At Work

You have to hand it to public employee unions

The Wall Street Journal (8-12-16) reports on a proposed referendum in Oregon to impose a new 2.5% tax on corporate sales over $25 million. Chances are, of course, that the tax will trickle down in the products and services offered by these corporations. Unions supporting the tax say it’s needed to close a $1.4 billion deficit. What they don’t  say is a good part of the State’s budget goes to public employee overly generous benefit programs.

Following is the SEIU’s explanation to its members of the new 2015 contract. How would you like your employer to pay 99% of the cost of your health benefits?  Even the best private employer plans haven’t seen that generosity in forty-years or more, if ever.

We’re very excited about this tentative agreement. Some highlights include:

We more than held the line on healthcare. Starting in January 2016, we will move closer to fully paid healthcare: Most plans will go to a 99 percent/1 percent premium share, while the most expensive plans will stay at 95 percent/5 percent.

There will be a 1.48 percent cost-of-living raise on December 1, 2015 and a 2.75 percent cost-of-living raise on December 1, 2016.

Retirement security for all state workers. Protecting PERS has consistently been a top priority for our members. After a great deal of work by our bargaining team, the State agreed to buy out the 6 percent pick-up on November 1, 2016. For more information on how the buy-out of the pick up will work, see our FAQ or video.

The day after Thanksgiving will be a new holiday for everyone! We’ve emphasized with the state over the last several bargaining cycles the importance of work/life balance and the work our members do in their communities. Our team landed on an extra holiday, which will give people more time with family and community.

imageNow look at the “buy out the 6 percent pick-up.” Prior to this new contract Oregon made a 6% of pay contribution to the workers retirement account. That’s not unusual,  but the union figured out a way to squeeze more from the State with very few people (voters and taxpayers) understanding what was happening. 

So, workers got a 6% raise plus an additional .95%, and their pay is raised for a variety of purposes including Social Security and final average earnings for pension purposes as explained by the union below. This means the actual cost to the state is 6.95% of pay plus the Social Security and Medicare tax on that additional pay plus the additional pay-related benefits. The workers get to contribute the 6% to their retirement account on a pre-tax basis which results in another net gain for the union member. Not a bad deal indeed … except for Oregon taxpayers. [Oregon has had a Democratic governor since 1987]. 

Rather than the state continuing to “pick up” the 6 percent by paying it directly into our PERS accounts, beginning Nov1, 2016, these funds will be transferred back to the employee’s pay and then transferred, as a pre-tax deduction, into the employee’s PERS account. Any additional payroll tax, and increased PERS contribution, incurred as a result of the “buy back” will be covered by an additional .95 percent paid by the state into the employee’s pay. While this will increase employee’s base wages by 6.95 percent, the intent of the buyout is to be zero cost to employees.

How would this benefit us?

There are a number of ways this would be in our best interests. First, it would be an additional benefit for OPSRP members (those hired on or after August 29, 2003, also known as Tier 3), as it would translate into a higher average final salary. Currently, Tier 1 and 2 members already have the 6 percent pick-up counted toward their final average salary, but OPSRP members do not.

In addition, pay and benefits that are based on your wage rate would increase; this includes IAP contributions, overtime, out-of-class and lead differentials, vacation payouts, and Social Security calculations. For example, if you work overtime or have a pay differential, this could put more money in your pocket.

There seems no limit to the leverage public employee unions have over politicians, especially Democratic politicians while taxpayers are unable to make the connection between the cost of benefits enjoyed by public employees (but generally not the taxpayer) and the taxes they must pay. 


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