A Double Standard We Can’t Afford

Imagine working for an employer who pays a salary 30 percent higher than you would make elsewhere, with fringe benefits that are 70 percent better. Then suppose you had a legal guarantee that your salary and benefits would keep going up, even if your contact expires, no matter how bad the economy gets.

That’s a deal most of us might dream about having. But for government workers in New York – alone among the 50 states – it’s a reality that creates a double standard. While workers in the private sector shoulder more of the burden for their health care and retirement, public employees receive benefits from New York taxpayers that keep getting richer.

· Public pensions cost $486 for every state resident in 2007, the highest in the nation. Most private-sector workers have a 401 (k) or other defined contribution plan, if they receive any retirement benefit.

· Public workers get 90 to 100 percent of health insurance premiums paid by their employer; the average for private-sector health insurance is 70 to 80 percent.

· Government employees also get more paid time off than people who work in the private sector. Some can be paid for 365 sick days in a year, plus vacations and holidays!

When benefits like these were first put in place, they were part of a general understanding. Government jobs paid a little less than those in the private sector, so fringe benefits would be a little better.

Today, however, state and local employees nationwide make 33 percent more than private-sector workers across all job categories. Across Upstate New York, comparing just full-time workers, the difference is 10 percent – an average salary of $47,036 for public sector workers, compared to $42,798 in the private sector.

New York’s double standard is detailed in an important new report available at www.unshackleupstate.com. Unshackle Upstate is a coalition of 75 business and trade organizations representing about 1.5 million private sector employees, and was co-founded by the Buffalo Niagara Partnership.

The report’s intent is not to criticize the public employees who teach our children, protect us from crime and fire and provide dozens of other services. They deserve the fairest compensation we can afford.

In many other states, however, public employees have accepted pay or benefit reductions in response to the recession. These unionized government workers, like many in the private sector, have negotiated to support the financial survivor of their employer in hard times.

In New York, unique legal guarantees give public employees little incentive to negotiate. Because of a 1982 law called the Triborough Amendment, employee pay and benefits increase indefinitely under terms of the expired contract. The Taylor Law, enacted in 1967, guarantees that fringe benefits can’t be changed unless both sides agree. Elsewhere, employee pay and benefits are frozen in place if a contract expires before the new one is negotiated. Here,
Maintaining these unique legal protections in today’s economic climate is fiscally reckless. Deficits are rising as far as the eye can see, revenues are falling, and New Yorkers already pay the highest state and local taxes in the nation.

Since labor costs account for 75 percent of government spending, fixing the double standard is the elephant in the room. Recognizing that employee compensation is a sensitive issue – and that we want to compensate public employees as fairly as possible -- legislators must deal with it to put New York on a sound financial footing. The fixes the Partnership and Unshackle Upstate continue to fight for:

· Change the Taylor Law and Triborough Amendment by freezing salary and benefit levels to the last in-contract year for public employees.

· Create a new Tier 5 in the retirement system for newly hired employees, shifting from a defined-benefit pension to a defined-contribution plan, like most of the private sector.