Ted Dabrowsi and John Klingner, Illinois Policy Institute May 31, 2016, 7:05am


Illinois’ biggest government-worker union, the American Federation of State, County and Municipal Employees, is currently engaged in contract negotiations with the state in an attempt to boost its members’ salaries and benefits. As part of its negotiation tactics, AFSCME claims its “middle class” benefits are under attack. Union officials are demanding additional salary and benefits that will cost taxpayers $3 billion more than what the state is offering.

The truth, however, looks a lot different from the picture AFSCME has painted. The Illinois Policy Institute’s new report “Cadillac benefits: Illinois state workers highest paid in nation” challenges AFSCME’s claim by listing four significant facts about Illinois state-worker compensation:

Illinois state workers are the highest-paid in the country, when adjusted for cost of living

-AFSCME workers receive Cadillac health care benefits

-Most state workers receive free retiree health insurance

-Career state retirees on average receive $1.6 million in pension benefits

-Here are a few of the most frequently asked questions regarding the report’s findings:

Q: How did the Institute determine that Illinois state workers are the highest-paid in the country?

A: The Institute’s report found Illinois state workers receive the highest wages of any state workers in the country, when adjusted for cost of living. Illinois pays its state workers nearly $60,000 a year when adjusted for cost of living, far more than its neighbors, and nearly $10,000 more than the national average.

The source data for the Institute’s numbers is publicly available from the U.S. Bureau of Economic Analysis, or BEA. The data is derived from the BEA’s “Regional Data – Annual State Personal Income and Employment.” Cost-of-living data is derived from the BEA’s “Regional Price Parities.”

The BEA is not the only institution with data that show Illinois state workers as the highest-paid state workers in the nation.

The U.S. Bureau of Labor Statistics’ “Quarterly Census of Employment and Wages” also ranks Illinois state workers as the highest-paid when adjusted for cost of living.

And The Pew Charitable Trusts has published data consistent with the Institute’s findings after adjusting worker pay for cost of living.

Q: Which state workers are included in the “highest-paid in the country” statistic?

A: The U.S. Bureau of Economic Analysis’ definition of “state government employee” includes all workers directly employed by state government, as well as state public-university employees (faculty, administrative staff, etc.).

Public K-12 teachers are not included as state-government employees. Instead, they are defined as local-government workers.

Q: Do Illinois state AFSCME workers receive more generous health care benefits compared to other state workers?

A: Active state AFSCME workers receive Cadillac health care plans, meaning workers receive the Affordable Care Act equivalent of platinum-level benefits but pay bronze-level prices for them. Illinois taxpayers end up subsidizing 77 percent of the average AFSCME worker’s health care, which costs taxpayers $14,880 a year per worker.

Those health benefits, while out of sync with what Illinois taxpayers can afford, are generally in line with what other state workers receive across the country.

But when free retiree health care is included, Illinois worker benefits turn out to be far more generous than what most other states offer. Illinois state workers with 20 years of service or more receive free health insurance when they retire. According to a 2011 Mercer analysis, Illinois is one of only a few states in the country to offer such a deal. Taxpayers in other states, on average, pay for a little less than half of their state retirees’ health insurance costs.

This benefit costs Illinois taxpayers $200,000 to $500,000 per employee, depending on when the worker was hired, how long he or she worked, and when he or she retired.

Q: Does the state’s proposed health care reform plan for AFSCME workers meet the requirement for “affordable” coverage under the Affordable Care Act?

A: Yes, according to the rules of the Affordable Care Act, the state’s proposed reforms fall within the bounds of what is considered “affordable” health care coverage for workers.

The state’s last offer to AFSCME states that employees’ health insurance coverage costs will be capped at 9.5 percent of income.

That 9.5 percent of income is the maximum amount that is considered “affordable” under the terms of the Affordable Care Act.

Q: What agreements has the state reached with other public-sector unions?

A: Eighteen other public-sector unions representing thousands of state workers have already agreed to new contracts with the state, including the Teamsters and the Illinois Federation of Teachers.

The Teamsters agreed to a wage freeze, the implementation of a bonus system for employees meeting or exceeding expectations, and additional flexibility in work rules. In addition, the state agreed to pay an additional portion of Teamsters’ health care costs, in exchange for members being responsible for any increased health care costs above 10 percent that may occur cover the course of the contract.

Other groups, such as the building trades unions, agreed to continue receiving prevailing wages, which may rise or fall depending on local economic conditions, and agreed to merit pay and flexible work rules.

AFSCME, on the other hand, is demanding guaranteed four-year raises ranging from 11.5 to 29 percent, a 37.5-hour workweek, five weeks of vacation and enhanced health care coverage. Those demands would cost Illinois taxpayers $3 billion more than what the state is proposing.

Q: What workers are included in the “state workers on average receive $1.6 million in pension benefits” statistic?

A: The Institute found that over half of state workers retire in their 50s. Recently retired career state workers (those with 30 or more years of service) will on average receive $1.6 million in benefits over the course of their retirements due to generous retirement rules, longer life expectancies, and substantial cost-of-living increases.

The Institute’s pension data come from the State Employees’ Retirement System, or SERS. SERS’s 55,600 retired members only include public-sector workers directly employed by the state. K-12 teachers, university professors, state judges and Illinois lawmakers are members of their own state pension funds and are not included in SERS.

In addition, members of SERS are the only state workers who also receive Social Security benefits. More than 96 percent of the 63,273 active members who are enrolled in SERS also participate in Social Security.

More News