Public Union Impact: Past and Future
Recent and ongoing work by CGR in several counties throughout New York has placed a spotlight on public employee unions and their impact on the cost of governmental services. In particular, the future status of county-owned nursing homes is directly affected by high labor costs and especially high benefit levels that have historically been negotiated with public unions, to the benefit of public employees and at the expense of taxpayers. County nursing home benefit levels, including retirement pensions and health insurance costs, are typically at least double the corresponding level in non-public facilities.
In decades past, county nursing homes were providers of last resort for the poor. While county homes continue to accept some residents that other facilities are reluctant to admit, as Medicaid has become a source of support for the long-term-care needs of both the poor and the middle class, nearly all nursing homes, both private and public, depend on Medicaid funding for a substantial share of revenue. Where county-owned homes are no longer the only facilities caring for the poor, they compete more directly with privately-owned homes. In this more competitive context, counties are questioning how much longer they can ask their taxpayers to cover the employee cost differential created by collective bargaining agreements—especially as counties face increasing fiscal stress, and as nursing homes face the prospects of probable declines in reimbursements looming in the near future.
The decision faced by a county’s leaders is often whether to continue to own and operate its nursing home at all. The closure or sale of county nursing homes is the topic of discussion across the state. While other considerations certainly influence the decision, the collective bargaining agreement often plays a critical financial role in a county’s decision.
Are Labor Cost Reductions Realistic?
Interestingly, we are learning in several counties that many employees in the county nursing homes take issue with their union leaders. Many realize that the negotiated financial benefits, significant amounts of paid time off and various worker protections that make it difficult to manage nursing homes cost effectively have a substantial impact on the financial viability and future sustainability of public homes. Many of these employees, in private conversations, express the willingness and desire to offer concessions in labor agreements if it would enable counties to continue to operate their nursing homes, rather than considering closing them or putting them on the market for sale to non-public entities.
But these employees express frustration that their union leadership typically resists putting any such proposals on the table for consideration by county decision-makers, thereby limiting options for counties seeking cost-effective alternatives to continuing to operate nursing homes at a financial loss to taxpayers.
To be fair, unions did not unilaterally bestow these benefits on themselves and their employees—they were negotiated and approved over years by state and county elected officials who now are often among the first to criticize the unions for their role in creating high-cost barriers to efficient public nursing home operations. So let’s be honest here: government leaders must accept their share of responsibility in helping to create the current reality, and stop playing the one-way-street blame game, if true solutions are to emerge. Like so many issues in our society today, we tend to paint issues as black or white, good guys vs. bad guys, rather than addressing the more complex realities in between. Counties and unions need to explore ways of finding common ground around public service issues if cost-effective solutions are to be found that address legitimate interests of taxpayers and employees alike.
The ability to find ways for public unions, management and policymakers to work more closely together to craft solutions of mutual benefit will have significant impacts on how well—and how cost effectively—key services, nursing homes and others, continue to be provided in communities throughout the state as resources diminish.