Lamont will give big fat raises to state workers

Gov. Ned Lamont is negotiating a new wage contract with the State Employees Bargaining Alliance Coalition. Despite Lamont’s claims to the contrary, it is highly likely that he will award state employees significant future wage increases as well as a generous modification of cost-of-living adjustments to their pensions after their retirement.

Any wage hikes and benefits would come on the heels of big wage increases in 2019 and 2020 under the old wage contract, which expired this past summer.

Nothing stands in the way of the ever-increasing generosity of state employee compensation.

Not this week’s data release showing that the median American household saw its income fall 2.9 percent last year while Connecticut state employees got a 5.5 percent wage increase.

Not the fact that Connecticut has had a big contraction in its workforce during the pandemic of about 6 percent and a top 10 unemployment rate, currently exceeding 7 percent, versus a national average nearing 5 percent.

Consistently, studies show that the compensation of Connecticut state employees exceeds average private sector compensation by one of the highest margins of the 50 states.

It is unsustainable and, more plainly, unjust. Virtually everyone in the state knows the situation and feels it is unfair. That includes Gov. Lamont, who said that in June 2020 when asked about the pay raise to take effect just days later on July 1.

So why might Lamont do something so patently unfair and so politically toxic as awarding pay raises to already overcompensated state workers while most Connecticut citizens and voters have been — and still are — hurting very badly?

Why? Because the state is facing a massive retirement wave, which, if mishandled, could cripple state government.

Last March, in a report that received relatively little media coverage, Boston Consulting Group documented that 27 percent of the state workforce is eligible to retire before June 30, 2022, and that about three-quarters lean toward retirement. Thirty percent intend to leave the state upon retirement.

BCG documented that the sclerotic state bureaucracy takes an average of 33 weeks to hire a new employee. With only 41 weeks remaining to replace retiring employees, the Lamont administration is fast approaching a severe manpower crisis.

The easiest way out of the crisis is to keep employees on board by offering them generous pay and benefit incentives.

The alternatives are suboptimal. Lamont could rehire retired workers as independent contractors, but then he would be paying those fees as well as funding retirement benefits.

He could outsource functions, but the state already pays outside providers an enormous amount — about $1.4 billion annually to nonprofits. “That sum hasn’t changed much in two decades. The [nonprofit] industry pegs the inflationary loss it’s taking on these payments at $460 million per year,” according to the CT Mirror. So, more outsourcing would compound the squeeze on the nonprofits, either rendering their condition even more precarious or necessitating a significant increase in their reimbursement rates.

The BCG study was supposed to facilitate a third approach. BCG was to help accelerate efficiency efforts, enabling the state to operate with less manpower. Efficiency is easier in concept than in actual practice.

Besides, all three of these difficult and only marginally helpful alternatives share one huge liability: The SEBAC unions will fight them tooth and nail, because all three reduce the number of unionized state employees paying dues to the union.

The one thing we know about Ned Lamont — or any Democrat, for that matter — is that he will not fight the unions.

So, it is a safe bet that Lamont will sign a juicy new wage contract with SEBAC. Inevitably, it will be highly unpopular, so the announcement will be buried as deeply as possible and spun like a top by Lamont’s spokespeople. Ideal timing for the announcement would be between Christmas and the New Year.

Likely, the governor’s spinmeisters will follow the lead of union leaders in referring to all state employees as “frontline workers,” although many agencies were closed to the public during most of the pandemic. The virtually inevitable pay hikes and favorable benefit modifications will then be classified as hardship pay to reward for employees for their phantom “frontline service.”

Lamont’s predecessor, Dannel Malloy, once boasted to a union gathering, “I am your servant.” Lamont is also in public (union) service, willingly or not.