Saving Money and Public Worker Unions

As the various States and the Federal Government look to cut costs one of their biggest issues is their current contracts with their employees. Many states, like Pennsylvania and New York, signed new contracts last year basing them on what turned out to be inaccurate economic projections. In the City of Philadelphia’s case many contracts are up for negotiation as they signed one year contracts last summer. The Philadelphia Inquirer reports that both Mayor Nutter’s administration and the Unions are already maneuvering for this years contract signings. Like many other municipalities and states one of the key issues is employee contributions to health care premiums. Unlike most private sector employees civil servants have tended to pay very little of their premiums. Of course the cost of these to the governments has gone up considerably over the last few years. Many governments would like their workers to pay a greater share. As Mayor Nutter says “If you look at what goes on in the private sector and in other public-sector jobs,” he said recently, “our employees pay much less for the overall cost of health care than many other citizens who are paying the tab.” Unions obviously want their members to pay as little as possible. If the costs of individual employees cannot be lowered that will then lead to layoffs and reduced services or an attempt to increase revenue.

There are no easy answers to this issue. In California Businessweek is reporting that as part of a tentative deal with the largest union, the SEIU, representing state workers that the recent furloughs and pay cuts will not be counted toward the workers pensions. This keeps up the amount that they will eventually pay out. The contract also does not increase the employee contribution. While this will keep the union and its members happy it does increase the potential liability for the pension system. Unfortunately, like the defense budget, the biggest part of most government spending these days is on people — salaries, benefits, pensions and retirees. In order to save a lot of money there need to be cuts made to these areas. As discussed above the unions representing these workers will fight proposed cuts and without a strong effort of accommodation by both sides no meaningful progress can be made.