By: Mark Glennon*

Shared sacrifice?

If you’re among the countless Illinoisans who have been laid off, had your pay cut or closed your business, maybe you’ve wondered what deal public employees who aren’t working got. Nobody in the press has bothered to ask.

The answer is among the most nauseating aspects of the crisis: Illinois state and local workers are getting paid in full for not working with full pension accrual.

Illinois and its public unions wasted no time ensuring the checks keep coming regardless of work. On March 15, well before the stay-at-home order and most of the shutdowns came, the state quietly announced this, buried in a press release headlined about closing bars and restaurants: “Select [state] employees will continue to report to work; while the remaining workforce will either work remotely or be asked to remain home on call while receiving pay. All state employees will continue to be paid during this period.”

Yes, that was a priority for Illinois’ crisis response.

Roberta Lynch, the head of AFSCME Council 31, the biggest public union in Illinois, had the astonishing gall to say this respecting the state’s action: “[Governor JB Pritzker] is modeling the behavior that every Illinois employer should follow.”

Has your employer assured you a paycheck even if you are not working, on a job from which you can’t be fired?

We have been unable to find any unit of government in Illinois that has cut pay for employees not working.** In other words, the same policy apparently is in place for all state and local workers in Illinois. Countless of them are not working at all – toll road cashiers, park employees, librarians, transit workers and many others where operations are partially or completely closed down.

Many are continuing to work whether from home or otherwise, some under extreme pressure. We salute them. But with the state and most local governments already insolvent before the crisis, full pay for those not working is criminally irresponsible. Slashing pay is essential, as the private sector well knows.

And then there are pensioners. Crisis? What crisis?

Pension checks keep flowing no matter what the size and irrespective of the market forces now savaging pension assets — the stock market’s fastest 30% loss in history.

Those automatic 3% COLAs are now exceptionally absurd because the country is likely facing a period of deflation. Commodity prices have dropped by roughly 30% over the past few months and the dollar has soared. Both indicate declining prices. Even before the crisis COLAs accounted for almost 40% of pension unfunded liabilities. The 3% COLA likely will become a bigger bonanza than ever.

The increased cost of public pensions resulting from losses in their investment portfolio will be pushed entirely to taxpayers. No shared sacrifice whatsoever for pensioners. For now, that is. When pensions run dry, for retirees reliant on reasonable pensions, the situation will become desperate, especially for retirees in smaller, local pensions sponsored by broke municipalities.

State and local governments should have already done what’s essential – pay cuts and layoffs. Monthly pension checks should be reduced for larger pensions immediately, protecting money for the sake of those smaller pensioners who will eventually need it. Pension assets must be marshaled. Pension trustees should have seen it as their fiduciary duty long ago to cut larger, current pension payments to protect smaller, future ones

Don’t let anybody tell you there is some constitutional protection for breaking contracts in that manner. The leading United States Supreme Court decision on that topic is now clearly on point, pertaining to contract modifications during the Great Depression.

And politicians at many levels of government in both parties are moving to enact moratoriums on mortgage foreclosures and tenant evictions, which also require overriding contracts. There is no constitutional impediment.

We recognize that Governor Pritzker and much of his top staff must focus primarily on the emergency medical aspects of this crisis, but there is no excuse for not declaring a fiscal emergency as well. He has other financial staff for that. We have a legislature that can act. We have a Comptroller and Treasurer who should be screaming for action. Deputy Governor Dan Hynes is a former state comptroller.

We have long said that Illinois is being looted by public unions. It is accelerating during this crisis. Illinois state and local governments have committed Illinois taxpayers essentially to holding harmless public sector workers from any loss. It’s immoral.

We will be writing again soon with a list of further emergency fiscal actions Illinois state and local government should have implemented.

*Mark Glennon is founder of Wirepoints.

**Illinois teachers are subject to a different rule as described in our article here. They are being paid in full with full pension accruals, but the extent to which they are expected to attempt to teach online, or are actually doing so, varies.

53 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Old Spartan
6 months ago

Looks like federal workers ave joined the “paid vacation” club as well. For example, try contacting any of Senator Durbin’s offces. Yesterday tried the DC office–“closed to protect the workers”– please call Chicago. Chicago office closed to protect the workers also. Springfield as well. I guess none of them have ever heard of call forwarding like all of us in the private sector who are working from home. And dont bother leaving a message on the answering machines– no response from them also. I thought Durbin said this is a “war”!

Andrew Szakmary
7 months ago

Just curious: how many federal, state and local governments, worldwide, have laid off their employees or cut their pay during this crisis? How many governments around the world have cut pensions for their former employees in response to the epidemic? How many non-profit institutions like universities have laid off salaried employees? I keep up with the news quite extensively and I have not heard of a single one, not even in China, or in Italy, or in any of the worst-affected countries or regions. What you describe as an Illinois phenomenon is actually global and has nothing, specifically, to do… Read more »

debtsor
7 months ago

“Because governments and other non-profit entities are not motivated by profit and have no stockholders, they put their employees (and creditors) first and continue to pay them until they have no other financial alternative. It has always been thus, pretty much everywhere.”

WRONG Answer. It’s because of UNION CONTRACTS that require full pay for any reason, whether they work or not. However, if this downturn is sustained, expect layoffs.

As for other countries, I don’t know about that. You’d need to get into the local language newspapers to determine whether or not there’s been local level layoffs.

Pension lawayer
6 months ago
Reply to  debtsor

Whaddya know? Corruption and abuse of power are world-wide phenomena. As are theft, adultery and coveteousness. Not to mention waste and inefficiency. Let us find different metrics, please.

Poor Taxpayer
7 months ago

I hope they pass a Federal Law allowing States to go Bankrupt.
This is the only fair solution to Illinois problems.
Other than Leaving ASAP.

Tom Paine's Ghost
7 months ago
Reply to  Poor Taxpayer

The Puerto Rico Bankruptcy is one legal method which could serve as a precedent for States.

NB-Chicago
7 months ago
Reply to  Poor Taxpayer

so far it doesn’t look like fed bailout, even with dem last minute demands, offers any silver bullet for Illinois to avoid bankruptcy…at least not this bailout..sure many more to follow. Kind of surprised dems aren’t pushing harder for fed to buy up all the bad muni bonds and offer unlimited guaranteed borrowing by states..or an I missing something?

Poor Taxpayer
7 months ago

Teachers are nothing but way overpaid babysitters. Why shouldn’t the retire at age 50 with $100,000 pensions with 3% Increases every year? They need luxury homes and cars in sunny Florida. They move out as soon as they can. They laugh all they way to the bank.
Only the mentally challenged stay in Illinois.
Most people from Illinois are ashamed to admit they are from Illinois– and should be.

Governor of Alderaan
7 months ago

I thought profiteering, gouging, and hoarding were illegal

Fed up neighbor
7 months ago

Sorry, not in Illinois it’s daily operating procedures

DantheMan
7 months ago

A couple months of shutdown or loss of income shouldn’t be such a major financial disaster. The U.S. as a whole needs to do a better job at all levels to encourage saving. Printing money (or borrowing) and going further into debt is simply poor management. Wouldn’t it be nice if we could simply focus on the health aspects of the crisis, knowing money isn’t an issue. I suppose the concept of saving for emergencies is unrealistic in our culture of instant gratification, and assumption of bailouts, especially in Illinois.

debtsor
7 months ago
Reply to  DantheMan

For guys like me, saving for a major disaster is in my DNA (don’t even ask about the paycheck to paycheck lifestyle household I grew up in). But for a lot of people, the jobs just don’t pay enough to save. Not when the cost of living and taxes are so high. Believe me, I’ve done the math a million times. You save a little each month, and at the end of the year, you see how little you’ve actually saved. It takes major savings, painful savings, to be able to save anything significant. A WI Dells vacation for the… Read more »

DantheMan
7 months ago
Reply to  debtsor

“But when you’re middle class, you need to live like the lower class to accumulate any savings, and that’s not easy, not easy at all.”

Agree, it’s not easy, but definitely possible. Drive an older car. Get a roommate. Live in a cheaper apartment/house. Forget about Starbucks. Cook cheaper meals and eat at home. Responsible people do it all the time. Most of us that have climbed the economic ladder had to make sacrifices along the way. So often when people say they can’t save it translates to simply being irresponsible and living a lifestyle they really can’t afford.

debtsor
7 months ago
Reply to  DantheMan

“So often when people say they can’t save it translates to simply being irresponsible and living a lifestyle they really can’t afford.” I wouldn’t say often, but rather, sometimes. I’ve done the math a million times. I’ve got poor relatives who live on SSDI and a retail store’s hourly wage, no skills and limited income earning potential. Every penny is gone at the end of the month, a luxury is eating pizza out. Sure, they could probably save a penny or two there, but at teh end of the month, they’ve only saved a few pennies. The fact of the… Read more »

Gary
7 months ago

Why not have them start working at the hospitals (welcomer), drive thru exams, etc? Put them to work for their paycheck.

Mike Salva
7 months ago

If you live in Illinois think of yourself as a tax mule for the public sector unions. Exactly why I voted with my feet over 20 years ago and left Taxistan!!

Douglas
7 months ago

When you extort people (taxation), it’s easy to guarantee a paycheck for no work. This is the nature of government–it’s inefficient, immoral and by any other standard is criminal.

Riverbender
7 months ago

Better yet is the invitation my wife, a retired RN, got to come in and volunteer to help out. Imagine asking her to work for free while the teachers etc get paid not to work. Needless to say she, and every retired nursing friend of hers, declined the offer.

Illinois Entrepreneur
7 months ago
Reply to  Riverbender

That is a poignant point.

I wonder if the teachers or say–Streets and San tow truck drivers–would donate a portion of their benefits or salary to the nurses to help out?

(giggle)

s and p 500
7 months ago
Reply to  Riverbender

That sounds like a good idea not to volunteer if you’re an older person and hospitals are short on equipment and supplies.

Jim Bob
7 months ago

Given the nature of this State, it can’t be very far from the state of nature. Public employees (predators) increasingly resemble the evolved brownshirts who are now backed by the full coercive power of government. The redistribution agenda is not exactly hidden and there may be some “show” of due process but they’ll soon be on the hunt for whatever you have that they want.

SteveOh
7 months ago

Bravo Mark !!! And Ted and John for all you do as well !!! Even though I’m in another tax-hell state, I’ll donate $50 to your great work, as most readers should, I believe. Illinoisians owe you a debt of gratitude for the eye-opening honesty you guys do, peeling away the two, thick outer layers of dishonesty — propaganda from top govt ees and ignorant cluelessness by the willing lackeys in media.

Tom Paine's Ghost
7 months ago

So perhaps the silver lining in this Wuhan Virus is that the inevitable and eventual bankruptcy of Chicago, Cook County and Illinois will be sped up and finally resolved. SEIU, AFSCME, CTU and IFT members and the slimeball politicians will all take a big haircut forced back into financial reality.

Instead of two to four more years of kick-the-can, Madigan and Pritzker will be slapped in the face with the mess of their own creation.

debtsor
7 months ago

“Madigan and Pritzker”

These two may not even be around at the end of this virus dealing with the crisis. Madigan is 77 years old. Jabba has hypertension, early stages of coronary heart disease, and likely diabetes. Both of them are candidates for the ICU ward if they get the Wuhan coronavirus.

Illinois Entrepreneur
7 months ago
Reply to  debtsor

Debtsor, you always give me a chuckle!

Tom Berman
7 months ago

No they will not be slapped in the face. Madigan, Pritzker (and Lightfoot) will continue to maintain that until the coronavirus hit, all of their budgets were balanced, pensions were adequately funded and there was no looming crisis with the financial situation in either Illinois or Chicago. They will blame everything on the coronavirus and take no accountability whatsoever for the decades long destruction of Illinois and Chicago by the Democrats and public unions. The only question is whether or not they can succeed in getting a federal bailout. Many may say that will never happen with a Senate controlled… Read more »

debtsor
7 months ago
Reply to  Tom Berman

Senate not going blue with this.

Tom Paine's Ghost
7 months ago
Reply to  Tom Berman

If the financial failure is only Chicago and/or Illinois and/or Cook County then they might get a disgusting Federal bailout (why should my elderly mother in Ohio pay for this 80 years of corruption?). But……..a more likely scenario is that all of the financially wobbly cities and states (NJ, CT, CA, NYC, Detroit, et al) collapse simultaneously then there would be too much failure for the rest of the country to bail-out. That’s the ideal scenario.

nixit
7 months ago

Here’s an idea for shared sacrifice: Start emptying out accrued sick days. Throw all employee accrued sick day balances over 10 days into one bucket by governing body (school district, university, etc), then pay out salaries for everyone from that bucket. While this won’t obviously cover salaries over the long-term, it is technically a no-cost solution to public sector workers as they still get paid yet will save those governing bodies money this year and beyond. Not only that, it is progressive solution as those that have accumulated a large number of sick days are typically on the higher end… Read more »

Fed up neighbor
7 months ago
Reply to  nixit

Great idea, use all vacation time, and all other accumulated time, then receive 25% of your exuberant salaries, that’s if there’s any money left

Indy
7 months ago

Should expect nothing less from Immoral Illinois.
#TheStateMustBeDestroyed

steve
7 months ago

at some point, and its coming up quickly, the pension funds will run dry and then they will be bankrupt.

Danni Smith
7 months ago
Reply to  steve

yaaaa-that has been the only solution for years already. Contracts are null and void in bankruptcies. Sure, the Illinois judges will tell the other gubs, who benefit, as do the judges, ‘raise the taxes, raise the taxes, the constitution says you cannot change the pensions’, but they will not get the money. They can seize, lien, foreclose, shoot, they will not get the $$. Nazi germany in Illinois.

debtsor
7 months ago
Reply to  Mark Glennon

Expect 1/3rd of local governments to default in the first two months and 1/2 within a year if we go to a pay-go system.

nixit
7 months ago
Reply to  Mark Glennon

And when the pension systems become pay-go, we can re-hire some of the terminated teachers at $15/hr to hand deliver full pension checks to retired teachers.

Riverbender
7 months ago

I have lost well into the 6 figure savings my wife and I had saved for retirement. The retired teachers and state workers have lost nothing in this. Shared sacrifice…yea right.

NB-Chicago
7 months ago

the dems are currently backing out of titanic $multi-trillion$ fed relief package– they’re biggest complaint being, $500 bill dedicated to corporate bailout loans is a “slush fund” for corporate execs and the well to do (maybe it could be). But much of the $350 billion going to states will in one way or another (rob peter to pay paul) be used as state gov workers & retirees “slush fund” to continue to live zero risk/zero sacrifice lifestyle while the rest of us loose are jobs get a $1000 check? make no mistake, that’s whats being fought over right now in… Read more »

nixit
7 months ago

“modeling the behavior that every Illinois employer should follow.” That has got to be one of the most pompous, dense, ignorant statements I have ever heard from a union official, and there have been many. As long as state paychecks continue, union dues deductions continue. That’s all they care about.

debtsor
7 months ago
Reply to  nixit

This is not sustainable. IL’s budget is in real time collapse right now. There’s no coming out of this tailspin. The state literally won’t be able to make payroll in the upcoming weeks and months. They can’t borrow the money, who will lend them money with tax revenues bombing out, there won’t be a federal bailout until January, and only if the senate goes blue (unlikely), and they’ll have to default on the pensions to pay employees, which they will never do. Massive bloodletting is coming to the state of IL. It will be mostly junior employees as you know… Read more »

Illinois Entrepreneur
7 months ago
Reply to  debtsor

Looks like the Fed will be buying municipal bonds now. There’s the clandestine bailout. Most people don’t understand or listen to what the Fed does much, but the extraordinary move to buy up municipal bonds will continue to encourage the states and municipalities to go for broke. The Fed will just print more money.

Danni Smith
7 months ago

major inflation-picture pushing do9llars around in wheelbarrows to buy bread.

debtsor
7 months ago
Reply to  Danni Smith

Fed debt buyouts won’t offset the looming and imminent credit defaults. We’re looking at deflation for years, not inflation.

Illinois Entrepreneur
7 months ago
Reply to  debtsor

They won’t allow that. They will spend tens of trillions if they have to, which is basically almost all of the debt that America holds. They’d rather that than allow for the catastrophe of deflation. After the Great Depression they vowed never to allow for deflation again. It is better to pay off the defaults over decades through the treasury paying back the Fed than allow for an imminent implosion.

s & p 500
7 months ago

Mayor Garcetti is closing Venice Beach and golf courses where people are still flocking to. He said “don’t mess around, don’t be selfish”. I assume that doesn’t include certain groups of public workers.

https://mynewsla.com/crime/2020/03/22/garcetti-announces-further-public-closures-including-venice-beach-boardwalk/

Illinois Entrepreneur
7 months ago

Very few of ANY people in state government — politicians, their staffers, bureaucrats, public union employees — have ever even worked for a private business, let alone run or owned one. These people have no clue the risks and difficulties involved in the business world, and they don’t care. The reality is that they all have a better pay, benefits, work/life balance, retirement, and easier jobs than the rest of us. But if Pritzker keeps extending the “shelter in place,” there won’t be much of an economy to work with, other than some of the biggest corporations and chains who… Read more »

Poor Taxpayer
7 months ago

Kiss Illinois Good Bye- Best Day of Your Life.

SteveOh
7 months ago

Your comment is an absolute tour-de-force. I hope it’s overly-pessimistic, but I’m not at all sure it is.

NB-Chicago
7 months ago

Fantastic writing!! And not a peep from illinois spineless republicans on this moral outrage.

chumpchange
7 months ago

Immoral? We ain’t seen nothing yet. Never let a good crisis go to waste, right?

Any wagers on the amount pension bailout money coming with the manna from heaven being formulated in DC right now?

SteveOh
7 months ago
Reply to  chumpchange

Yes, I’ll bet you a small fortune (LOL, oxymoron on purpose) that the federal govt Democrats won’t touch, at least right now, the pension underfundings in blue states. Not now. But you’re right……….eventually. And Repubs better have control of at least one branch of govt when that happens !