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Dannel Malloy was unpopular, but his legacy is worse than you think

There’s a strange ongoing media fascination with former Democratic Gov. Dannel P. Malloy, including a Sept. 5 article “State employee OT is up, but salary costs are lower than a decade ago,” focusing upon his efforts to downsize the state labor force and negotiate wage concessions from state unions.

It’s a marvel that anyone is interested in someone who left office as the least-popular governor in the country.

But that’s the point. The recent article implies that Malloy’s unpopularity reflects an unfair assessment of his performance and that he deserves a resurrection. He doesn’t. He mismanaged the state labor force, achieving insignificant downsizing and perpetuating overgenerous wages.

Malloy negotiated two omnibus labor contracts, the SEBAC 2011 and SEBAC 2017 agreements, covering state employee benefits through 2027 and layoff and wage policy for the decade from July 1, 2011 through June 30, 2021.

Over the decade, state workers received three 3-percent wage increases, went five years without increases and are now receiving two years of 3.5-percent increases. This translates into a simple average annual increase of 1.7 percent. Throughout this period, state employees have enjoyed — and continue to enjoy — a no-layoff guarantee.

Here’s what the unions’ chief negotiator, Daniel Livingston, said of SEBAC 2011 concerning its one-year wage freeze and three subsequent 3 percent annual raises: “Arbitrators around the country are ordering four zeroes in many cases.” On job security: “Nowhere else in the country will you find four years job security.”

Sounds like Livingston ran circles around Malloy.

Not only that, but Malloy’s negotiating failure was shameful within the context of the times. Over 100,000 private sector workers in Connecticut lost their jobs in the Great Recession. State workers shared none of this pain. Malloy coddled them.

Somehow, nevertheless, Malloy has been credited with reducing aggregate wages for the state’s executive branch workforce (representing only about half the state workforce).

Data from the Office of Policy and Management belie this notion. Aggregate executive branch wages under Malloy remained flat from fiscal 2011 through the end of the most recent fiscal year. There’s been no reduction.

Keeping wages flat for eight years would be a major accomplishment — if that were the whole story. It’s not. Malloy is responsible for 10 years, including the final two that he negotiated with 3.5 percent wage increases and job security through June 30, 2021.

Moreover, previously suspended “step increases” will begin again this year for more than half the workforce. “Steps” have nothing to do with meritorious performance or promotions. They average about 3 percent, according to the non-partisan Office of Fiscal Analysis. Spreading them across the whole workforce, they add another 1.5 percent on top of the 3.5 percent wage increase, bringing the total annual wage increases to 5 percent during the current fiscal year and the next.

That will add $270 million, or 11 percent, to aggregate executive branch wages by June 30, 2021.

The recent article gives Malloy credit for reducing the size of the executive branch workforce by nearly 10 percent. That’s a slight exaggeration. According to OPM, the workforce has dropped by about 8.3 percent from the 28,751 employed on June 30, 2011. That’s roughly 1 percent per year, hardly a meaningful accomplishment.

Actually, if anyone is due credit for reducing the headcount, it is Malloy’s predecessor, Republican Jodi Rell, who reduced the headcount by 3,100, or about 10 percent in just the last three years of her administration. Rell took decisive action after the 2008 financial crisis, implementing an early retirement program under which 3,460 workers retired in June 2009.

Malloy’s failure to achieve meaningful downsizing or wage restraint is not only shameful, given the pain in the state’s private sector and the state’s anemic economic performance during his two terms, but it is even more appalling considering that Connecticut state workers have enjoyed consistently higher wages than the state’s private sector workers. The reverse was true in virtually all other states when Malloy took office.

Malloy had to have known about this extraordinarily overgenerous pay. In 2010, the Commission on Enhanced Agency Options reported that the average state worker wage was $65,750 versus a private sector average of $59,300. More recent third-party studies have found that this unfair disparity persists, including a 2019 study of 2017 data. That’s before the impact of the 5 percent wage increases this year and next.

The current revisitation of Dannel Malloy’s record is not doing his legacy any favors. His poor reputation is well deserved, if not in need of a downgrade. But the real tragedy is not personal. It is that his decade of failure has left the workforce and wage problem to grow significantly. This guarantees a crisis down the road — worker pensions are based upon pay at retirement. Overgenerous wages translate inexorably into overgenerous pensions.


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