Which side in SB 5 argument has best pay deal?

By Marc Kovac | October 26, 2011 at 12:07a.m.

COLUMBUS

Proponents of Senate Bill 5 point to examples of public-sector unions whose members are paying less than the new law’s proposed requirements for health insurance and pension contributions.

Isn’t it terrible, they posit, those employees are getting raises and potentially paying little or nothing for their health and retirement benefits when the people footing the bills are getting paid less and have, in the words of Gov. John Kasich earlier this year, “shabby at best” benefits?

SB 5 opponents call that line of campaign rhetoric hogwash, saying public employees have forgone pay raises and, for the most part, are paying more than their fair share of their health and pension costs.

Isn’t it terrible, the opponents posit, that fat-cat politicians and government managers continue to enjoy the kinds of pay raises and benefits they want to take away from policemen and firefighters and other public servants?

That’s the crux of what has become one of the most divisive arguments in the Issue 2/SB 5 campaign.

Of the numerous provisions included in the 300-plus page bill, public- employee compensation has received considerable attention.

Both sides have studies and statistics to back up their positions.

“It is not unreasonable to ask government workers to pay 15 percent of the cost of their health care,” Sen. Keith Faber, a Republican from Celina who supports the bill, said during a recent Issue 2 debate.

Faber stressed giving taxpayers a voice: “Ask county workers to pay 15 percent of their health care or employ five more sheriff’s deputies. It’s a pretty easy decision for the taxpayers.”

During the same debate, Dale Butland, spokesman for Innovation Ohio countered, “Ninety-four percent of all public workers already pay 10 percent of their pension contributions. Ninety percent pay toward their health insurance, and all state workers already pay 15 percent.”

The Studies

Statistics indicate that public-sector wages increased more than private-sector wages over the past decade, and more public-sector workers had access to insurance, pensions and other benefits.

Additionally, public employers paid a larger percentage of the costs for benefits than private-sector employers.

According to the Ohio Department of Job and Family Services, public-sector wages in Ohio rose from an average of $32,922 in 2000 to $42,923 in 2009, an increase of about 30 percent.

Average private-sector wages rose from $32,192 in 2000 to $40,128 in 2009, an increase of about 25 percent. The results were not adjusted for inflation, said Ben Johnson, department spokesman.

Nationally, retirement and medical benefits were offered to 99 percent of full-time public employees, according to the most recent survey by the U.S. Bureau of Labor Statistics. Ninety-eight percent of public workers received paid sick leave.

By contrast, 73 percent of full-time, private-sector employees had access to retirement benefits, 85 percent had access to medical care and 75 percent had access to paid sick leave.

Also, according to BLS, “For single coverage, employers paid 88 percent of the medical-care premiums for full-time state and local government workers and 80 percent of the medical-care premiums for full-time private industry workers. For family coverage, employers paid 71 percent of the medical-care premiums for full-time workers in state and local government and 69 percent in private industry.”

Both sides of Issue 2 have released their own studies in an attempt to better account for such differences. Opponents cite an Economic Policy Institute briefing paper titled “Are Ohio Public Employees Over-Compensated?” Proponents side with a study written by the American Enterprise Institute, commissioned by the Ohio Business Roundtable, titled, “Public vs. Private Sector Compensation in Ohio.”

The two studies do agree on one issue: State and local government employees in Ohio earn less in wages than their counterparts of equal educational attainment and other factors. The institute puts public employees about 3.3 percent below private-sector employees, while the Roundtable study puts the difference at about 2.5 percent.

That’s about the only area where the two sides are even close in their comparisons, however.

According to EPI, public employees receive a higher portion of their compensation in the form of employer- provided benefits. For example, 26.7 percent of state and local government pay packages go to benefits, compared to 18.9-22.8 percent in the private sector.

Public employees receive pensions, while private-sector employees have been shifted to 401(k) and other defined-contribution plans, “and many private-sector employers do not pay any contribution toward their employees’ retirement compensation beyond Social Security.”

Public employees also receive “considerably less supplemental pay,” “somewhat less vacation time” and less compensation through mandated benefits, such as Social Security.

EPI concludes, “Considering both the cost of employer-provided benefits and direct wages, public-sector workers in Ohio receive compensation that is slightly less than what they would receive in the private sector. ... Public employees are not overpaid.”

“Public-sector workers generally get a little less in wages, and they generally get a little more in some of the benefits,” said Amy Hanauer, founding executive director of Policy Matters Ohio.

“The pensions in the public sector are really much, much more generous than what the typical private-sector worker would get,” counters Andrew Biggs, co-author of the Roundtable study.

The Roundtable study concludes, “Even if the provisions of Senate Bill 5 were implemented in full, it is very likely that Ohio public-sector workers would continue to enjoy a substantial compensation premium over private-sector Ohioans.”

Examples

Under SB 5, public employees would be required to pay at least 15 percent of their health insurance premiums, and it would block public employers from paying any portion of workers’ required pension contribution.

Building a Better Ohio, the proponent campaign for Issue 2, cites numerous communities where employees are paying less for health insurance or employers are picking up more of the costs of pensions.

In Cincinnati, public employees pay 5 percent of their health-insurance premiums. In Dayton, they pay 11 percent. In Lima, there are school districts paying as little as 1.4 percent. And in 91 public school districts statewide, employees are paying nothing toward their health insurance, proponents say.

Republicans estimated during the legislative debate on SB 5 that local governments would save “more than $1 billion just by requiring government employees to pay 20 percent of their health-care costs and by eliminating step increases and longevity pay.”

“The private sector right now is bearing the brunt of the burden,” Faber said. “The [93 percent] of Ohioans who aren’t government employees are paying 100 percent for the government employees, and they’re paying 31 percent for themselves.”

But opponents say there are numerous communities where public employees are paying more than their fair share toward health insurance.

“There’s nothing wrong with 10 and 15 [percent toward pension and health insurance] if that is part of a local conversation,” said Jay McDonald, president of the Fraternal Order of Police of Ohio. “I pay more than 20 percent for my health care. I pay 20 percent plus I contribute to a health savings account, [with a] high deductible health plan up front.”

Opponents also say public employees, in response to difficult economic circumstances in recent years, have offered contract concessions,

“Our people have been giving concessions, giving money back to their employers, to keep their operations running for quite some time,” McDonald said. “All you have to do is look back at state employees who gave back $350 million under [former Gov.] Ted Strickland to help make the budget balanced.”