Category Archives: Public Sector

Employer Costs for Employee Compensation – September 2015

Source: U.S. Bureau of Labor Statistics, News Release, USDL-15-2329, December 9, 2015

Employer costs for employee compensation for civilian workers averaged $33.37 per hour worked in September 2015, the U.S. Bureau of Labor Statistics reported today. Wages and salaries averaged $22.88 per hour worked and accounted for 68.6 percent of these costs, while benefits averaged $10.48 and accounted for the remaining 31.4 percent. Total employer compensation costs for private industry workers averaged $31.53 per hour worked in September 2015. Employer Costs for Employee Compensation (ECEC), a product of the National Compensation Survey, measures employer costs for wages and salaries, and employee benefits for nonfarm private and state and local government workers.

Compensation costs in state and local government

State and local government employers spent an average of $44.66 per hour worked for employee compensation in September 2015. Wages and salaries averaged $28.45 per hour and accounted for 63.7 percent of compensation costs, while benefits averaged $16.21 per hour worked and accounted for the remaining 36.3 percent. Total compensation costs for management, professional, and related workers averaged $54.02 per hour worked. This major occupational group includes teachers, averaging $60.92 per hour worked. Total compensation for sales and office workers averaged $30.83 per hour worked and service workers averaged $34.02. (See chart 1 and table 4.)

For state and local government employees, employer costs for insurance benefits averaged $5.34 per hour, or 12.0 percent of total compensation. The largest component of insurance costs in September 2015 was health insurance, which averaged $5.20, or 11.6 percent of total compensation. (See chart 2 and table 3.)

In September 2015, the average cost for retirement and savings benefits was $4.63 per hour worked in state and local government, or 10.4 percent of total compensation. Included in this amount were employer costs for defined benefit plans, which averaged $4.26 per hour (9.5 percent of total compensation), and defined contribution plans, which averaged 37 cents (0.8 percent). (See chart 2 and table 3.) Defined benefit plans specify a formula for determining future benefits, while defined contribution plans specify employer contributions but do not guarantee the amount of future benefits. Two components of benefit costs are paid leave and legally required benefits. Paid leave benefit costs include vacation, holiday, sick leave, and personal leave. The average cost for paid leave was $3.24 per hour worked for state and local government employees. Costs for legally required benefits, including Social Security, Medicare, unemployment insurance (both state and federal), and workers’ compensation, averaged $2.63 per hour worked. (See table 3.)….

Workforce of Tomorrow

Source: Local Government Research Collaborative (LGRC) and the Center for State and Local Government Excellence (SLGE), December 2015

From the summary:
How can local governments compete for talent as more of their workforce retires and they need to appeal to a new generation that has many choices about where to work?

“Workforce of Tomorrow,” a report released today by the Local Government Research Collaborative (LGRC) and the Center for State and Local Government Excellence (SLGE), recommends six action strategies to build the workforce of tomorrow:
• Reinvent human resources to become more flexible, nimble, and strategic. Seek staff who champion people management issues and can set the workforce agenda.
• Revamp antiquated policies and practices to meet the needs and expectations of a changing workforce.
• Build a brand that tells the great story of public service
• Focus on talent management, leadership development, and succession planning to prepare for workforce transitions, build capacity, and grow future leaders.
• Create a culture that values and engages employees in meaningful ways.
• Leverage technology, data, and automation to improve operations and provide employees with the tools they need.

Benefits, retirement and savings make up larger percentage of government employee compensation

Source: U.S. Department of Labor, Bureau of Labor Statistics, The Economics Daily, December 16, 2015

Over the last 10 years, state and local government employer costs for employee benefits have increased as a share of total compensation. This can be mostly attributed to increases in retirement and savings, specifically defined benefit plans. Retirement and savings as a share of total compensation increased from 6.6 percent in March 2005 to 10.4 percent in September 2015.

Forensics and the Future of a Connecticut Pension Plan

Source: Jean-Pierre Aubry and Alicia H. Munnell, Center for Retirement Research at Boston College, State and Local Pension Plans, SLP#46, December 2015

The brief’s key findings are:
– Connecticut’s State Employees Retirement System faces a large unfunded liability, despite recent efforts by the State to fund.
– A significant source of the liability is the “legacy debt” built up before the State began pre-funding its pensions in the 1970s.
– More recently, inadequate contributions, low investment returns (since 2000), and early retirement incentives have added to the problem.
– A promising approach for addressing the funding problem is to provide more breathing room in exchange for a real and sustained commitment to funding by:
– separately funding the legacy debt over multiple generations; while
– funding ongoing benefits using a stricter method for calculating required contributions, and reducing the long-term assumed return on plan assets.

Which Parts of Their Collective Bargaining Agreements Do the Friedrichs Plaintiffs Oppose?

Source: Andrew Strom, OnLabor blog, November 24, 2015

The theory of the Friedrichs case is that requiring the plaintiffs to pay fair share fees imposes a “severe and ongoing infringement” of their rights to free speech. Their Complaint asserts that each plaintiff “objects to many of the unions’ public policy positions, including positions taken in collective bargaining.” The fair share fees that are at issue in the case do not go to fund the unions’ public policy initiatives. Instead, they only fund activities that are germane to collective bargaining. And because of the way the case has been litigated, the plaintiffs have not identified which specific provisions in their collective bargaining agreements they oppose.

In their Supreme Court brief, the Friedrichs plaintiffs argue that wages and benefits for teachers can be controversial, and they assert that collective bargaining involves matters relating to education policy, but they never assert that they personally oppose their union on any issues addressed by their own collective bargaining agreements. While the brief is full of generalized assertions about collective bargaining agreements, it never addresses any of the specific collective bargaining agreements that apply to the plaintiffs. ….

….The unwillingness of the Friedrichs plaintiffs to identify the specific collective bargaining activities that they find objectionable is at odds with the heated rhetoric in their lawyers’ Supreme Court brief. While their lawyers assert that the Friedrichs plaintiffs are being forced to contribute money “for the propagation of opinions which [they] disbelieve[],” in fact, it appears that their agency fees are going to fund negotiation and enforcement of collective bargaining agreements that directly benefit them…..

Massive Rolling Strikes Shut Down Quebec

Source: Sonia Singh, Labor Notes, November 23, 2015

After provincial bargaining stalled, 400,000 public sector workers across Quebec walked out in October and November on rolling one-day strikes.

The government is proposing pension cuts and only a 3 percent salary increase over five years. Since coming to power in April 2014 it has already begun cuts to services, including slashing health and education funding.

The Common Front, a coalition of Quebec public sector unions, is coordinating the strikes, which include teachers, health care workers, and government employees. Members voted to authorize six days of strikes per union. These began with one-day strikes, staggered by region. The Common Front vowed that if no agreement was reached, all members would strike at the same time December 1-3.

Labor Notes interviewed Benoit Renaud and Philippe de Grosbois, who have both been on strike. Renaud is an adult education teacher in the city of Gatineau and a member of the La Fédération Autonome de L’enseignement. de Grosbois teaches in a pre-college program in Laval and is an executive of his local, which is part of the Confédération des Syndicats Nationaux.

At the time of the interview, a December general strike was still planned. However, the Common Front recently announced it’s postponing the strike while negotiations continue…..

Legal Challenges to Interest Arbitration: Evidence From Canada

Source: Joseph B. Rose, Labor Law Journal, Vol. 66 no. 3, Fall 2015
(subscription required)

Although interest arbitration in Canada is used in a variety of contexts, its widest application involves the settlement of disputes in essential services. For groups such as police, firefighters and hospital workers compulsory interest arbitration is a substitute for the right to strike. In some sectors of the economy where strikes are permitted, but could potentially pose a hardship or significant inconvenience, senior governments have intervened or threatened to intervene to preempt strike action or order striking workers back to work. In these circumstances, the disputes are usually referred to binding arbitration.

As in the United States, economic and political pressures have posed a threat to the efficacy of interest arbitration and contributed to calls to reform interest arbitration schemes in Canada. This paper examines recent legal developments involving the regulation of interest arbitration and assesses the relative strengths and weaknesses of these approaches to dispute resolution. The first section examines some attributes of an effective interest arbitration system and briefly reviews several controversies surrounding interest arbitration. Next, we assess the impact of recent legislation on interest arbitration. The ascendancy of government austerity policies following the global economic crisis has led to restrictive labor laws regulating public sector bargaining and limitations on the right to strike in the private sector. The impact of government intervention focuses first on temporal limits (wage restraint laws and policies) and permanent changes to interest arbitration statutes. This is followed by referrals to interest arbitration associated with ad hoc, back-to-work laws. Changes affecting interest arbitration have included format (conventional arbitration or final offer selection), the selection process for arbitrators and arbitral criteria. In the final section, we consider both the potential and future of interest arbitration….

Final Report on Connecticut State Retirement Systems: SERS and TRS

Source: Jean-Pierre Aubry and Alicia H. Munnell, Center for Retirement Research at Boston College, November 2015

The report’s key findings are:
– Connecticut’s pension systems for state employees and teachers face large unfunded liabilities, despite recent efforts by the State to fund.
– A significant source of the problem is the “legacy debt” built up before the State began pre-funding its pensions in the 1970s.
– Since pre-funding began, inadequate contributions from the State and low investment returns have added to the problem.
– One way to address the problem is through a two-step approach:
– separately finance the legacy debt over multiple generations; and
– fund ongoing benefits using a level-dollar amortization method over a reasonable rolling period; and reduce the long-term assumed return.

Why U.S. States Need Pension Waiver Credits

Source: Randall K. Johnson, Mississippi College School of Law Research Paper No. 2015-03 September 29, 2015
(subscription required)

From the abstract:
This article identifies a novel approach to public pension reform. It does its work in, at least, four ways. First, the article encourages better use of public sector resources by calling for the elimination of public pension inefficiencies. Next, it explains how to reduce public pension inefficiencies, at least on a prospective basis, by moving away from defined-benefit pension plans. The article also describes a way to move beyond defined-benefit pension plans, which calls for the creation of a new tax expenditure program (Pension Waiver Credits). Lastly, it explains how to implement this new tax expenditure program: so as to optimize the use of public sector resources.