Public Pensions
San Diego and San Jose voted on Tuesday to cut employee pensions of existing workers. Clearly the cities couldn’t afford what they have promised and voters were angry about what they saw as over generous pension benefits. But that leaves me with all kinds of questions and they don’t make me comfortable.
First, over generous or not, is that not the deal we entered into with public workers? Sure, those jobs look good now in a depressed economy, but when things were booming, who wanted to be a public worker? Your salary is basically fixed, not moving you into the country club set, and the work can be tedious and long. But the plus side was a secure pension with good benefits. Now the public doesn’t like the bill, but isn’t that a gross violation of the contract we made? Oh, I now, those evil public employee unions cramed this down our throats, except they didn’t. It takes two to make a bargain, and in the good times, we concurred. If you want to be mad as hell, what about those politicians you elected who sold out for votes?
Second, we have decided to dump the pensions on the stockmarket. Well that was one of the benefits of working for the government, good times or bad, the pension was guaranteed. Now we are all going to be hostages to the stockmarket and I don’t know about you, but in my mind it is nothing more than a giant casino where guys use our money to take risks and we are just encouraging them. The one thing about employee pension systems is that they had a lot of weight (because of the large amounts involved) in controlling Wall Street (well maybe control is too strong a word) depending on where they placed their bets. Now we will be on our own.
Finally and most critical is the stuff you hear from people who are consumed with envy in hard times. “I have to work till I am 80 and have three jobs to afford my health care so why shouldn’t they?” Well there are a couple of problems with this. First, you could have applied for the public job, or maybe you weren’t qualified, or maybe you didn’t want to be stuck in a public sector job. Second, afforable health care is a national problem. So public servants have the single payer system and that doesn’t mean you should strip what they got. It means you should maybe start supporting a public option for all of us.
Lastly and most importantly, instead of whining about their benefits like a truculent child, what are reasonable benefits that would allow someone to retire? It is not a question of what we can afford having fallen on hard times, but what we need to pay to ensure no one falls into poverty.
This last point is probably the most critical. What is a reasonable retirement system for all of us? We all make choices and some go into government service which does not offer most government workers anything close to what they could make in good times in the general economy for equally educated and qualified people, so what should the pension system look like? Should everyone be on their own? Health care is a case in point where everyone being on their own doesn’t work. No one would cover the elderly who will have higher costs. It should be a shared burden. So if you chuck health care costs, what do you need.
The answer is about 70% of your before retirement income (debatable since there are many varibles like are you eligible for Social Security which most California public employees are not)to not lower your standard of living. So the question becomes for all of us, how do we maintain or achieve that income in retirement and what age do we retire. For the majority of public employees who earn an average of $ 55,000 a year the question becomes one of what pension should we promise to attract good workers at these levels of pay.
The truculent would say screw them, we can’t afford it, but then you made a commitment and these public workers did not cause the problem we are now in, but the greed on Wall Street. And you kids had to bail them out, but I don’t see you going after them. Instead you are going after first responders, teachers (the largest segment), and other public servants. See many teachers driving a Bemer or living the high life in the Bahamas? Are we a great country or what?
Full Disclosure: I am a public employee retiree living on my retirement and social security (well not quite). That total is about half of what I made as an engineer in government so I also work as a consultant and I earn double what I made in the government working only half time. So anecdotally I could say, one can make a whole lot more on the outside, but my pension and more importantly my health care is not held hostages to the Masters of the Universe on Wall Street. If you want to attract gifted and smart people to government service, there has to be an incentive besides public ire when the economy turns south.