Is Lamont about to buckle to the unions?
Governor Lamont is negotiating a new wage contract with the State Employees Bargaining Alliance Coalition that, I expect, will award state employees significant future wage increases as well as generous modification of the cost-of-living-adjustments to their pensions after their retirement.
Any new wage hikes and benefits would come on the heels of big wage increases in 2019 and 2020 under the prior contract that expired this past summer. Nothing ever stands in the way of the ever-increasing generosity of state employee compensation.
Nothing. Not this week’s data release showing that the median American household saw its income fall 2.9% last year while Connecticut state employees got a 5.5% wage increase.
Nothing. Not the fact that Connecticut has the worst labor market conditions of the 50 states, with the biggest contraction in its workforce (about 6%) during the ongoing pandemic and a top-ten unemployment rate, currently exceeding 7% versus a national average nearing 5%.
Consistently, studies show that the compensation of Connecticut state employees exceeds average private sector compensation by one of the highest margins of the 50 states – the very highest in several years.
It is unsustainable, and, more plainly, unjust and unfair. Virtually everyone in the state knows the situation and feels that it is unfair. That includes Governor Lamont, who said exactly that in June 2020 when asked about the pay raise to take effect just days later on July 1.
So why would Lamont do something so patently unfair and so politically toxic as awarding pay raises to already overcompensated state workers while most Connecticut citizens and voters have been – and still are – hurting very badly?
Why? Because the state is facing a massive retirement wave, which, if mishandled, could cripple state government.
Last March, in a report that received relatively little media coverage, Boston Consulting Group documented that 27% of the state workforce (its so-called “executive workforce”) is eligible to retire before June 30, 2022 and that about three-quarters intend to retire before that date, according to an official survey. Thirty percent intend to leave the state upon retirement.
The report documented that the sclerotic state bureaucracy takes an average of 33 weeks to hire a new employee. With only 41 weeks remaining to replace the 6,000 retiring employees, the Lamont administration is fast approaching a severe staffing crisis.
The easiest way out of the crisis is to keep employees on board by offering them generous pay and benefit incentives.
The practical alternatives are suboptimal. Lamont could rehire retired workers as consultants or independent contractors, but, then, he would be paying the equivalent of ongoing wages in the form of consulting/contracting fees as well as funding retirement benefits.
Secondly, he could outsource functions, but the state already pays outside providers an enormous amount, i.e. about $1.4 billion annually to non-profits.
“That sum that hasn’t changed much in two decades. The industry (non-profits) pegs the inflationary loss it’s taking on these payments at $460 million per year,” according to Connecticut Mirror. So, more outsourcing would compound the squeeze on the non-profits, either rendering their condition even more precarious or necessitating a significant increase in their reimbursement rates.
The consultant’s study was supposed to facilitate a third approach. It was to help accelerate efficiency efforts enabling the state to operate with less staffing. Efficiency is easier in concept than in actual practice.
Besides, all three of these difficult and only marginally helpful alternatives share one huge liability: the SEBAC unions will fight them tooth and nail, because all three reduce the number of unionized state employees paying dues to the union.
One thing we know about Ned Lamont — or any Democrat for that matter — is that he will not fight the unions.
So, it is a safe bet that Lamont will sign a juicy new wage contract with SEBAC. Inevitably, it will be highly unpopular, so the announcement will be buried as deep as possible and spun like a top by Lamont’s spokespeople. Ideal timing for the announcement would be between Christmas and the new year.
Likely, the governor’s spinmeisters will follow the lead of union leaders in referring to all state employees as “frontline workers,” despite that many agencies were closed to the public during most of the pandemic. The virtually inevitable pay hikes and favorable benefit modifications will then be classified as hardship pay offered to reward for employees for their phantom “frontline service.”
Lamont’s predecessor, Dannel P. Malloy, once boasted to a union gathering “I am your servant.” Lamont is also in “public (union) service,” willingly or not.
Red Jahncke (Twitter: @RedJahncke) is president of The Townsend Group Intl. LLC, a Connecticut business consulting firm, and a contributing Day columnist.