new schedule for pouring sidewalks. But the whole plan started with $40 million from something called “managed competition,” in which public employees compete against private-sector firms for contracts to provide government services.