DN Editorial: REALITY CHECK

THIS IS a watershed year for the city's public workers, whose unions are being pressured to cede some of the pay, work rules and fringe benefits they have won over the years.

For example, the Philadelphia School District, nearly broke and borrowing money just to keep operating, wants to reopen its contract with the Philadelphia Federation of Teachers so it can seek givebacks.

The Nutter administration, after a four-year contract dispute with municipal unions, announced last week that it is making its "final offer" and may impose a settlement that includes pay increases, but also reduces fringe benefits and changes pension rules.

Not surprisingly, the unions are pushing back. Last week, several thousand union members cheered at Independence Mall as speakers denounced the city's demands as harsh and unfair.

Mayor Nutter was booed and accused of working for the rich - the notorious 1 Percent - against working people. The rallying cry was: Instead of asking givebacks from us, tax the rich. That will solve the problem.

It's time for these workers to visit the real Philadelphia.

For starters, unlike the federal government, the city doesn't have the tools to target the rich. We have a flat wage tax instead of a graduated income tax. Our tax code has none of the loopholes written into federal tax law.

Even if we did want to soak the rich, Philadelphia has another problem: We don't have enough millionaires to soak.

In Philadelphia, just 2 percent of households earn more than $200,000 a year. Another 11 percent earn between $100,000 and $199,000, according to the Census. Most earn far less.

In fact, the largest single bloc in the city is not the rich - it is the poor. Of the 1.5 million people who live in Philadelphia, 434,000 live below the poverty line. As such, they don't pay taxes.

That means that in this city, the burden of paying for city government and the public schools falls mostly on the shoulders of working people. During the Great Recession, the Nutter administration went to them repeatedly, enacting tax increases to keep government up and running.

But it cannot tax enough to keep up with the costs of public employees' salaries and benefits, contractual and legal obligations that must be paid regardless of whether economic times are good or bad.

These obligations, particularly when it comes to health and pension costs, have risen at a much faster clip than inflation. In 2001, under Mayor John Street, the city spent $483 million a year for fringe benefits for its employees. This year, it is paying $1.2 billion.

The city pays an average of $48,000 per employee just to cover the cost of fringe benefits. The average household in the city earns $37,000 a year.

The reality is that the people who must pay the biggest share are hundreds of thousands working and middle-class Philadelphians.

Unions would do well to remember that many of these workers have Ford Fiesta benefit packages, compared with the Cadillac Escalade of some public-sector workers.