UNEMPLOYMENT

September 2, 2008

Many of them lossing their jobs due to recession.most of the people dono what to do after lossing their jobs.

Cushy government benefits are beginning to clash with the fearsome reality of explosive state and local deficits. “Towns are starting to fight back,” says Edholm. “They’re drowning, and they realize they have to do something about it.” Many municipalities and a majority of states now face serious budget shortfalls, and declining tax revenues are likely to result from the onset of a recession. That may force some tough choices. “Falling tax receipts resulting from a steep recession could change the budgetary requirements of state and local governments,” says Bos. “Whether that will have an impact on services or benefits or wages remains to be seen. It will depend on the electorate’s appetite for an increase in taxes.

“The historical rationale for giving government employees better benefits was that they didn’t get paid as well,” says Jim Edholm, president of Better Benefits Insurance Inc., a benefit-consulting firm based in Andover, Mass. “That has long since lost its validity. Those employed by government agencies tend now to have richer total compensation packages than those in virtually any private industry.

Many city workers are eligible for legacy health plans that aren’t available to private-sector workers in any but the ritziest of jobs. Some such plans, for instance, offer 100% coverage for basic surgeries with little if any co-pay, whereas private plans may require a $250 to $500 co-pay per surgery. In Massachusetts, for example, many local government employees enjoy benefit plans that have long since been phased out for private employees, who have seen plan standards tighten consistently in recent years. Increasingly, private sector employees across the country end up in euphemistically dubbed “consumer-directed health plans” which typically cost companies less because of higher deductibles and more restrictive care options.

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