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After a recent story in The Oregonian looked at TriMet’s high-cost union contracts -- and the way they’re draining the transit authority’s budget -- John Charles of the Cascade Policy Institute jumped into the discussion.
He added this statement: "Due to the compounding effect of these contracts, TriMet now spends $1.63 in benefits for every $1.00 spent on wages."
This isn’t the first time that Cascade has taken a critical look at the way TriMet spends money, but after Charles’ post was sent out as a tweet, we couldn’t help but wonder if he was right.
We went to Charles directly and he pointed us to TriMet’s 2011 annual financial report. On Page 7, there’s a chart that lays out the figures clearly.
In 2011, labor expenses accounted for $123,482,000 of spending. Fringe benefits, meanwhile, accounted for $200,875,000. Those numbers do indeed show that TriMet spends about $1.63 in benefits for every $1 on wages.
We followed up with TriMet spokeswoman Mary Fetsch. She verified the numbers that Charles had pointed out. But she also pointed out that "fringe benefits" includes a number of different categories: medical coverage, disability payments, workers comp and unemployment, time off and some others.
It’s unlikely the average person would consider payouts to workers comp and unemployment coverage to be benefits in the traditional sense. They’re not the sort of thing you negotiate before taking a job -- they’re the cost of being an employer.
It’s also worth pointing out that the money being spent on fringe benefits doesn’t just go to current employees. As our own Joseph Rose pointed out in his initial story, the authority’s benefit plans follow workers and their families into retirement -- and medical coverage for spouses and dependents continues even after a former employee’s death.
Mary King, a professor of economics at Portland State University, said lumping those sorts of costs in with this discussion may be misleading. "I think it's really a huge red herring to start talking about what TriMet might be paying for past employees," she said. "That's an attempt to make it look like they're paying a lot."
Now, Charles didn’t specifically decide to throw those sorts of things into the benefits category -- that’s just the way TriMet lays out the budget. Still, the best way to get at whether benefits seem high in comparison to wages would be to look at the average salary of a represented employee and their average benefit payout.
Fetsch was able to give us the figures budgeted for fiscal year 2013. According to her data, TriMet will pay out an average of $67,000 in wages for each union employee and about $33,500 in benefits. If you consider these numbers rather than the aggregate figures Charles used, TriMet pays about 50 cents in benefits for every dollar it spends on wages. But that leaves out the current portion of the union pension, which most people would consider a significant benefit.
Going back to the 2011 numbers, another caveat here is that, in a strict sense, TriMet didn’t pay out the full $200 million. About $70 million of that went unpaid -- but it still remains a future obligation. Eventually TriMet will have to pay it. In the meantime, it’ll keep incurring similar costs year after year.
Charles said "TriMet now spends $1.63 in benefits for every $1.00 spent on wages" and the budget bears this out. While the statement is accurate, some of that $1.63 is going to past employees as well as other basics -- like unemployment -- that most would not consider part of their benefit package. That’s the clarification that affects our ruling.
We rate this claim Mostly True.
E-mail from Mary Fetsch, spokeswoman for TriMet, June 1 and 5, 2012
E-mail from John Charles, Cascade Policy Institute, June 1, 2012
TriMet 2011 Anuual Report
John Charles, "Insolvency, one step at a time," May 16, 2012
Interview with Mary King, economics professor at Portland State University, June 4, 2012
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