Illinois Gov. Pat Quinn
Updated: March 21, 2013 2:22AM
Gov. Pat Quinn says he was put on earth to solve our state’s underfunded-pension problem. Yet he’s now made that problem worse.
At a time when the State of Illinois is literally broke and inflation not much above zero, Quinn (who is facing a primary election next year) has agreed to give increases in pay to state employees, who on Tuesday approved the deal. These come in two main components: 2 percent increases in the last two years of a three-year contract; and “step increases” for some workers to reflect additional years of seniority. In addition, senior workers get an extra $25 per month in “longevity payments,” and the deal restores a 5.25 percent raise previously granted by Gov. Rod Blagojevich.
Few employees in the private sector receive such a combination of pay increases in this economic climate, and virtually none receives them from employers who are broke.
The implications of these pay increases go beyond the annual operating budget. Base pay at the time of retirement (or over a period of years preceding retirement) is the basis for calculating the amount of pension which a retiree will receive. State employees may retire at age 55 and receive full pensions if they have enough years of service; so they can expect to receive pensions for many more years than private-sector retirees who retire at 65 or later.
Union leaders argue that most of the elements of the pension formula may not be changed to their disadvantage. But even the union leaders do not argue, to my knowledge, that salary levels may not be held flat. Pay levels for the future are not guaranteed by the state constitution. For that matter, state employees are not guaranteed a future job by the state constitution.
So one way the governor could have helped “control” — there is no way to “fix” at this stage — our state’s unfunded pension liability problem would be to hold salaries flat. The union might decline to agree to a contract without a pay raise. So be it. The state could survive without a contract in place.
Union leaders would say holding salaries flat is unfair. Maybe, maybe not. “Fair” should be determined not based on some supposed “natural law” that compels annual increases regardless of circumstances, but based on what is going on in labor markets: what do employees in the private sector who work at similar jobs get paid? What does it take to attract and retain competent people? One way to tell is to do a wage-comparison study. It’s by no means clear that employees of the state — taking all factors into account — are underpaid compared to folks doing similar work in the private sector.
Another way to tell would be to see what happens if wages were held flat. Would we see large percentages of the state’s employees departing the state payroll for better-paying jobs elsewhere? If we see lots of folks leaving, and if the state could not find replacements, that would support the notion that flat is unfair.
But what if folks hang on to those state jobs, and the retirement benefits that come with them, like jewels?
Gov. Quinn had a chance — a clearly constitutional option — to diminish in a modest way our state’s pension crisis. Instead, he has made it worse.
I wonder why.