AFSCME leaders ignore economic reality, Illinoisans’ hardships

Mailee Smith

Senior Director of Labor Policy and Staff Attorney

Mailee Smith
December 19, 2016

AFSCME leaders ignore economic reality, Illinoisans’ hardships

Peoria-based manufacturing giant Caterpillar announced Dec. 14 it will lay off even more employees – another blow to CAT employees in the state and around the globe. Yet while too many Illinoisans struggle under the state’s faltering economy, AFSCME continues to demand more pay and more benefits for state workers.

Caterpillar Inc. announced Dec. 14 an unspecified number of planned layoffs. These new layoffs follow approximately 1,000 positions news outlets reported the heavy equipment manufacturer terminated since January.

The American Federation of State, County and Municipal Employees – the largest government-worker union in Illinois – should take note of the basic economics involved here. In the face of shrinking global demand for many of its products, Caterpillar has had to cut its expenditures to match its lower revenues. For private companies, when there is no money to pay workers, painful layoffs often follow. Government is not exempt from this math, and AFSCME doesn’t do state workers any favor by refusing to yield on any contract demands despite the poor financial health of the state that must pay those salaries and benefits. Moreover, AFSCME should consider how tone-deaf its extraordinary demands must appear to struggling taxpayers who enjoy no similar benefits.

Economic instability rocks Illinois’ private sector

One CAT employee lucky enough to still have a job described the workplace instability like this: “I have watched about 20 percent of my peers get fired, some after 25 years of service to the company, and each day I wonder if there will be another announcement of more layoffs.”

He continued, “Our compensation (relative to other companies hiring for the same skills) has fallen between 10 and 15 percent over the last few years, our healthcare costs have increased 400 percent….  I don’t know whether to stay and hope I don’t get fired, or move out of the state to take a position elsewhere….”

Another CAT employee shared, “[Those employees that are left are] now doing multiple jobs and walking the halls with the ghosts of those that left because the halls and workspaces are noticeably less crowded.”

The CAT layoffs underscore Illinois’ precarious financial situation. The state currently has over $11 billion in unpaid bills. Illinois’ pension debt jumped to $130 billion in in 2016 (up from $111 billion). And the state has the nation’s worst credit rating.

Illinois residents are leaving the state in droves. Illinois’ out-migration rate is worse than any other state in the region. What’s more, Illinois has the fastest shrinking workforce of all surrounding states. And with Illinois suffering the region’s heaviest loss of manufacturing jobs two years in a row, many workers in the state’s private sector are suffering.

AFSCME ignores economic reality

Clearly, AFSCME leadership is out of touch with the economic realties facing the 99.95 percent of workers in Illinois not covered by an AFSCME contract. The union has been filing lawsuits all over the state in an effort to force state taxpayers to heavily subsidize platinum-level health insurance for state workers and cover pay increases up to 29 percent. The demand for increased pay comes despite the fact that Illinois state workers are already the highest-paid state workers in the nation when adjusted for cost of living. In fact, AFSCME salaries already rose five times faster than Illinois workers in the private sector between 2005 and 2014.

When Gov. Bruce Rauner started negotiating with the union nearly two years ago, he wanted to bring union costs more in line with what state taxpayers can afford, while also avoiding widespread state worker layoffs.

But AFSCME came to the table with unrelenting, unreasonable demands that forced negotiations into impasse, or deadlock. If AFSCME were to get its way, its demands would cost the state an additional $3 billion in wage and benefit increases – including wage increases of 11.5 to 29 percent by 2019, continued platinum-level health insurance at little cost to workers, and a workweek with overtime for workers after just 37.5 hours.

Taxpayers simply cannot afford those demands.

On the other hand, Rauner’s offer to the union includes provisions to ease the financial burden on taxpayers. State workers would maintain the current salary levels that make them the highest-paid state workers in the nation when adjusted for cost of living. But it includes a temporary four-year wage freeze on those salaries. Other unions – including Teamsters and the Illinois Federation of Teachers – have agreed to a temporary four-year wage freeze.

And instead of continuing to provide platinum-level health insurance at bronze-level prices, the governor is asking AFSCME workers to pay 40 percent of their health care premiums – up from the 23 percent they pay now. This means state taxpayers will continue subsidizing 60 percent of an AFSCME employee’s health care, paying $11,600 of the total $19,328 annual cost per worker – still a significant amount by any standard.

The Rauner proposal also includes provisions clearly beneficial to state workers. For example, the governor has proposed over $200 million in additional compensation in the form of bonuses when employees meet simple, objective standards – such as not having unexcused absences. Also known as merit pay, this performance-based incentive would reward good employees with bonuses above and beyond normal salary.

But rather than compromise, AFSCME leadership ran to court to stop implementation of the governor’s contract and force the state back into negotiations – where the union can continue its unrealistic demands.

ASFSCME leadership is out of touch with Illinois’ economic reality and the hardship too many Illinoisans are experiencing. It’s time to set aside its quest for power and prioritize the fiscal health of both state workers and state taxpayers.

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