What would you do if your employer said, "in lieu of a raise, I'll pay your portion of contributions to our 401K."
Would you agree to that, on the understanding that it would be continued year after year after year, because you aren't getting an actual pay raise? Remember, a raise is an increase you also get year after year after year.
Would you be upset if, after 10 years, your employer said, "I'm going to stop contributing your portion to the 401K, but I'm not increasing your salary to reflect the raise that contribution was in lieu of, either."
Wouldn't you feel, just a little bit, robbed?
That's how the public employees of Virginia are feeling right now. Because that's exactly HOW it came about that the state and various localities began contributing the employees' portion of their retirement funds. It was in lieu of a raise.
And, revoking that promise is worse than an equivalent pay cut, because the promise wasn't just a contract, it was made into statutory law in the Code of Virginia. If the legislature changes that now, it's only because they are literally changing the rules via their power as lawmakers. No party to a contract could ever unilaterally do that.
I understand that under a fiscal crises, all things get put on to the chopping block, and I'm not going to argue about whether this is a good cut or a bad cut. But let's be honest about what this cut is: it is a broken promise and it is the rolling back of a years-old pay raise.
What does this mean for future workers' agreements? Will workers be willing to accept alternatives to straight pay-raises? Further, why should anyone ever do business in, with, or for Virginia if they do this? Hey, did we say we were gonna pay you for that? Oh, hang on! Sorry! we just wrote a new law that says we don't have to pay you like we said we would. Bye, bye!
Again, this is not to say that this cut is a bad one comparatively - choices need to be made. But we need to be clear about what the cut means and the larger implications.
At the very least, workers need to hear from legislators that they are aware that this is what amounts to a pay-cut - not merely the ending of a promised benefit.
Thanks for bringing this to more public attention. My board-mate, Supervisor Waters, sought to have the Loudoun board ask the legislature to change the law, so we could stop making these promised payments. Fortunately for the credibility and integrity of our county, a majority of us outvoted her. But it's still up to the legislature. I wonder who, if this law is changed to allow us to break our promise, will ever be willing to believe in a commitment made by a governmental unit of Virginia again.
ReplyDeleteStevens Miller
As you know, I do prefer this cut to the ones to to FAMIS, medicaid, and mental health services. But we need to be clear about WHAT we are cutting, what it means, and how it will affect people.
ReplyDeleteSeems to me, that bringing back the estate tax would be a better choice than any of these.