Municipal Government

Reconsider an Early Retirement

April 2, 2011
By Letitia James, NYC Council Member, District 35

According to research and expert advice, I agree that a buyout or early retirement incentive is a tried and proven method to get salaried workers to voluntarily step aside, saving jobs of younger workers who can least afford to be out of work.

Simply put, it’s the least painful way to reduce the work force. If Mayor Bloomberg is so adamantly opposed (at present, when he previously endorsed such a plan in 2002) to an early retirement incentive, let him release a detailed financial analysis as to why it is not viable option to be explored with the public and the unions. NYC employee’s financial and emotional lives hang in the balance and all options should be aired openly and honestly to find the most effective way of dealing with the fiscal problems of today.

In a buyout, the rate of “back filling” or rehiring is the most crucial determinant for success or failure. At present, if a City worker leaves or retires the position or line is lost, there is no rehire, hence a shrinking workforce. Combined with hiring freezes controlled by the Mayor who has strict governance over the city’s workforce and therefore payroll expenses he could employ an early retirement incentive to maximize payroll savings, ASAP.

Unemployment insurance for up to 99 weeks for laid off workers, loss of city and state tax revenue, loss of health insurance for many families, possible foreclosures etc., as well as the emotional upheaval that ripples outward is a huge avoidable cost. This type of information (overall social cost) is rarely addressed when quantifying the overall success or failure of an early retirement incentive. For example, simple math layoff teachers verses an early retirement incentive for all agencies: if you layoff 4,600 workers (teachers) and pay each unemployment insurance of $400 per week for 99 weeks that’s 400 x 4,600 = 1.84million x 99 weeks = a potential $182 million dollars. This does not include driving current and potential teachers from the profession, and the 4,600 former professional middle class New Yorkers who would join the expanding pool of the 9% unemployed.

In summary, an early retirement incentive would continue to reduce the City work force with immediate cost savings (rather than pension relief that would take decades to materialize and that the NYS Legislature appears reluctant to overturn), and have a lesser impact on career civil servants. It forces NYC agencies to do more with less, while negatively impacting society to a lesser degree, as opposed to sending thousands of workers into a very poor job market.

I ask the Bloomberg Administration to address this viable alternative and statistically explain the resistance to such a course of action. There appears no opposition from the workers, the unions, the City Council, the NYS Legislature only the Mayor stands opposed.

April 1, 2011

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