Governor Lamont and the Democrats have increased the wages of Connecticut state employees by a stunning 33%, awarding them six consecutive annual wage increases (two 5.5% raises, then four 4.5% pay bumps). A 2023 study found Connecticut state employee wages to be the second-highest of the 50 states.
Yet, Democrats in Hartford claim the state is having trouble recruiting new employees. How so? The active workforce grew from about 47,000 to 49,000 in the last fiscal year, according to the just-released 2024 Report of the Actuary for the state pension fund.
Why the “trouble?” Democrats allege that state employee pension and health care benefits are too skimpy and need to be fattened up.
Really? Connecticut state worker health care benefits are the most generous of the 50 states and their pension benefits rank in the top quartile.
Active Connecticut state employees have the most generous health care benefits of all state employees nationwide, according to a 2023 study by experts at Georgetown University.
Moreover, a December 2021 study found that Connecticut state employees’ retirement health care benefits were the most generous by far among the 50 states. Note, The Townsend Group, which I head, oversaw the study which was commissioned by the Nutmeg Research Initiative and conducted by Dr. Andrew Biggs, one of the nation’s foremost retirement benefit experts. On NRI’s behalf, Townsend agreed with Dr. Biggs the parameters to be analyzed.
Dr. Biggs’ study covered all elements of compensation. Biggs compared state employee compensation in each state to compensation for comparable workers in the private sector in the same state, thereby eliminating any notion that Connecticut state employees need high pay and benefits because of the high cost of living in the Nutmeg State.
On the pension side, Dr. Biggs found Connecticut state employee pension benefits to be the 11th most generous of the 50 states. That is, Connecticut state employee pension benefits surpass average private sector pension benefits in Connecticut by the 11th greatest margin of the 50 states. Note, Dr. Biggs’ measured the benefits that currently active employees can expect in retirement, not the benefits enjoyed by already-retired state employees.
This is a crucial difference, since the new debate in Hartford alleges that insufficient pension benefits for new state employees have made it difficult to recruit for state positions. While the average pension benefit for active Connecticut state employee is the 11th most generous, the more relevant comparison is to the private sector in Connecticut, namely the labor pool from which the state must hire employees.
In Connecticut, and nationwide, traditional guaranteed-benefit pensions have all but disappeared from the private sector. Most workers lucky enough to have a pension have a 401K-type saving plan to which their employer may or may not contribute.
Dr. Biggs found that private employer contributions to employee retirement accounts averaged 3.5% of salary and wages on a nationwide basis (state by state private sector pension data is not available). In contrast, Connecticut pays pension benefits equal to 22.4% of state worker paychecks.
It is near-impossible to believe that the state is having general difficulty hiring in competition with Connecticut’s private sector.
Perhaps, in specific instances. Transportation Commissioner Garrett Eucalitto has said that his department is having trouble hiring engineers. So, adjust compensation for beginning engineers, but absolutely do not fatten pay and benefits for all state employees.
Actually, if any adjustments are made, they should freeze pay and reduce benefits which far exceed those of other states’ workers and private workers in Connecticut. The reductions should apply to all employees. Instead, in the past, the unions and the Democrats have made adjustments applicable only to new employees.
In 2017, a new “tier” of employees was created for all new hires. The new Tier IV has a new pension benefit that is a hybrid of (1) the traditional guaranteed defined benefit enjoyed by all other Connecticut employees and (2) a 401K-type benefit. This reform should have applied to the pension benefits that existing employees had not yet earned (their unvested benefits).
There is much talk in union-Democrat circles about “concessions” and “sacrifices” made by unionized state workers. Don’t believe any of this belly aching. “Sacrifices” and “concessions” that apply only to new employees are not sacrifices by existing employees. They are the opposite. They are the avoidance of sacrifice. Moreover, reforms only for new hires create an underclass out of new hires.
If there is a recruitment problem, this new underclass is the problem. If the Tier IV pension benefit is a problem, then reduction of unvested pension benefits of other tiers should be used to supplement Tier IV pensions.
It borders on lunacy to suggest that a state paying the second highest wages, offering by far the most generous health care benefits and the 11th most generous pension benefits is having difficulty hiring due to insufficient compensation.
Red Jahncke is a nationally recognized columnist, who writes about politics and policy. His columns appear in numerous national publications, such as The Wall Street Journal, Bloomberg, USA Today, The Hill, Issues & Insights and National Review as well as many Connecticut newspapers.