By: Ted Dabrowski and John Klingner
When Gov. J.B. Pritzker was on the campaign trail, he promised to “lift up the standard of living” for Illinoisans by “putting dollars back in their pockets.” It didn’t take him long to break that promise.
Pritzker recently signed a $40 billion budget and a $45 billion capital bill backed by new revenues, including a doubling of the gas tax. The pain of those taxes will be felt heavily by Illinois’ working and middle classes for decades.
But now Illinoisans are learning more about where their dollars are going – to multi-year, guaranteed raises and potentially pensionable stipends for state workers who are already some of the highest paid government workers in the nation.
Gov. Pritzker apparently reached a tentative deal with AFSCME at the same time the 2020 budget was being passed. Now some of the details of the new contract have been leaked and reported by WCIA. The AFSCME contract matters because it captures why Illinois is in such a mess.
The facts which are detailed below, should make private sector residents fume. Ordinary Illinoisans don’t have long-term contracts that guarantee them automatic pay raises, or anything else for that matter. They don’t get free health insurance in retirement. They won’t get guaranteed lifetime pensions.
If ratified by the members, the new contract will be the first deal AFSCME has had with the state since 2015. The contract comes after several years of conflict with former Gov. Bruce Rauner, who tried to bring in state worker benefits with what Illinoisans could afford.
Rauner’s approach may have been an utter failure, but he was right to try and control the state’s operational costs. Before we get into the details of what AFSCME workers can expect in their new contract, it’s worth reviewing just how rich their benefits already are.
(1) Illinois state workers were already the second-highest paid workers in the nation when their contract expired in 2015, second only to New Jersey. (2) State workers get free health insurance during retirement after working just 20 years – a benefit worth $200,000 to $500,000 for each worker. (3) Nearly three-quarters of state worker health costs are covered by ordinary Illinoisans – a taxpayer subsidy of about $15,000 per worker. (4) AFSCME workers who spend a career in government will get lifetime pensions of more than $1.8 million. (5) Nearly 95 percent of state workers also participate in Social Security. (6) In all, the average compensation for state workers totals nearly $110,000.
Rauner and AFSCME fought over the terms of the contract for his entire term. The union originally demanded salary raises ranging from 11.5 to 29 percent, a 37.5-hour workweek, five weeks of vacation and enhanced health care coverage. Rauner wanted major reforms to both overtime and healthcare costs.
But now with Pritzker in charge and a new-found harmony in Springfield, AFSCME can get more of what it wants. What’s in the new contract? According to WCIA:
Governor J.B. Pritzker plans to offer pay raises, more time off work, enhanced family leave and a cash stipend to offset “financial hardship” state workers endured under the administration of his Republican predecessor, according to a copy of the Pritzker administration’s contract offer.
The one-time stipend of $2,500 will “be paid upon ratification of the agreement.” Union members will qualify for a quarter of the stipend so long as they worked one calendar day in any of the prior four years.
The new contract assures newer members they will continue to receive “step increases,” or automatic pay raises.
All members will see a pay raise of 1.5% on January 1, 2020, another pay raise of 2.1% on July 1, 2020, on July 1, 2021, a pay raise of 3.95%, and on July 1, 2022, a pay raise of 3.95%.
By 2022, the average state employee would see his or her annual salary jump from $59,679 up to $66,827 for an average net increase of more than $7,000.
Each worker’s increased contribution to the state’s health insurance program would cost roughly $624 to $864 extra each year.
We’ll have more to say on this later, but suffice it to say that Illinois is a national outlier when it comes to government worker costs, and in many cases, the state is an extreme outlier.
Yes, this new contract asks workers to pay a bit more for their healthcare, but the additional raises and new benefits they get in exchange will more than make up for the costs. Some of those benefits are, according to WCIA:
“Paid maternity leave for birth and adoption will increase from four weeks to 10 weeks,” the contract states, and will also expand to apply to both parents if they each work for the state. The 10 weeks can be taken together or back-to-back instead of the parents splitting one paid leave.
“The contract offer also removes the potential for discipline if employees decline to work mandatory overtime.
“The maximum time the employer may make temporary assignments unrelated to illness or injury leave will increase from 60 to 90 days,” the contract reads. “Outstanding debts to the state at the time of retirement will no longer be cause for termination of retiree health benefits, so long as the individual is making a good-faith effort to repay the debt.”
Paying for a protected class
Perhaps what best captures how well protected public sector workers are compared to the private sector is their guaranteed raises. AFSCME workers get raises in good times and bad thanks to the long-term contracts they negotiate with the state. In contrast, Illinoisans have to make do with less even as they are stuck paying AFSCME workers more.
Between 2005 and 2015 (when the last AFSCME contract expired), ordinary Illinoisans’ earnings grew only 11 percent, half the rate of inflation. Meanwhile, state AFSCME salaries grew more than 40 percent over the same period.
It didn’t take long for Pritzker to break his promises to Illinois’ working and middle classes. His hikes of highly regressive taxes, along with increasing the pay and benefits of some of the most highly compensated government workers in the nation, shows just where Pritzker’s priorities lie.
Read more about how politicians created Illinois’ crisis:
- Pritzker’s untruth: Illinois’ budget is billions out of balance
- Illinois’ Reckless $45 Billion Capital Spending Binge
- Illinois’ crisis: 20 facts Pritzker doesn’t want ordinary Illinoisans to know
- Illinois state pensions: Overpromised, not underfunded
Illinois state workers were the 2nd-highest paid in the nation when the last contract expired
Illinois state workers were the 2nd-highest paid in the nation in 2015 after adjusting for cost-of-living. Only New Jersey paid its state workers more than Illinois did. On average, Illinois state workers received 28 percent more than Wisconsin state workers and 40 percent more than state workers in Indiana.
Cadillac health care benefits
Illinoisans subsidize nearly $15,000, or 77 percent, of state worker annual health care costs. In Obamacare terms, state workers are paying bronze prices for platinum-level health care benefits. Taxpayers pick up the difference.
Free retiree health insurance after 20 years of work
State workers with 20-plus years of service get free health insurance during retirement (state workers get a 5 percent discount for their retiree health insurance for every year of work). That fringe benefit for career workers is worth $200,000 to $500,000 per retiree. Nobody in the private sector gets free retiree health insurance.
Nor do many in the public sector. The average subsidy for retiree insurance in the public sector across the nation is 50 percent.
$1.8 million lifetime pensions, on top of Social Security
Recent retirees who spent their careers working for the state can expect to collect $1.8 million in total pension benefits during their retirement. On top of that, 96 percent of state workers are enrolled in Social Security, so they’ll get benefits from that, too.
AFSCME workers receive, on average, total compensation of nearly $110,000
Add up all the compensation AFSCME employees get in a year – salary, overtime, healthcare benefits, future pension and health insurance benefits – and the average state worker costs ordinary Illinoisans nearly $110,000 a year.