“No, layoffs are not something we would ever consider,” said former Connecticut House of Representatives Speaker Moira Lyons (D-Stamford) in November 2002, in response to a reporter’s question about laying off state employees in order to close the state’s budget deficit.
“I get 100 people applying for these jobs, and once someone is in, they don’t leave. They retire,” said John Boland, personnel director for the City of Milford, Connecticut, commenting in September 2005 on the availability of janitorial positions in his town.
“You’re talking about something that is not going to take place,” said Mayor Maryann Welcome of the Town of Winchester, Connecticut, responding in January 2005 to a taxpayer group’s request that the town ask its employees for benefit concessions.
Government Jobs Boom
While job creation in the nation has rebounded strongly since the recession at the turn of the century, in some states the employment picture remains grim. In Connecticut, private-sector employment has yet to regain its July 2000 peak. Looking back farther, the Federal Deposit Insurance Corporation recently found that since the early 1990s, “no other state in the country has had such stagnation in employment.” Even worse, median household income in the Nutmeg State appears to be falling.
But a recent study conducted by this author for the Yankee Institute, a free-market think tank based at Trinity College in Hartford, discovered the state and its 169 municipalities boosted their government workforces substantially in recent decades. Connecticut has lost half of its manufacturing jobs in the past few decades, but the public sector is a growth industry. Between 1970 and 2000, employment in state government grew six times faster than the general population, and municipal employment grew four times faster than population.
Compensation for most public-sector positions now outstrips that of similar work in the private sector. Benefits–health insurance, retirement income, paid leave, etc.–are also superior to those offered by the vast majority of private-sector employers.
This disparity parallels the dramatic difference in the rates of unionization between the government and private sectors. Just under 88 percent of state employees are covered by collective-bargaining agreements, and the percentage is similar for municipal work. By contrast, unionization in Connecticut’s private workplaces is 8 percent, down from a high of 24 percent in 1970.
Public Serves Public Servants
U.S. Bureau of Labor Statistics (BLS) data show that for the most part, state and local government employees in Connecticut receive higher pay than their counterparts in the private sector. In the Hartford Metropolitan Statistical Area (MSA), mean hourly earnings for public-sector employees are 37 percent higher than for private-sector workers. The story is the same in the New York City MSA, which includes numerous Connecticut cities and towns. There, the advantage is almost 15 percent.
Health care coverage in Connecticut government is also more generous: The public sector offers this benefit more commonly than private-sector employers do, and the employee-paid portion of health care premiums is significantly smaller. There is also strong anecdotal evidence that public employers in Connecticut offer higher quality plans–e.g., broader coverage of health problems and lower co-pays.
Pensions Pose Big Burdens
All state and most municipal employees participate in a defined-benefit pension plan–guaranteed income based on length of service and salary at the time of retirement. Defined-benefit pension plans are disappearing in the private sector, where 401(k) plans are now the norm, but in Connecticut government employment they are the norm. (Nationally, nearly half of all workers aren’t offered pension benefits of any kind.)
Connecticut’s teacher-retirement fund has a $5 billion gap between assets and liabilities. The unfunded liability for all state employees is $7 billion.
Unlike the use-it-or-lose-it policy of the private sector, it is common for unused sick and vacation days to be “purchased” by Connecticut’s government entities when employees retire. A 2005 investigation by the Republican-American, a major Connecticut daily newspaper, discovered retiring teachers in the City of Waterbury’s school district “are owed an average of $38,542 each for unused sick days. That money, to be distributed over three years, totals $7.2 million–enough to fund salaries of 182 entry-level teachers at $39,569.”
D. Dowd Muska ([email protected]), the Yankee Institute’s Philip Gressel Fellow for tax and budget policy, is the author of “The Two Connecticuts: Public and Private Employment in the Nutmeg State.”
For more information …
“The Two Connecticuts: Public and Private Employment in the Nutmeg State” is available online at http://www.yankeeinstitute.org. A hard copy may be obtained by calling 860/297-4271 or emailing [email protected].