This letter to the editor is from Pat McDonald, former Commissioner of the Vermont Department of Human Resources and the Department of Labor.
On November 10th Campaign for Vermont (CFV) held a press conference to review the details of its report entitled The Public Sector Reality. For the record, I am the President of the Board of Directors of CFV. Over the past months of pension discussions at the Legislature we heard claims about the state’s non-competitive wages and we decided to verify those statements. We set out expecting to find that pension benefits were an unquestionable asset to recruiting and retaining our public sector workforce. What we found surprised us.
Here are our key findings:
1. The average public sector employee is in the top 25% of income earners in Vermont, even before you consider health benefits.
2. On average, employees make nearly $12,000/yr less in the private-sector vs. the public-sector.
3. The average private sector employee makes at least $20,000 less per year in retirement than a public sector employee. This disparity likely grows when health benefits are considered.
4. Wages for public sector employees have grown faster over the past 20 years than private sector employees. And, over the past 30 years (as far back as we have data) private sector wages have consistently lagged the public sector.
5. The problem is going to get worse before it gets better as nearly 20% of state workers are approaching retirement.
6. The extraordinary benefits offered to public sector retirees may not be necessary to compete for qualified workers.
CFV hopes that having this information will help the Legislative Pension Task Force to ask the tough questions about the total compensation of public employees that are necessary as they set about making the changes to address the State’s current $4.5 Billion pension liability situation. We will continue this important work to better understand the value proposition of our above average benefit options. CFV values our public employees and do not want to break our promises to them, but we do need to make changes that safeguard the long-term stability of our pension funds for future generations.
Check out the report.