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Stephen Crockett

Delaware State Worker Pay Cut Fight: Part 2
By Stephen Crockett
Jun 10, 2009 - 11:53:50 AM

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The fight against the proposed 8% pay cut for state employees in Delaware has grown dramatically in scale and intensity in recent weeks. This week, the State Workers United for a Better Delaware coalition has scheduled a Legislative Commitment Rally on Thursday, June 11th on the Legislative Mall in Dover, Delaware.

The crowd will begin gathering at 4pm. Speeches and the public signing of a No Salary Cut Commitment Pledge by legislators will commence at 6pm. At the time of the writing of this article more than a dozen legislators have already announced support for the pledge.

Organized labor has been rallying strongly behind the state workers in opposition to the pay cuts. Union leaders believe that the budget deficit can be solved without resorting to massive pay cuts for workers in Delaware. They have not been shy about proposing numerous alternatives and criticizing the basic unfairness of placing an excessive burden on a relatively under-paid group of workers.

Traditionally, state government employees have been paid significantly less than either federal government employees or workers in the private sector. They traded job security for significantly lower pay. Union leaders think that asking underpaid employees to further reduce their wages cannot be justified for the vast majority of state employees.

Amos B. McCluney, Jr., Chairman of the UAW Local 1183 Retiree Chapter and former Delaware State House member stated, "As a former Delaware state legislator, I realize that not all state workers can afford a pay cut. Lower paid state workers are the guys who are already maxed-out. They are already living paycheck to paycheck. If you cut their pay 8%, they would have to drop their 401K, get an inferior healthcare plan and still not be able to keep their bills current.

It is a different story when it comes to the very highest paid state workers in essentially upper-management positions. The highest paid state employee in Delaware makes around 480,000.00 per year. He can afford a pay cut. He is not going to miss it."

The importance of finding equitable alternatives seems focused on tax fairness instead of pay cuts. For example, Harry Gravell, President of the Delaware Building and Construction Trades Council explained that "many out of state contractors and sub-contractors evade payment of Delaware taxes by various legal and illegal mechanisms. Closing the tax evasion loopholes by these unethical contractors would certainly generate enough additional tax revenues to close the budget gap and more. There would be no need to cut the pay of state workers."

Gravell went on to state, "An aggressive effort by the Attorneys General, Labor Department and Governor to go after out-of-state construction industry tax cheats would help create jobs for the citizens of Delaware and protect the interest of honest contractors in Delaware facing unfair competition."

Brian McGlinchey, Regional Director of Government Affairs for the Laborers’ (LIUNA) union and prominent Democratic Party activist contends that "we can find other sources of revenue to address the short-term budget deficit while we seek fairer solutions. We can certainly tap the Rainy Day fund. We can look at possibly finding some additional revenue from out-of-state corporations, legally headquartered in, but not actually having operations in Delaware.

We need to get more creative in finding solutions that do not lower the standard of living for tens of thousands of struggling working class and middle-class Delaware families. We need to grow our way out of this budget deficit. Pay cuts of this magnitude are not the right answer because pay cuts will not promote economic growth, more jobs or higher tax revenues."

In Part 1 of this series of articles, the Laborers International Union of North America (LIUNA) Local 1029 was accidentally not included as a member of the State Workers United for a Better Delaware coalition.

Sam Lathem, President of the Delaware State AFL-CIO noted that, "Delaware workers are angry about the employment and tax policies pursued in recent decades at their expense. Tax cuts have long been focused at providing breaks for the wealthiest segment of society and large corporations instead of the working poor and the middle-class. Workers are being driven out of the middle-class by unfair government policy and excessive corporate power. Pay cuts for state workers only make the problem worse. Cutting the pay of workers reduces the buying power of consumers which leads to even more job losses. Job losses reduce tax revenues that already are stretched thin by misguided, excessive tax cuts for those most able to afford to pay taxes. We are putting the burden on the wrong segment of our society."

AFSCME Council 81 Executive Director Michael Begatto clearly expressed the importance of finding a more equitable solution to the state budget problem. Begatto said, "Delaware public employees provide the vital public services that make Delaware happen. Public employees in Delaware are underpaid, understaffed and overworked and their health insurance rates are increasing by 50%. That means state employees and their families are already sacrificing to help balance our budget.

An 8% pay cut for public employees would be an economic disaster for Delaware. It would take 91 million dollars out of Delaware's economy. That will deepen our recession. It would hurt small businesses. It would be bad for every Delaware taxpayer."

The crucial roles played by state workers in economic recovery and proving essential services were highlighted by Pamela T. Nichols, Director of Communications of the Delaware State Education Association, "We have teachers, school nurses, other school specialists who will lose 18, even twenty percent of their normal salary if all of the administration's salary cuts go through. It's not just 8% to the base. This is really worse than short-sighted, it is worse than short-sighted to think that taking $91 million out of Delaware's economy will help us out of economic recession. Cutting salaries to balance the budget is misguided - chasing economic chaos with more economic chaos makes no sense. It will not increase spending or create jobs. It will do just the opposite.

I also think that Delawareans get the connection between devastating public servants and devastating the services they provide. They understand that hurting teachers, for example, hurts education. Times are tough for everyone. We understand that. But devastating more families won't increase spending or bring jobs and businesses to our state.

There are certainly more responsible ways to shore up our economy, lots of ways, all of which are being discussed by legislators now. Many of them are ideas that will not hurt Delaware's families, adversely affect any one group, or create more economic downturn."

When it comes to alternatives, several prominent legislators have pointed to a series of tax cuts enacted for those in the highest income brackets over the years. They indicated that the first 4 or 5 of those tax cuts were passed based on the premise that they would create additional economic growth in Delaware.

However, these same legislators noted that the most recent 4 or 5 tax cuts for upper income Delawareans were passed because the state budget at that time was in surplus. They contend that those recent cuts are not necessarily still justified since the government surpluses are now deficits. Some legislators think it might be a good idea to create additional tax brackets at the highest income levels.

There are many other alternatives being proposed. Many of these, like the Kowalko Plan proposed by State Representative John A. Kowalko, Jr., were mentioned in Part 1 of this series of articles.

It has become clear that there will be a huge political price to pay for any legislators who support budget deficit solution measures that reduce the incomes of Delaware workers. With higher fuel prices, higher food prices, higher medical costs, higher insurance costs and more, Delaware workers understand that any government action aimed at reducing wages for any portion of the workforce will inevitably result in more pressure to reduce wages for other segments of the workforce. Delaware workers cannot afford lower income levels.

The usual tactic of divide and conquer concerning pay rates will not work although the usual suspects in Dover are already floating some proposals of this type. Anti-working class bias is alive and well in the Delaware legislature.

Certain Republican legislators are trying to exploit the budget deficit by trying to eliminate prevailing wage laws in the construction industry. This is another unfair proposal to drive down the standard of living for Delaware workers. These same legislators are completely ignoring the massive tax evasion and violation of labor laws by unethical out-of-state contractors who are often exploiting illegal aliens.

The pay cut proposals being pushed in Dover have united Delaware workers in an unprecedented fashion. The anger they have generated runs very deep. The sense of injury is turning into a very deep and lasting resentment that legislators will be facing for years to come. It is unlikely to go away before the next state election.

Sadly, alternatives are clearly available that are fairer and have many additional benefits for small businesses and the citizens of Delaware. The question remains "will the state legislature look at the alternatives that create jobs and opportunity or will they be blinded by an anti-working class bias?"

Written by Stephen Crockett (Host of Democratic Talk Radio and Editor of Mid-Atlantic Labor.com).


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