President's Perspective

Sharing the pain

by Randi Weingarten

Apr 2, 2009 3:43 PM

As we went to press, our state leaders protected schools, health care and other core services in the new state budget while at the same time rejecting — at least for the moment — a new Tier V, which would have been a step in the wrong direction for working families all across the state. The budget was made possible because our elected representatives understood they had to protect kids, seniors and the most vulnerable, even when times are tough. And they were helped by the federal stimulus package and a new progressive income tax, both of which UFT members had fought for since October, and which provided enough revenues to offset major cuts.

Don’t get me wrong: This remains a very tough budget and we will still have a fight in the city. However, we are continuing to successfully run this budget marathon and, heading into the last few miles, our two goals are as always protecting children’s services and our members’ economic security.

Still, as the seriousness of the nation’s economic decline becomes more pronounced, the city will continue ramping up the pressure for cost-saving concessions from its employees. Included among the city’s demands were worker contributions to the premiums for the basic health plan and a reduced-benefit pension tier for new hires. Last week the unions responded, rejecting those actions but proposing equal savings in ways that would not diminish benefits.

Harry Nespoli, president of the sanitation workers union and chair of the Municipal Labor Committee, and I also wrote the following opinion piece to counter the oft-repeated but false allegations about the supposedly “overly generous” benefits of city employees. I thought it was important for our members to know the facts:

Amidst the current economic uncertainty, myths are circulating about the pension programs and health insurance for municipal workers. These myths not only misrepresent the problems, they stand in the way of finding realistic solutions.

Myth 1: Shared Sacrifice?

Critics have attacked the unions for not quickly agreeing that their members should be shouldering some of the burden like other New Yorkers. They seem to ignore the fact that municipal workers, like all residents, face higher taxes, increased transit fares, higher college tuition, destroyed asset values and reduced public services. Moreover, in the face of service cuts we are working harder and with fewer staff to maintain the quality of life all New Yorkers deserve. Shared sacrifice should start with those most able to contribute. That means at least on a temporary basis those who are doing well should reach a little deeper for those who are struggling.

The municipal workers neither caused the economic crisis we find ourselves in, nor did they profit from it. Our wage increases, indeed all our salaries by name, are public record. Between 2003 and 2007, when the average salary in the securities industry grew by 76.2 percent — more than four times faster than the non-financial sectors (17.8 percent) — municipal salaries increased 11.7 percent.

While it is true that the current economic crisis will require collective sacrifices on the part of all New Yorkers, it is wrong to use the current problems as justification to target cuts at the pensions and health insurance of hard-working municipal employees who have historically been willing to help New York through grim times.

Myth 2: Gold-plated pensions and health insurance

The city has argued for shared sacrifice in the form of a fifth pension tier with reduced benefits for new employees. Although the mayor claims that this would have a first year savings of $200 million, the city’s own Independent Budget Office has shown it would save only $35 million in the first year.

Despite the predilection of critics to inflate pension numbers to bloated proportions with rare examples of high payouts, in reality the average NYCERS (the largest system) annual pension payout is $24,437 and 77 percent of retirees had over 20 years of service.

Effectively, pensions are deferred wages and one way for municipal workers to achieve a middle-class quality of life for their families and have a sense of long-term parity with the private sector. They are an instrument to ensure lifetime middle-class security, not to buy expensive McMansions, cars and vacations.

City workers contribute part of their salaries to fund their pensions, in some years exceeding the amount put in by the city. For the largest New York City system (NYCERS) the members contributed on average $328 million per year. And when stocks saw a windfall, the city put in even less — the city cost for NYCERS averaged just 1.7 percent of payroll in the six years 1999-2004. It is the recent asset meltdown caused by Wall Street that has increased the city cost.

To pretend our health insurance benefits are outrageous is also another way to demonize. The benchmark is a low-cost HMO and municipal workers face a myriad of co-pays, deductibles and a restrictive panel of providers. If employees want more expensive insurance than the benchmark HMO they have to pay more.

The problem is not hard-working employees who receive insurance; it is the businesses that don’t do their fair share and pass the costs of the uninsured to those with coverage and the taxpayer. Shared sacrifice should start with those entities that are now contributing a big zero and letting everyone else pay.

Myth 3: The unions have offered nothing

The unions have taken the first step by offering concrete ways to reduce the city’s health care cost by $160 million in FY 2010. The city’s response: not enough and escalating threats usually delivered through the media.

Contracts, including important health insurance and pension provisions, have been negotiated in good faith by City Hall and municipal unions as part of collective bargaining agreements that met the needs of all parties. Public sector contracts are long-term commitments made in return for years of service by dedicated employees who keep the city running. The promises on both sides were kept during boom times; they must be maintained during difficult times.

Pensions and benefits are not perks. They are not the private jets and country club memberships of corporate executives and the Wall Street crew. What has happened in the private sector is a disgrace. To use it as an excuse to weaken the social contract between the city and its dedicated workers — who have been the backbone of the five boroughs for decades — would be counterproductive to the very taxpayers the city is supposedly trying to help.

The bottom line is labor unions and their members will help the city solve its problems, but they did not cause the global financial crisis. Right now, they are doing more with less to keep the city running. Don’t look to them to bear an unfair share of the burden. For it is those taxpayers that rely each and every day on the services the city work force delivers.