Bloomberg’s Rx for Fiscal Health

As Mayor Michael Bloomberg surveys a budget crisis unlike any in a generation, he is well aware that the worst thing he could do now is order massive layoffs to help plug the yawning gaps in the city’s short-term finances.

New York already has lost tens of thousands of jobs. Our financial services industry, so critical to the city’s tax base, has suffered terrible blows. When prosperity returns—it won’t be for a while—the city cannot count on the giants of Wall Street to resume hiring, as they have in past recoveries. The jobs they have shed may very well be gone for good.

If, under these circumstances, the city was forced to lay off thousands of workers, today’s crisis will be tomorrow’s catastrophe. What’s more, massive reductions in the workforce surely would lead to demoralizing gaps in essential services. We know this because it happened before, in the 1970s. We don’t want to relive that awful epoch in the city’s history.

With all of that in mind, the mayor has proposed much-needed changes to the municipal workforce’s benefits package. To help close a $4 billion budget gap, Mr. Bloomberg is asking city workers to help pay for a portion of their health-benefits package. Hard to swallow, but absolutely necessary.

The city picks up the entire cost of health insurance for tens of thousands of workers. Not all city workers have such a deal, but most do. The mayor wants workers to pay 10 percent of the cost of insurance. In addition, he has proposed changes in the city’s pension plan that would require workers to stay on the job longer before they qualify for what continues to be a generous pension benefit.

These reforms, the mayor said, must be made if the city—and other cities around the nation—are to avoid bankruptcy. City workers still enjoy health insurance and pensions that are the envy of many workers in the private sector. It does not seem unfair to ask municipal workers to help pay for the benefits they enjoy.

The unions will not concede Mr. Bloomberg’s point without a fight. One union leader already has complained that the mayor is looking to balance the city’s budget at the expense of municipal workers and retirees. City workers, the union leader said, are not to blame for New York’s financial mess.

That’s true. Cops, social workers, teachers, firefighters, EMTs, clerks and other city workers are not responsible for the nation’s financial crisis. But New York cannot stabilize its finances simply by hoping to penalize those who provoked this crisis.

Mr. Bloomberg is trying his best, it seems, to avoid the kind of layoffs that so damaged New York in the 1970s. He rightly notes that city workers “determine the quality of living in this city.” Without a stable city workforce, the gains of the last 15 years—everything from better reading scores to record decreases in crime—could be wiped away.

The stakes are enormous. The unions must be a part of the solution, and that will mean concessions on benefits. Better that than layoffs.