New Yorkers don’t get what they pay for when it comes to government employees.
The issue recently sprang to life on Long Island: In Nassau, one of the first acts of the new Republican majority was to jack up salaries for legislative leaders more than $20,000 apiece for the top three officers.
Since the county’s budget woes were a big reason the GOP had won a majority, the public naturally screamed. Presiding Officer Peter Schmitt has promised to rescind the raises this month.
Of course, New York City taxpayers can complain that City Council members pull down at least $112,500 a year (and the pointless public advocate draws $165,000). But then, neither the city nor Nassau stands out as a stellar example of prudence with taxpayer money.
Actually, “big bucks for political incompetence” may be the rule. As the top three states for legislators’ base pay, the National Conference of State Legislators lists California, Michigan and New York. They’re also three of the states in the worse fiscal and economic shape right now.
And incompetence clearly extends to how these politicians pay others in government.
New York’s state and local government employees cash in nicely. The latest Census data (based on March 2008 numbers) has New York’s average state government pay as fourth highest in the nation — 16 percent above the national average. Pay for local government employees here tops the US average by 18 percent.
And those numbers don’t account for the lavish benefits that lawmakers dole out to these employees. As noted in a 2009 report by Unshackle Upstate (a group of businesses and trade associations), New York’s per-capita costs for public-employee pensions ranked highest in the nation in 2007.
Indeed, pension costs are exploding. In 2000, New York taxpayers paid less than most, per-capita, toward public-employee pensions — $79, vs. the US average of $143. But we’d moved above the national average by 2004. And in 2007 (the most recent Census data), New York’s costs ranked highest in America, more than double the national average — $486, against the national average of $242.
From 2000 to 2007, while national per-capita taxpayer contributions to state and local public-employee pensions grew by 69 percent, they exploded by 515 percent in New York.
Most private employers offer new hires only a defined-contribution 401(k) plan — but old-style pension plans (guaranteed income based on longevity and salary) are just about universal in New York’s public sector.
And it’s often not just a well-paid retirement, but an early well-paid retirement. As the Empire Center for New York State Policy has reported: “Government workers in the Employee Retirement System and the separate Teachers Retirement System can retire as early as age 55 with pensions equal to 60 percent or more of their final average salaries.”
Exploding pension costs (plus such benefits as health care) are a major reason virtually every government in the state is staring at a years-long fiscal nightmare.
Indeed, the entire system is rigged in favor of government workers. The state Constitution actually bans any reduction in existing government-employee pension benefits. Throw in the 1967 Taylor Law and the 1982 Triborough Amendment, and government-employee compensation packages can only be changed if the union agrees. Even when a contract expires, all step pay hikes and benefits are maintained.
On politicians’ pay, the public needs to serve as a check. Why not put all pay hikes for elected officials up for vote of the people?
But the larger public-sector pay problem won’t be solved until we elect politicians who’ll say “no” to the public-sector unions.
A few simple, reasonable changes would go a long way. For example, once a contract expires, freeze all compensation at the last year of the contract. Also, new hires should get defined-contribution retirement plans — just like most of the taxpayers they work for.
Assemblyman Michael Fitzpatrick (R-Smithtown) has offered legislation that would start this process by carving out elected officials and noncivil service, appointed employees from defined-benefit pensions — capping their defined-benefit plans and placing them in defined-contribution plans going forward.
Traditionally, a government job offered more security but lower compensation than private-sector work. In New York today, it means vastly greater security and better average pay — plus benefits that most taxpayers can’t even dream of.
Maybe the taxpayers should form a union . . .
Long Island-based economist and writer Raymond J. Keating is a columnist with Long Island Business News.