Lower Merion Township Commissioner, The Forgotten Taxpayer’s BFF, comments on the proposed Workers Association contract. The Key Point: the Forgotten Taxpayer cannot afford these increases. Disturbingly, Township Commissioner Paul McElhaney plans on voting on the Workers Association contract negotiated by his brother, George McElhaney, president of the Lower Merion Workers Association. It seems that Commissioner McElhaney and the Lower Merion Board Majority do not see this as a conflict of interest. Crony Unionism is no better than Crony Capitalism.
The terms of the proposed workers agreement are now public, so I am writing to give you some of the details. I apologize in advance because I know this is a long email. But you really have to read this to believe it.
The context is important. Under the most recent union contract, which covered 2007 through 2010 (the worst economy in memory):
Wages: Workers association members received wage increases of 3.75% – 4% every year. At the same time, annual inflation averaged only 1.95% (www.usinflationcalculator.com) and many of you saw your wages decline.
Step pay: During the first five years of employment, workers’ association employees receive automatic annual step pay raises equal to approximately 2% – 3% of salary. This is on top of the annual wage increase!
Longevity: Longevity bonuses are not related to work performance in any way. The payment is based on working another full year for the Township. Long ago when public employment generally paid lower than private employment, longevity was instituted as a way to increase public pay. These days, however, our government workers are no longer undercompensated and such across-the-board bonuses have no place. In 2010, longevity bonuses averaged nearly $2,200 per worker association employee. This is equal to an average of 4% of wages and is on top of the annual wage increase. (The average longevity bonus for 2010 was $6,000 for management!)
Paid days off: Employees who have worked just one year for the Township are entitled to more than 5 weeks paid time off (9 standard holidays, 7 personal holidays and 10 vacation days) every year. Those who have worked for the Township for 6 years get more than 6 weeks of paid time off each year. Those who have worked more than 20 years for the Township get more than 8 weeks of paid time off.
Paid sick days: The average number of paid sick days taken by Township workers in a year is 14 days (nearly three weeks), although they are entitled to 30 to 60 days of paid sick leave each year. This means that with vacation and average sick time, someone who has worked for the Township for just one year enjoys 8 weeks off with pay (that’s almost two months).
Health insurance: As noted in my previous email, Township employees pay between 4% and 5.25% of their health insurance premiums, while the national average is 19% for single coverage and 30% for family coverage. As well, the Township currently offers health insurance plans that cost 60%-80% more than the average health insurance.
Opt-Out: Employees who have a working spouse with health insurance may opt-out of Township health insurance and receive 50% of the premium saved. The average opt-out payment is approximately $10,000 (equal to an average of 20% of wages). I am advised by Commissioner Brian Gordon that the School District allows an opt-out payment of only $600 per employee.
Other benefits: Employees also receive tuition reimbursement, paid bereavement days, uncapped dental coverage, and generous pension benefits.
This is very generous compensation by any standard. While any one of us who owns a business has the right to pay workers over-generously, as elected officials, we do not have the right to spend taxpayer money over-generously.
THE NEW CONTRACT PROPOSAL
Immediate bonuses: The contract proposes to award $1,300 cash bonuses to each non uniform employee for the current year (approximately equal to an average 2.5% wage increase).
Annual Wage increases: The contract proposes a wage increase of 2.5% over current wages for 2012, another 2.75% for 2013 and another increase of 2.75% for 2014.
Status Quo on Health Insurance: The contract does not address the unsustainable benefits offered to current employees. Those in the most expensive $2 co-pay health insurance category will see no changes to their exorbitantly expensive plans. Other plans have modest increases in co-pay. The main problem however, is that employee contributions to health insurance premiums are proposed to rise to only 6.5% of premium in 2014 (while the ever-rising national average was 19% for single coverage in 2010 and 30% for family coverage).
Opt-Out payments: remain unchanged for 2011 and are only modestly decreased for current employees for the contract years.
IN SUMMARY: Township workers should be compensated fairly for the excellent work that they do. The current contract, however, provides compensation that Township taxpayers can no longer afford and the proposed contract does NOT adequately address this unsustainable trend. Without reasonable modifications to the Township’s labor costs (which comprise the majority of the Township’s budget), the Township will never be able to get spending under control. The Board should not approve the proposed contract and should negotiate, instead, for an agreement that is fair to taxpayers and workers alike.
As always, whether you agree with my analysis or not, I would appreciate hearing any thoughts or guidance that you may have on this matter.