Dysfunctional

Tweet

A very informative editorial from the New York Times that gives you some idea of what is going in New York with public employee compensation.

The Times observes:

In all, the salaries and benefits of state employees add up to $18.5 billion, or a fifth of New York’s operating budget. Unless those costs are reined in, New York will find itself unable to provide even essential services. To point out these alarming facts is not to be anti- union, or anti-worker. In recent weeks, Republican politicians in the Midwest have distorted what should be a serious discussion about state employees’ benefits, cynically using it as a pretext to crush unions.

But after you read the editorial, you may actually come to conclude that the political power of unions could have something–maybe almost everything–to do with the problem. Here are some excerpts:

Negotiations begin this month, but so far union leaders have publicly resisted Mr. Cuomo’s proposals… Last April, in the midst of one of the worst financial crises that New York and the nation have ever faced, the state’s unionized workers got a 4 percent pay raise that cost $400 million. It came on top of 3 percent raises in each of the previous three years. These raises were negotiated long before the recession began, by a Legislature that routinely gave in to unions that remain among the biggest political contributors in Albany… During the same period, many private-sector workers had their pay or hours cut. Private-sector wages in New York dropped nearly 9 percent in 2008. In 2009, Gov. David Paterson pleaded with the unions to give up the raises to help the state out of its crisis. Union leaders attacked him in corrosive television ads, and Mr. Paterson eventually caved, settling for an agreement that reduced pension payments to new employees. The deal wasn’t enough to address New York’s serious fiscal problems… A clause in the state labor law known as the Triborough Amendment allows contract provisions for all workers to proceed until a new contract is reached… This clause, unique to New York, was a well-meaning attempt to give some balance to state unions, which by law are not allowed to strike and had no leverage to draw management to the table in flush years. The problem with the Triborough Amendment is that it gives the unions far less incentive to bargain, as we saw last year… In 2000, employee pensions cost New York State taxpayers $100 million. They now cost $1.5 billion, and will be more than $2 billion in 2014. Wall Street’s troubles are a big part of that. But so are state politics. The Legislature, ever eager to curry favor with powerful unions, added sweeteners to pensions and allowed employees to stop making contributions after 10 years… Unlike Gov. Scott Walker of Wisconsin, Governor Cuomo is not trying to break the unions. He is pressing them to accept a salary freeze and a reduction in benefits for new workers. The unions need to negotiate seriously.

But do they need to negotiate seriously. What incentive do they have? Reading the Times’s analysis, it appears that the public sector union relationship with the state is dysfunctional. Or maybe it is functional but only for one party.

Comments