Public Employees Receive First Diminished Paycheck Today
Today, public sector workers in Wisconsin will receive their first paycheck reflecting reductions in their compensation mandated by the budget repair bill passed earlier this year.
Public employees with relatively low salaries or hourly wages stand to lose thousands of dollars a year, the equivalent of as much as six months of grocery costs. Some public workers at the lower end of the income spectrum could face as much as 15% in lost income and increased costs beginning this week.
This pay cut will hit low-wage public employees the hardest, and could potentially push many families that are barely scraping by into insolvency. Wisconsin Council on Children and Families highlighted these changes in a recent brief, showing how the cuts in compensation could affect low- and moderate-wage workers like janitors, beginning teachers, and public school kitchen workers.
The budget repair bill, which inspired massive protests across the state, requires public sector workers to pay a larger portion of their health insurance costs and contribute more to their retirement accounts. These changes come after years of negotiations in which salary was sacrificed in order to retain those benefits.
Working-class families with children will find it especially difficult to manage with their newly reduced paychecks in light of other changes in the biennial budget. Those changes include rollbacks in the earned income tax credit for working families with children and funding cuts for subsidized for child care.
And last week, the Department of Employee Trust Funds caught many workers off guard when they brought to light a new coinsurance payment that could cost workers up to $1,000 a year in out-of-pocket health care costs.
Keep in mind that public employees in Wisconsin are already compensated at lower levels than their private sector counterparts. A study by the Economic Policy Institute, released earlier this year, shows that public sector workers earn about 4% less than public sector workers performing similar jobs.
For more information, see Wisconsin Council on Children and Families’s two-page brief that describes the effect of compensation cuts on low-wage public sector workers.