Some public sector union abuses are not only alive and well, but more egregious than ever. Connecticut state employees are retiring with pension benefits higher than their last salary.
How so? Tens of thousands of Connecticut state employees enjoy the unlimited right to spike overtime, namely work enormous hours of overtime just before retirement in order to boost pensions whose calculation includes overtime pay in immediate pre-retirement years.
And that’s not all.
Under Connecticut’s Democrat Governor Ned Lamont, unionized state employees have enjoyed six consecutive annual pay raises compounding to a whopping 33%. It is no coincidence that state employee wages have climbed the rankings to second highest among the states. Nationally, private sector pay has increased only 23% over this span. Recently, Lamont promised his union allies “every year I’m here, you’re going to get a raise.”
Perhaps we should not be surprised, since Connecticut’s public sector is the second most heavily unionized of the states. Yet, pensions higher than last salary?
That goes against the general trend gradually phasing out overtime spiking. In the most unionized public sector state, neighboring New York State, former governors David Patterson and Andrew Cuomo instituted moderate limits on the inclusion of overtime in pension calculations, beginning in 2010. Former Governor Jerry Brown eliminated it in California in 2012. Yet there is a move afoot in the Golden State to create a new supplemental publicly-funded union-run pension system for state employees. The unions never give up.
In Connecticut, Lamont’s predecessor Democrat Dannel Malloy ended spiking for workers hired after 2017. Yet, there are 28,000 pre-2017 hires still on payroll.
The Townsend Group, which I head, conducted a study for Nutmeg Research Initiative and Yankee Institute of overtime spiking in Connecticut’s Department of Correction. In each of the last five fiscal years, we identified the ten workers with the highest overtime pay. Eleven have retired. Their pensions averaged a stunning 138% of their last salary.
These workers retired almost immediately upon reaching retirement eligibility at 20 years of service. Why wouldn’t they if retirement brings an immediate 38% raise? Why work six more years to accumulate “only” 33%?
The starting pension of one worker was $153,000. As a benchmark for comparison, the maximum Social Security benefit for those retiring at 67 is $48,000. This worker is likely forty-something and will enjoy decades banking paychecks from subsequent jobs alongside her robust monthly pension. In her last full year on the job, this worker earned 80% more overtime pay than straight-time wages.
Under what kind of management – or mismanagement – could this take place?
In 2020, Lamont hired Boston Consulting Group to study state agency staffing and administration. BCG reported that rampant absenteeism was leading to widespread overtime. BCG noted that absenteeism was not just incidental or accidental, implying strongly that employees were gaming the system. BCG laid out various ways they could. There is a simple solution: allocate overtime evenly among younger and older workers.
With statewide overtime up from $312 million four years ago to $378 last year, clearly, the Lamont administration has not improved its workforce management nor achieved reforms in the last contract negotiations in 2022. Yet, negotiations are underway again, because the current wage contract expires in just days at this month’s end.
Republican Senator Rob Sampson introduced legislation to eliminate overtime from pension calculations. It died without a vote in this year’s session. He plans to reintroduce it next session. Yet its prospects are slim and none, with Lamont in office and union-friendly Democrats holding supermajorities in both houses of the legislature.
Yet, Republicans have also proposed another fix, namely a two-year wage freeze. This would moderate the fast-paced trend of wage increases, while also controlling rapidly rising pension costs since pensions are based on wages. Indirectly, this would somewhat moderate overtime spiking.
A wage freeze is not totally improbable. Lamont’s predecessor, Democrat Malloy, imposed three annual wage freezes.
Present circumstances militate in favor of a freeze. Lamont and Democrat legislators cut raises out of the just-adopted budget for fiscal 2026, because spending is barely within constitutional budget limits. Two months ago, Lamont himself imposed a hiring freeze for the remainder of this fiscal year to keep this year’s budget in balance through its end next Monday.
About a month ago, Lamont threw in the towel on this year’s fiscal challenge and declared a fiscal emergency in order to legally allow spending this fiscal year to exceed the cap.
The fundamental problem is the state is paying unionized state employees top dollar, despite being in the worst financial condition of the 50 states. This is unsustainable. This basic problem afflicts other blue states; unaffordable pay for public sector union workers is unsustainable.
Democrats are on the back foot. Republicans should press the case for a freeze. Malloy faced down the unions, why can’t Lamont? Why can’t he finally take BCG’s guidance and actually manage the workforce and clamp down on overtime spiking?
The original version of this column appeared in The Hill.