Report | Unions and Labor Standards

Cockeyed comparisons

Policy Memo #178

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Is this the new normal for public employee health care contributions?

Governor Chris Christie has proposed that New Jersey state and local public employees contribute 30% to the cost of their health insurance. State Sen. Stephen M. Sweeney’s proposal moves gradually toward the 30% goal over seven years. Both Governor Christie and Senator Sweeney assert that the 30% employee contribution is fair, since it will place state and local public employees at parity with private-sector workers. They are wrong. In New Jersey, comparable private-sector employees contribute 22% to the cost of their health insurance.

While the effort to seek parity in health costs is fundamentally flawed, an investigation of what comparable privatesector workers contribute to their health insurance is nonetheless informative—as long as one understands that the real issue for any employer is the total cost of their employees’ compensation. Whatever the mix among benefits and wages compensation, the remuneration is for work performed, which belongs to the employee. What matters is not whether one or another element is at market parity, but whether the entire compensation package is at parity with the market. As demonstrated in our 2010 Economic Policy Institute report, Are New Jersey Public Employees Overcompensated?, New Jersey’s state and local government employees are neither over- nor undercompensated.

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