Public Workers Feel No Pain In Recession

“It’s hard to believe there’s a recession,” a friend recently observed, as he navigated the jam-packed parking lot at a suburban Albany shopping mall.

While private-sector workers in the capital region have, in fact, suffered like everyone else during the downturn, many of those cars likely belonged to the favored not-so-few: state employees.

New York’s statewide unemployment rate in January hit 9%, the highest level in 26 years. New York City’s rate was 10.6%. In addition, untold thousands of New Yorkers have seen their hours or wages slashed, their health benefits cut, and their retirement accounts plummet.

But in New York’s capital region, the unemployment rate most recently stood at 7% — and around Albany, involuntary joblessness is mainly a private-sector phenomenon.

Unionized state workers (94% of the work force) got 3% raises last year and are scheduled for 4% raises in April. The average employee earns $63,750 plus fringe benefits, according the state budget division. Those benefits average about $28,000 per employee.

The state government — including its two public university systems — had 228,595 full-time-equivalent employees in January, down 3,640, or 1.6%, from the previous year, according to the state comptroller’s office. This decrease was achieved mainly through attrition, not layoffs.

Health, dental and vision benefits are untouched. Retirees still get heavily subsidized health insurance for life — even after only 10 years on the payroll. And, despite a precipitous drop in the state pension fund, employees and retirees will feel no pain, because the state Constitution requires taxpayers to backfill any investment losses.

Elsewhere, state employees have shared the burden, in turn helping to close massive gaps, save jobs and improve their state’s economies.

For example, Connecticut state workers, seeking to avoid layoffs, agreed to a one-year wage freeze, seven unpaid furlough days and higher employee health insurance contributions. New Jersey civilian workers agreed to 10 unpaid furlough days and deferral of a cost-of-living increase; state police and corrections employees opted for a one-year wage freeze.

In these neighboring states, public employee unions negotiated savings through the collective bargaining process. They concluded it was better for every union member to make a relatively small sacrifice than to throw thousands of young co-workers onto the unemployment line. In other states, governors have imposed pay freezes, layoffs or payless furloughs on recalcitrant unions.

But here in New York, the state government’s largest unions — Civil Service Employees Association (CSEA) and the Public Employees Federation (PEF) — last year rejected Gov. Paterson’s call for a wage freeze and a five-day pay lag, which would have saved $300 million. Late in the budget process, Paterson threatened to lay off 8,700 union members.

The governor then backed down. In June, the unions agreed to let Paterson offer a $20,000 voluntary buyout to up to 4,500 employees — a deal fewer than 2,000 accepted. The unions also promised not to lobby against Paterson’s modest pension “reform” proposal, known as Tier V. In exchange for these small potatoes, Paterson took the unprecedented step of promising not to lay off any members of the CSEA or the PEF for the rest of his current term, which ends Dec. 31.

Last month, facing a budget gap now estimated at $8.2 billion, Paterson again called for a five-day payroll lag. He also wants to delay or reduce (not freeze) the 4% raise scheduled for April. The two measures would save $250 million. (Paterson, as he did last year, is canceling raises for 12,000 non-unionized employees, saving $28 million.)

But without the threat of layoffs to back him up, the governor has no leverage. Besides, a pay lag and salary deferral would merely push costs into the future. That’s also true of his plan to “amortize” sharply increased pension costs over a 10-year period — which will reduce a 52% annual increase in pension contributions to a still-whopping 33% increase.

The state’s propensity to shift costs to future taxpayers is best illustrated by its promise of lifetime health insurance for retirees. Retiree health benefit costs, which grew nearly 11% annually over the past decade, are funded on a pay-as-you go basis. As a result, New York state’s retiree health insurance promises amount to a $55 billion unfunded liability for the future.

Paterson’s budget would put a miniscule dent in that liability by requiring retirees over 65 to pay a small portion of their Medicare Part B premiums, saving taxpayers $30 million in fiscal year 2011-12. But the state could save four times as much by requiring retirees to pay their entire premium, a common practice throughout the private sector.

Even if the Legislature approves the governor’s plan to trim the payroll by another 600 workers (primarily by attrition), taxpayers would spend about $19 billion on the state work force in 2010-11.

Despite all the cars at the suburban Albany shopping mall, there is a recession out there. It’s time for public employee unions to make common-sense concessions — or risk the growing ire of other New Yorkers.

This piece originally appeared in New York Post

This piece originally appeared in New York Post