From the recall of Gov. Scott Walker in Wisconsin to the threat of a strike at Marian Regional Medical Center, employees’ unions have been front and center in the news as of late.
According to the American Federation of Labor and Congress of Industrial Organization’s website, aflcio.org, the modern labor movement began in the mid 1800s with the founding of the American Federation of Labor by American cigar maker Samuel Gompers in 1886. The AFL was an alliance of craft unions, which merged with the Congress of Industrial Organizations in the 1950s.
Today, unions represent the interests of more than 16 million people nationwide. The collective goal of most every union is to ensure safe labor practices and fair wages and benefits for their employees.
The organizations, however, have come under fire since the economic crisis began in 2008, when two of the country’s largest automakers—GM and Chrysler—received $85 million in government funds to stay afloat. Some conservatives blamed the near-bankruptcy on labor negotiations; others argued that autoworkers’ concessions helped the companies stay viable, blaming financial woes on the competitive foreign market and other issues.
Locally, a similar debate is swirling around another labor union: Service Employees International Union (SEIU) 620. SEIU 620 represents more than 3,500 employees in 20 different public agencies throughout the Central Coast, but the organization is probably best known for representing employees at the county level.
The Santa Barbara County Employees Retirement System (SBCERS)—or, more specifically, its financial troubles—has been on the public radar for years. And, for years, officials and other members of the community have warned that the county isn’t capable of keeping the system solvent.
One of these people is Andy Caldwell, executive director of the Coalition of Labor, Agriculture, and Business (COLAB) in Santa Barbara County.
In a recent interview with the Sun, Caldwell said he’s grateful to unions for advocating for higher wages and better working conditions.
“They’ve been successful in establishing some of the best working conditions and retirement benefits in the world,” he said. “I think some companies and agencies would enforce the absolute minimum, if they could. Unions gave us a floor for good wages and benefits.” But he said a lot of union organizations have become big businesses themselves over the years.
“Some of them have pushed so hard that they’ve taken the business industry down,” he explained, using the auto industry as an example. “The market should keep balance between the union and the employer. But there’s no balance in the public sector in California and, one could argue, in Wisconsin.”
The biggest culprit, Caldwell said, is pensions.
“Public servants used to make less than the private sector. It’s now flipped; we are serving the public unions instead of public unions serving us,” he said. “I think they need to switch to defined benefits instead of guaranteed benefits like the rest of the world.”
In Santa Barbara County, the pension system is funded three ways: Employees have money deducted from every paycheck, typically 5 to 7 percent. The county matches that amount. And the combined money is invested in the stock market. Before 2011, county employees were expected to receive 80 percent of their highest salary if they retired at age 65 with 30 years of service.
The county expected to fill that promise with returns from the stock market. However, when that tanked in 2008, the option was no longer available. In response, the county retirement board adjusted its investment return rate from a little more than 8 percent to 7.75 percent—which proved not to be enough. The county’s losses were estimated at $1 billion in 2008. To keep the pensions funded, officials have had to take money out of the general fund. This has left the county grappling with multi-million dollar deficits for the last several years—a trend that’s expected to continue.
Many SEIU employees, however, argue that they’ve worked with the county over the years to come to a consensus over pensions, benefits, and wages.
Robin Barber, a field representative for SEIU 620, said in an e-mail to the Sun that the purpose of her organization is to protect the labor rights and working conditions of working families. She said the union has become “more politically active” and has “utilized our collective powers” to ensure those rights and protections.
The Sun asked Barber what she’d say to someone who believes pensions aren’t sustainable.
“The pension, for the most part, pays for itself through investments of the benefits paid into it. There are ways to protect the right for everyone to have retirement income that they can provide a living from. That is not just the right of government employees, but should be the right of every working individual to be able to provide for themselves.”
Leaders at SEIU 620 agree that some adjustments could be made to the county’s retirement system, she said, such as curbing pension spiking (cashing in vacation pay to boost one’s pension); imposing benefit or income limits; and having employees share a larger percentage of the costs.
“In my personal opinion, [the county] went too far with their changes and virtually gutted the retirement of new employees,” Barber said. “There was not a need for that drastic a measure, and it was not [done in] good faith nor in the interest of the community. People entering retirement deserve the ability to live after their working abilities are no longer there.”
The “gutting” Barber is referring to is the Santa Barbara County Board of Supervisors’ May 15 decision to reduce the maximum retiree cost-of-living adjustment from 3 percent to 2 percent for non-safety employees hired on or after June 25, 2012. The ordinance also changed the pension pay rates for the employees based on the age at which they’re hired. Lastly, the board finalized its decision to eliminate the retiree medical program benefits for non-safety employees hired after June 25.
“The union allows for working families to have a voice at the table,” Barber said. “After all, working families are a partner in all of this; the government and corporations depend on employees to get their work done; they should have a voice in that process.”
Steve Lavagnino, 5th District supervisor for the county, said he understands why county employees are frustrated.
“I’m sure they hear a lot of negative talk about pensions. But, honestly, they’re doing a good job, and they’re right when they say, ‘We haven’t had a raise in three years.’ Their wages have been relatively flat,” Lavagnino said. “What they don’t see is the hidden cost of the pensions. They’re working longer hours with less employees and they probably feel like they’re being dumped on.”
But he said the pension adjustment is something that “should have been done 10 years ago.”
In the last two years, overall pension costs for the county jumped from $70 million to $105 million. Lavagnino acknowledged that county employees have made “considerable concessions in their pay,” but said, “we need to be real about where we’re at.”
He feels the retirement plan restructure was warranted and made in the best interest of the county, its employees, and the taxpayers.
“I don’t begrudge anyone their pension—they’ve worked hard for it,” he said. “But we have to be able to afford it.”
Contact Managing Editor Amy Asman at aasman@santamariasun.com.
This article appears in Jul 5-12, 2012.