State's public workers cope with reduced buying power following Walker legislation
State of Wisconsin clerical worker Gina Bertolini started paying about 6 percent of her $15.48 hourly wage toward her pension in August plus $84 a month for her health coverage.
Many other government employees carrying family health coverage took bigger hits, but overall Bertolini saw an 8 percent reduction in her $32,000 annual pay, about $2,500.
She worried, but took it in stride. Until the holidays.
"I've never been rich, but I always made a nice Christmas dinner for my family," said Bertolini, 59, who has two grown sons and two small grandchildren. "This year I couldn't afford to do the dinner. I did buy everyone a gift, but it was really modest. I didn't decorate. I thought, 'I'm just not going to think about this.'"
Bertolini is just one of tens of thousands of public workers in Wisconsin without union contracts who have faced reduced buying power in the wake of Gov. Scott Walker's landmark legislation - unveiled one year ago this week - to balance the budget by curtailing union collective bargaining and extracting financial concessions from workers.
Private sector workers have lost jobs and suffered pay and benefit cuts in recent years, and many are used to going without pensions, paying into retirement accounts and paying more for health insurance. But the erosion in public worker benefits happened suddenly, prompting massive protests at the Capitol, sparking recall efforts against Walker and lawmakers and transforming the state into a national battleground over the future of unions.
Walker spokesman Cullen Werwie blamed the budgeting practices of previous administrations, and said the higher insurance premiums and pension contributions prevented layoffs while keeping taxes down, cutting state costs at a rate of $308 million a year. Another $65 million in annual savings are expected from higher health care co-pays that started Jan. 1, Werwie said.
"Asking government employees to contribute to a portion of their pension and health care costs, far less than the average person in the private sector pays, helped keep thousands of workers on the job, while thousands of Wisconsinites have seen property tax relief for the first time in years," Werwie said.
The "shared sacrifices" brought government more in line with private business, said Assembly Speaker Jeff Fitzgerald, R-Horicon.
"Although it's tough, it's also been tough on the private sector, people who are unemployed now," Fitzgerald said. "Obviously, it's a highly charged issue."
While Republicans say the cuts will improve the business climate by holding down taxes, critics warn cutting so many workers' take-home pay risks harming the economy.
"It's less that they have to spend, and it's in the context of a recession, so it moves Wisconsin away from creating jobs," said Laura Dresser, a labor economist who is associate director of the liberal Center on Wisconsin Strategy at UW-Madison.
Lower end hit hardest
Wisconsin has about 370,000 public sector workers, including 267,000 in the pension system and 183,000 covered by the state health insurance system. A dwindling fraction haven't been affected yet because their union contracts haven't expired.
As a percentage of pay, the increases in employees' benefit contributions hit the low end of the pay spectrum hardest because the health premiums are flat dollar amounts regardless of income, the nonpartisan Legislative Fiscal Bureau said September, shortly after the higher payments hit paychecks.
The pension premium, even though it is proportional to income - roughly 6 percent of pay - also stings more at low income levels, said Tim Smeeding, director of the Institute for Research on Poverty at the UW-Madison La Follette School of Public Affairs.
"If your current living costs allow nothing extra for savings, (the $21,000) employee is hurt more than the ($210,000) employee," Smeeding said. "I have had two people who work for me, just a bit above the lower rate, in my office in tears saying they are not sure how they will manage."
A New York Times study last year found compensation for state public employees typically is higher at the low end of the pay scale compared to the private sector, but lower at the higher end of the pay scale.
Of 39,046 permanent classified state workers in 2010, two-thirds earned between $15 and $30 an hour, or between $31,200 and $62,400 annually on a 40-hour work week. More than 1,200 earned $12 or less.
Many state workers are upset about losing ground economically, and looking for answers, said Debra Neubauer, who runs UW Extension's Financial Education Center. Last year, more than 1,000 state workers and retirees attended more than three dozen 90-minute classes on coping with pay cuts. Some 1,400 viewed the class online.
The center advises moves that include switching to cheaper auto insurance, cellphone plans and cable packages, and seeking help from food pantries, energy assistance programs and foreclosure counselors. For the lowest paid, the advice includes tracking every penny and looking for additional income, she said.
"The less resources you have, the less room you have for making an error," Neubauer said.
Making changes, sacrifices
Last summer as pay cuts loomed, Department of Workforce Development research technician Nicki Stapleton worried about falling behind again on her $284-a-month student loan bills.
She dropped her stepchildren from her health plan, cutting the premium she pays. And she eventually won promotion to a higher state job classification, raising her pay from $12.89 an hour to $15.84.
But she still took on a job working about 10 hours each weekend as a $13.50-an-hour custodian at the Fitchburg Community Center.
Still, Stapleton said she shops at second-hand stores, dropped her Netflix account and reduced her cable package but can't cancel it until September without paying a penalty. She's finding it hard to save enough money to leave her apartment and purchase a duplex with her mother.
"I don't buy anything that's not a sale," Stapleton said. "I am also possibly considering a third job."
Further up the pay scale, at $29 an hour, state public health administrator Reghan Walsh pays most of the bills in her East Side Madison household. Her husband works for a private bus company that has had less work for him this year.
The cut in Walsh's take-home pay means the couple discarded plans to replace one of their cars - one is a 1993 and the other a 1996. Walsh has reluctantly reduced charitable giving.
State workers have endured several years of stagnant wages and unpaid furlough days, she said. "Being paid less to do the same job, it's just a slap in the face," Walsh said.
'There's no cushion anywhere'
After 12 years working near the low end of the state pay scale, Bertolini already had given up her car, fled a big rent increase on the Isthmus by moving to an apartment in an "iffy" North Side neighborhood, and grown accustomed to doing without a cellphone, Internet service or cable television by the time she began contributing more of her paycheck to benefits. She worked a second job as a data inputter for several years but quit recently after suffering numbness in her hands.
She shops in thrift stores, doesn't go out to eat and can't see how she will be able to afford new eyeglasses.
"I'm doing worse every year financially," Bertolini said. "I've been poor before and I'll squeak by, but if something big comes up there's no cushion anywhere. There's not a whole lot of places to cut back."
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Many other government employees carrying family health coverage took bigger hits, but overall Bertolini saw an 8 percent reduction in her $32,000 annual pay, about $2,500.
She worried, but took it in stride. Until the holidays.
"I've never been rich, but I always made a nice Christmas dinner for my family," said Bertolini, 59, who has two grown sons and two small grandchildren. "This year I couldn't afford to do the dinner. I did buy everyone a gift, but it was really modest. I didn't decorate. I thought, 'I'm just not going to think about this.'"
Bertolini is just one of tens of thousands of public workers in Wisconsin without union contracts who have faced reduced buying power in the wake of Gov. Scott Walker's landmark legislation - unveiled one year ago this week - to balance the budget by curtailing union collective bargaining and extracting financial concessions from workers.
Private sector workers have lost jobs and suffered pay and benefit cuts in recent years, and many are used to going without pensions, paying into retirement accounts and paying more for health insurance. But the erosion in public worker benefits happened suddenly, prompting massive protests at the Capitol, sparking recall efforts against Walker and lawmakers and transforming the state into a national battleground over the future of unions.
Walker spokesman Cullen Werwie blamed the budgeting practices of previous administrations, and said the higher insurance premiums and pension contributions prevented layoffs while keeping taxes down, cutting state costs at a rate of $308 million a year. Another $65 million in annual savings are expected from higher health care co-pays that started Jan. 1, Werwie said.
"Asking government employees to contribute to a portion of their pension and health care costs, far less than the average person in the private sector pays, helped keep thousands of workers on the job, while thousands of Wisconsinites have seen property tax relief for the first time in years," Werwie said.
The "shared sacrifices" brought government more in line with private business, said Assembly Speaker Jeff Fitzgerald, R-Horicon.
"Although it's tough, it's also been tough on the private sector, people who are unemployed now," Fitzgerald said. "Obviously, it's a highly charged issue."
While Republicans say the cuts will improve the business climate by holding down taxes, critics warn cutting so many workers' take-home pay risks harming the economy.
"It's less that they have to spend, and it's in the context of a recession, so it moves Wisconsin away from creating jobs," said Laura Dresser, a labor economist who is associate director of the liberal Center on Wisconsin Strategy at UW-Madison.
Lower end hit hardest
Wisconsin has about 370,000 public sector workers, including 267,000 in the pension system and 183,000 covered by the state health insurance system. A dwindling fraction haven't been affected yet because their union contracts haven't expired.
As a percentage of pay, the increases in employees' benefit contributions hit the low end of the pay spectrum hardest because the health premiums are flat dollar amounts regardless of income, the nonpartisan Legislative Fiscal Bureau said September, shortly after the higher payments hit paychecks.
The pension premium, even though it is proportional to income - roughly 6 percent of pay - also stings more at low income levels, said Tim Smeeding, director of the Institute for Research on Poverty at the UW-Madison La Follette School of Public Affairs.
"If your current living costs allow nothing extra for savings, (the $21,000) employee is hurt more than the ($210,000) employee," Smeeding said. "I have had two people who work for me, just a bit above the lower rate, in my office in tears saying they are not sure how they will manage."
A New York Times study last year found compensation for state public employees typically is higher at the low end of the pay scale compared to the private sector, but lower at the higher end of the pay scale.
Of 39,046 permanent classified state workers in 2010, two-thirds earned between $15 and $30 an hour, or between $31,200 and $62,400 annually on a 40-hour work week. More than 1,200 earned $12 or less.
Many state workers are upset about losing ground economically, and looking for answers, said Debra Neubauer, who runs UW Extension's Financial Education Center. Last year, more than 1,000 state workers and retirees attended more than three dozen 90-minute classes on coping with pay cuts. Some 1,400 viewed the class online.
The center advises moves that include switching to cheaper auto insurance, cellphone plans and cable packages, and seeking help from food pantries, energy assistance programs and foreclosure counselors. For the lowest paid, the advice includes tracking every penny and looking for additional income, she said.
"The less resources you have, the less room you have for making an error," Neubauer said.
Making changes, sacrifices
Last summer as pay cuts loomed, Department of Workforce Development research technician Nicki Stapleton worried about falling behind again on her $284-a-month student loan bills.
She dropped her stepchildren from her health plan, cutting the premium she pays. And she eventually won promotion to a higher state job classification, raising her pay from $12.89 an hour to $15.84.
But she still took on a job working about 10 hours each weekend as a $13.50-an-hour custodian at the Fitchburg Community Center.
Still, Stapleton said she shops at second-hand stores, dropped her Netflix account and reduced her cable package but can't cancel it until September without paying a penalty. She's finding it hard to save enough money to leave her apartment and purchase a duplex with her mother.
"I don't buy anything that's not a sale," Stapleton said. "I am also possibly considering a third job."
Further up the pay scale, at $29 an hour, state public health administrator Reghan Walsh pays most of the bills in her East Side Madison household. Her husband works for a private bus company that has had less work for him this year.
The cut in Walsh's take-home pay means the couple discarded plans to replace one of their cars - one is a 1993 and the other a 1996. Walsh has reluctantly reduced charitable giving.
State workers have endured several years of stagnant wages and unpaid furlough days, she said. "Being paid less to do the same job, it's just a slap in the face," Walsh said.
'There's no cushion anywhere'
After 12 years working near the low end of the state pay scale, Bertolini already had given up her car, fled a big rent increase on the Isthmus by moving to an apartment in an "iffy" North Side neighborhood, and grown accustomed to doing without a cellphone, Internet service or cable television by the time she began contributing more of her paycheck to benefits. She worked a second job as a data inputter for several years but quit recently after suffering numbness in her hands.
She shops in thrift stores, doesn't go out to eat and can't see how she will be able to afford new eyeglasses.
"I'm doing worse every year financially," Bertolini said. "I've been poor before and I'll squeak by, but if something big comes up there's no cushion anywhere. There's not a whole lot of places to cut back."
source