Over the last few weeks, the battle over New Jersey public employee pensions and health benefits has been fierce.
Last week, the workers wound up the losers.
The issues often are portrayed as simple ones—the unions are bullies who strong-armed state or local employers to get cushy perks for their members, or the governor and Legislature are the bullies stealing hard won benefits and collective bargaining rights from poor workers.
It’s actually much more complicated than that.
Way back 20 or 30 years ago, there was pretty much no doubt that New Jersey’s public workers on a whole were low-paid compared with people in the private sector. If you went to work in a public job, it was for the benefits, particularly for a good pension.
Then came Gov. Tom Kean’s $18,500 minimum starting salaries for teachers, which had a ripple effect into other jobs. Good times followed and teachers were getting pay raises approaching double digits. Other unions sought similar salary hikes.
Today, there are districts where a 22-year old fresh out of college can make $50,000 teaching from September through June. In 2009, a probationary patrolman in Chatham Township with no experience started at $55K and got a $1,000 bonus for having a bachelor’s degree. State agencies employ about 75 people working as public information officers, earning anywhere from $55,000 to six figures.
So how do public worker salaries compare with the private sector today and what does that mean for other benefits?
Unfortunately, no seems to be able to agree on the answer.
A report by the Center for State and Local Government Excellence and the National Institute on Retirement Security found that both the salaries alone and the total compensation, including more generous benefits, of state and local workers are lower than those of comparable private sector employees.
But Bureau of Labor Statistics data from 2009 shows that the average government worker made about $2,400 more than the average private sector worker.
But the same data shows that an accountant working in the private sector earned about $7,000 more than a local government accountant.
But one University of Michigan researcher says public sector wages rose 42 percent in the 2000s, compared with 32 percent for private sector wages.
And so on, and so on.
What seems clear is that pay for public workers, particularly those in unions, has kept rising while many in private sector jobs have had to deal with wage freezes or layoffs. Only very recently have public workers agreed to pay freezes or lost their jobs.
Fewer and fewer private workers today have the luxury of a traditional pension, and if they do, there is no guarantee their employer won’t freeze or cut its benefits before they retire or after. Public pensions, on the other hand, are sacrosanct.
Taxpayers are jealous.
But is that any reason to impose the kind of large pay cuts–and forcing workers to pay more for their pensions and health benefits is a pay cut–that a majority of lawmakers just approved, and that Gov. Chris Christie is likely to sign?
Under the legislation, workers would have to pay as much as an additional 2 percent of salary to fund their pensions and several thousand dollars, depending on their pay, for family health insurance.
If you are of a certain age, you remember when everyone had a traditional health insurance plan, which allowed him to go to any doctor without need of pre-certifications, and he paid little or nothing for it. That’s the first health insurance I had as a full time, private sector worker in a low-wage reporting job.
Today, it seems, everyone is stuck in an HMO or PPO with all sorts of rules and limitations and is paying on average 30 percent of the premium for a family policy, or $4,000 a year, according to the Kaiser Family Foundation and Health Research & Educational Trust. How we got here is a complex national problem that President Barack Obama’s health care reform did not fix, and Congress does not seem to want to try to tackle.
How New Jersey’s pension funds became so deeply underfunded, however, is an easier question to answer. It includes legislators of both parties handing out pension enrichments to individuals and groups as freely as candy on Halloween while at the same time governors starting with Christie Whitman in the 1990s up to Chris Christie last year refused to make the necessary payments into the system, and sometimes told local governments they didn’t have to make any payments either. The result, according to the New Jersey treasurer, is a $54 billion unfunded liability that was the fault of local workers only in that they sought or agreed to higher pension payouts.
Now they are the ones suffering.
Reminds me of what happens in corporate America. The CEO of a national corporation is desperate to make the bottom line attractive to investors so he cuts staff at local offices. The local offices put out a smaller and less attractive product and lose customers. Income drops. To save the bottom line, he cuts more staff, thousands of hard-working relatively low-paid employees over the period of a couple of years. The product keeps suffering, the customers keep abandoning it. And for this, he receives $9.4 million a year in pay and stock options, not to mention the other perks of office.
The average worker just can't catch a break.
If you want more details about the legislation, you can find an explanation here.
Colleen O'Dea is a writer, editor, researcher, data analyst, web page designer and mapper with almost three decades in the news business. Her column appears Mondays.