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Business Groups Attack New York Citys Lavish Health Benefits

December 18, 2009
Related Topics: Financial Impact, Benefit Design and Communication, Policies and Procedures, Latest News
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New York City could save $1.4 billion a year if it could pare municipal government workers’ health benefits down to the size of those of private-sector workers in the city, say the Citizens Budget Commission and the Partnership for New York City.

The two pro-business nonprofits surveyed 52 large firms in the city and found that municipal workers’ perks are relatively extravagant. The CBC says the city now pays $10.4 billion a year for health insurance and pension premiums for its 242,000 workers and 275,000 retirees.

That dollar amount would be higher if it included costs at agencies like the New York City Health and Hospitals Corp., which has about 30,000 employees, the CBC said.

A spokesman for Mayor Michael Bloomberg said the city is trying to rein in that spending, a process that must be done at the bargaining table. The city has dozens of unions, and the benefits have built up over decades.

The spokesman noted that the city recently won an agreement from the Municipal Labor Committee, which negotiates on behalf of the largest unions, to reduce the cost of health coverage by requiring workers to make co-payments, use designated hospital and ambulatory surgery networks, and other measures. Even so, it will take six years for the city to cut those costs by $1 billion.

“We continue to seek an [employee] contribution of 10 percent of health insurance premiums, but we were not able to achieve that,” the spokesman said.

Among the CBC survey findings: While the city pays the full premiums, only 8 percent of private companies do; and just 29 of the 52 firms surveyed offer health coverage to retirees; of those, only two of those pay the premiums for all retirees as the city does.

The argument that such lush benefits make up for lean city salaries no longer holds true for blue-collar jobs, noted CBC research director Charles Brecher.

“Traditionally, that was true, but for blue-collar and gray-collar [maintenance and custodial] jobs, the wages are now about the same in both sectors,” he said.

In fact, in many job titles, municipal work pays more. For instance, according to the most recent (2004) Bureau of Labor Statistics figures for the New York City metropolitan region, laborers in municipal government make an average $19 an hour, compared with $14 in the private sector. There’s a wider salary gap for white-collar jobs, Brecher said.

For instance, engineers and architects in municipal government make an average $29 per hour, the 2004 BLS numbers show, compared with $40 an hour in the private sector.

“But in those jobs, people tend to go back and forth between public and private; they do take a pay hit [in the public sector], but they usually get some experience that’s good for their reputation.”

The group has yet to tackle the question of whether it would be cheaper for the city to pay higher white-collar salaries and offer fewer benefits.

Filed by Gale Scott of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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