Saturday, March 12, 2005

NY Times employees get a small taste of the future of Social Security and Medicare.

Workers at the NY Times are getting a little lesson today in what we all are certain to learn much more about later -- the virtues of pay-as-you-go benefit financing:

Worst of Times

The New York Times faces a looming $4 million shortfall in the health and benefits plan that is administered by the Newspaper Guild and about 1,500 unionized members may have to give up a 3 percent pay hike. An e-mail from the Guild jolted unionized members, who were told that their benefits fund faces a "major financial shortfall that is projected to hit about $4 million this year."

The Guild said members face two options: skip the 3 percent pay hike that was to go into effect at the end of the month and divert the money to the benefits fund or take the pay hike and face "a drastic cut in benefit levels including the elimination of all dental, vision and life insurance."

Some insiders are incensed.

"Everyone was banking on that 3 percent raise at the end of the month — now they're telling us we have to forgo the raise or face a sharp cutback in our benefits package," grumbled one insider...

"They're giving us a choice," said [another]. "Either we can slide down a razor blade until we're split in half or else we can jump into a pit of molten lava." ...

The union is recommending that members skip the pay hike.
Pay that extra tax and be happy!

William O'Mara, secretary/treasurer of the Newspaper Guild, said the Times benefits fund is not broke, but it is paying out more in benefits each month than it is taking in.
Of course the "benefits fund is not broke" just because it can't pay what it promised and owes. Certainly not.

Right now, he said there is an eight-month reserve, estimated to be between $8 million to $10 million in the fund.

The pay diversification should send in an additional $3 million, he said. "When you combine the pay diversification with some other cost savings measures, it should be enough so that we're not in a situation where more is going out than coming in each month," he said.
And Paul Krugman would no doubt be happy to explain to the Times' minions, as he has to his readers, that their current benefit system is entirely sustainable as it is, provided it is changed sufficiently (through "pay diversification" to collect more from them and provide less to them.)

There was also anger directed at the union at the Edison Café.

"We all talked about the amazing efficiency of our union to make money go away," said one insider.

Added another worker, "How did they get into this jam? You don't get into a $4 million shortfall in a week."...
[NY Post]
Oh, yes! And that's just a 3% tax hike they're facing.

Imagine what these same people are going to be saying 20 years from now when a 35% income tax hike (perhaps Democrats then will call it "income diversification") is coming at them just to cover the cost of the trust funds they supposedly already financed with their FICA taxes ... plus another 30%+ and-rising-forever-more tax increase to cover the Medicare benefits promised to them that nobody ever told them they were going to have to pay for.

Think of the happiness that will be expressed in the Edison Cafés across America then! Joy!!

Addendum: One more little point in the story, as noted by Don Luskin in his pointer here ...
It didn't help among the rank and file that news of the benefits crisis broke the same day Times Publisher and Chairman of the board Arthur Sulzberger, Jr. had received a pay hike to $2.82 million in 2004 from $2.7 million 2003.
So any day now we'll be reading new Krugman/Herbert columns damning millionaire CEOs who get their jobs by nepotism and raise their own multi-million dollar salaries while rank and file employees take cuts in pay and benefits.

Right? ;-)

(I've said it before and I'll say it again: the New York Times wouldn't be half as much fun without the New York Post reporting on it.)