The New York Times last week reported that recently passed legislation in New Jersey “will significantly increase costs or reduce benefits for three-quarters of a million public employees and retirees.” A typical New Jersey public worker who enrolls her family in her health care plan will now pay about $3,600 annually for her health care premium, up from about $1,000 that she paid prior to the new legislation.
In addition, the new legislation increases employee pension contributions by 2 percent over seven years, suspends cost-of-living increases for retired public workers, and prevents public workers from bargaining over health care benefits for at least the next four years.
“This is a dark today for workers’ rights as the race to the bottom continues,” said Larry Cohen, president of the CWA, which represents 65,000 state and other public sector workers in New Jersey.
New Jersey public employees and retirees will join their counterparts in California, Wisconsin, Massachusetts, and other states who are either paying more for their benefits or have had them cut.
And it’s not just public employees who will have to figure out how to get by on less. Despite healthy profits, private employers have been busy figuring out ways to pay their workers less. Auto companies succeeded in establishing two-tier wage systems in their plants. According to the Detroit Free Press, newly hired auto workers are paid about $15 an hour, about half of what other auto workers make. At one GM plant, laid off workers were forced to accept the new-hire rate if they wanted to get their jobs back.
In Wisconsin workers at Harley Davidson, Mercury Marine, and Kohler had to accept a new two-tier wage system in their new contracts and agree to allow their companies to rely more heavily on temporary workers, who work for the new-hire rate and don’t receive the benefits that permanent workers have.
In New Jersey, Gov. Chris Christie, a Republican, justified the cost increases and pension freeze as the only way that the state could close its budget gap. But CWA while it was negotiating a new contract for state employees proposed changes that would have saved the state $200 million in health care costs and kept premiums for the coverage much lower than those enacted.
Senate President Stephen M. Sweeney, a Democrat and member of the iron workers union, and state Assembly Speaker Sheila Y. Oliver, also a Democrat, sided with Gov. Christie and mustered enough Democratic support to pass the law.
After the vote, Hettie Rosenstein, the state director of the New Jersey CWA, criticized Democrats who lined up with Republicans on the bill. “Today is a sad day for hundreds of thousands of New Jersey working families who will get a pay cut at the stroke of Gov. Christie’s pen,” Rosenstein said. “It is a downright awful day for the Democratic Party, which has abandoned the middle-class and its own core values for the sake of a political backroom deal. The party which once stood for workers’ rights has torn itself apart under the leadership of self-interested political bosses.”
When the new legislation goes into effect, a typical worker, who makes between $65,000 and $70,000 a year will see her annual take home pay reduced by about $2,600 a year if her dependents are covered by her health care plan. She can reduce her cost, but will have to settle for less coverage if she does. Her pension contribution will also increase by 1 percent and rise in phases another 1 percent over the next seven years.
Health care premiums could increase even more because public workers can no longer bargain collectively over health care benefits, which means that it will be easier to pass along health care costs to workers. Rosenstein calculates that if health care costs rise 6 percent a year and those costs are passed along to workers, premiums will increase by $1,100 a year.
“We thank those who stood up and voted “No” despite the pressure,” Cohen said. “We will never forget them. We will also never forget those who moved New Jersey back fifty years, stripping bargaining rights from public workers and imposing health care cuts that will destroy living standards for hundreds of thousands of families.”