Taxpayers Are Getting a Bargain with Public Employee Compensation

Red Jahncke claims that “the long-festering enormous problem of overly generous” benefits to state employees makes a “Connecticut Comeback” impossible.  Only by stopping the “gravy train” of “wildly overgenerous” benefits by slashing public sector compensation can Connecticut’s economy rebound.  But Jahncke’s premise is a fallacy based on falsehoods so blatant it’s shocking it’s difficult to understand why it was ever published.

Claiming they receive “dramatically overgenerous pension benefits,” Jahncke questions, “Why not reduce the benefits to national average levels?”  In fact, the definitive 2015 study of the state employees pension system (SERS) by consultants from the Center for Retirement Research at Boston College concluded that SERS’s “unfunded liability derives from legacy costs and funding shortfalls, not overly generous benefits to members.”  The report stated that “the cost of benefits provided to current employees is actually below (the national) average.”  That conclusion came before public employees agreed to substantial additional salary and benefits cuts in the 2017 SEBAC negotiations.  So not only do Connecticut state employees not receive “wildly overgenerous” pension benefits, their benefits fall well below the national average.  

Jahncke supports his demand for cuts in compensation by pointing to wage increases over the past two years.  However, he fails to acknowledge the massive cuts Connecticut public employees agreed to over the past decade.  Actuaries Cavanaugh McDonald estimated that unionized state workers agreed to give-backs under Democratic Governor Malloy that will total more than $24 billion over a 20-year period.  Moreover, a 2020 report by the Connecticut Office of Legislative Analysis forecasts that impending cuts in COLA’s and new mandatory contributions for health insurance premium share for employees retiring after July 1, 2022, will lead more than 20% of eligible employees, nearly 3,000, to retire before that date.  That impending “retirement wave” is expected to impact the state’s workforce so dramatically that Governor Lamont has engaged the Boston Consulting Group to help the state deal with the workforce contraction.

Jahncke claims that, “State employees have enjoyed a decade-long no-layoff guarantee, while hundreds of thousands of private sector workers have lost jobs.”  In fact, according to the state website, and reported by Hearst Connecticut Media, the state workforce contracted nearly 14% during the Malloy administration, reducing the state’s workforce back to the level of the  the 1970’s.  Indeed, according to Connecticut Department of Labor statistics, Connecticut’s total government sector workforce declined under both Governor Malloy and Governor Lamont pre-Covid by 10,000 workers to the lowest level in more than two decades.  A 2019 study in USA Today concluded that the state’s total public sector workforce relative to population ranks Connecticut 10th leanest in the nation, while Connecticut shrank its public sector workforce over the past decade by the second largest percentage of any state. By contrast, according to the department of labor, Connecticut’s private sector employment hit new all-time highs before Covid.

While offering no source, Jahncke claims that, “for more than a decade, state employee compensation has exceeded compensation in Connecticut’s private sector by about 40 percent, the biggest gap in the nation.”  That unattributed claim likely came from a 2015 report by the Yankee Institute asserting Connecticut public sector workers earn 25-46% more than comparable private sector workers. 

First, consider that the Yankee Institute is not a reputable source of research, but a right-wing, dark money-fueled, propaganda outlet associated with conservative North Carolina billionaire Thomas Roe’s State Policy Network.  Roe’s particular objective, as revealed in Jane Mayer’s book, “Dark Money,” was the destruction of public sector unions. 

In a meticulous analysis for the respected Economic Policy Institute, Monique Morrissey debunked the Yankee Institute report, revealing it was based on a cherry-picked sample of workers, used nonstandard control variables, and inflated the cost of retiree benefits in the public sector, while minimizing their cost in the private sector.  Morrissey concluded that Connecticut public sector workers without college degrees are compensated somewhat more than those in the private sector, while those with college and graduate degrees are compensated somewhat less than in the private sector, even when factoring in more generous public sector benefits.  In short, Morrissey writes, “taxpayers are getting a bargain!”

Last, Jahncke misleadingly claims that, “SERF and TRF are drastically underfunded, recently as the result of both Lamont and his predecessor, Dannel Malloy, reducing state contributions to SERF with the full approval of union leaders.”  Though the pension funds are underfunded, both Malloy and Lamont have, for the first time, fully funded the state’s required pension contributions each year in office, while scrupulously enacting the Boston College consultants’ reform prescriptions.  The changes in contributions resulted from the extension of the amortization period by 30 years for both funds, as recommended in the Boston College report.

Jahncke’s op-ed is riddled with falsehoods. Connecticut taxpayers are getting a bargain!

Sean B. Goldrick
Greenwich, CT

After a career in international finance, specializing in Asian equities and corporate analysis, Goldrick’s opinion writing has appeared in a variety of publications including the Washington Post, Providence Journal, The Day of New London and Hartford Courant.

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