Under a new contract announced November 20, Maryland’s professional public employees will receive a 3-4 percent salary raise on July 1, 2019. This negotiation, reached on top of a 2.5 percent raise to all state workers that was promised in January, will cost the state $13.1 million.

Constant pay raises demonstrate how much power labor unions hold in Maryland. In October, hundreds of AFSCME Maryland 3 members protested outside of the governor’s mansion, calling for Governor Larry Hogan to end a “staffing crisis.” According to the labor unions, there are 2,500 vacant positions at agencies across the state.

There is no question that state government should do something to fill the vacant positions. The question is, will higher salaries resolve the state’s so-called staffing crisis?

No. According to a recent Glassdoor survey, salary isn’t a top priority for today’s job seekers, who take many factors into consideration before accepting a job. In fact, 80 percent surveyed said they would choose additional benefits over a pay raise. In other words, job seekers would not want to take the risk that pension or benefit promises may not be kept, even if the state offers a competitive salary.

Despite this, salary negotiations for public employees were reached amid Maryland’s ongoing public pension crisis. As of June 30, 2017, Maryland reported an actuarial unfunded pension liability of $19.7 billion.

The labor unions are wrong to believe that they can have everything. By demanding constant pay raises, they are risking their own retirement security by diverting funds that can be used to provide much-needed relief to the state’s pension crisis.

One of the most common arguments public employees use to defend their entitlement to receive a pension is the concept of “deferred compensation.” The idea is that pension promises must be kept because pensions are simply money that employees earn while working but collect at a later date.

This concept, however, also works against unions when they ask for a pay raise. Since public employees are guaranteed a certain amount of compensation in their retirement years, they should be willing to accept less competitive salary rates today.

Therefore, in order to truly address Maryland’s staffing challenges, the state should instead focus on improving its pension health and ensure that the state’s benefit structure is attractive to potential employees. For all this to happen, the state should not reduce or skip its payments, even in years that pension fund investment returns are exceptionally high.

In addition to making enough contributions annually to ensure that the system eventually becomes fully funded, Maryland’s government should consider gradually moving away from offering traditional defined benefit pension plans and provide alternative benefits that allow for greater flexibility. According to the Pew Charitable Trusts, workers under the age of 40 prefer immediate benefits, such as flexible hours and work-life balance, versus benefits that take years to materialize, such as pension benefits. 

Private companies in Maryland provide a range of innovative benefits that include tuition assistance and student loan repayment in place of traditional pension plans. These perks may be less costly than offering defined benefit pension plans, but more effective at addressing Maryland’s staffing crisis because they are designed to meet the needs of today’s workers.

As long as the state pension system remains almost $20 billion underwater and the state continues to offer outdated benefits, higher salaries will not be sufficient to make Maryland a competitive employer.

Budget constraints and taxpayer expectations force Maryland and its labor unions to accept prudent measures. It is time for the state to adopt more fiscally responsible policies to fill the vacant positions in state agencies. It is time for labor unions to realize they cannot balance higher salaries with pension obligations.