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Today’s (Thursday, December 23) NY Times has an article that tells me the future has arrived and it is not going to be pretty. The pundits and those who want to destroy all aspects of public service have been calling and complaining for years that public pensions are going to destroy the universe. Never mind that those public employees have often foregone higher salaries in order to have those pension plans. Never mind that it is the elected officials who failed to properly fund those public pension plans, it will be the retired police, trash collectors, fire department employees and all the other municipal and state employees in their greed that are going to be the end of civilization. (That’s snark for the snark deficient)
But regardless of all the calls for austerity, and all the calls and drum beating about things needing to be done to “rein in out of control pensions,” it is not civil servants that caused the meltdown to the world economy. Civil servants have not been the people who took tax cuts and placed the bets in the Wall St casino. They did not commit the fraud in mortgage processing. . . .
The fact is, a quick check of der Google using “public pensions” brings 3.9 million hits. Just the first page has this article from Business Week in June of ’05 blaming public pensions for a “crisis.” Then the drumbeat really picks up this year with this from the NY Times Magazine from back in June, this from a PEW site on States from August, this op-ed from former Labor Secretary Elaine Chao from October at the Christian Science Monitor, and this from a couple of days ago at CBS Money Watch predicting:
The traditional defined-benefit pension that is the dominant retirement plan for public-sector employees officially has a huge target on its back. And 2011 is shaping up as the year politicians begin to take serious aim at cutting promised benefits. What was a mere trickle of states and municipalities starting to address massive unfunded pension liabilities in 2010, which are now estimated to total more than $1 trillion, looks to grow to a torrent in 2011.
Obviously the politicians in these states seem to think that defaulting on their obligations, obligations incurred through good faith bargaining (at least, good faith on the part of the employees) are just so many faithless promises on their parts.
Back to the original article from today’s Times and we can see how the future is going to play out in varying degrees. This is the future that will be ours if the states default on their pension obligations and it will be ours if the recommendations of the Catfood Commission are allowed to be implemented:
PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.
Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.
Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”
Now the Times article goes on to say that this town has been through bankruptcy twice so it’s not as if the people shouldn’t have been aware of fiscal mismanagement from their elected officials. But that would defeat the point of the article which is to beat the anti-public pension drums louder and louder.
Why do the public pensions look like they are such a give away? Because businesses have spent the past thirty plus years doing everything possible to destroy defined benefit plans in the private sector. Of course, people also tend to forget how many times for profit businesses have declared bankruptcy precisely so they could dump their defined benefit pensions on the federal Pension Benefit Guaranty Corp.
So let’s see where we are. Private pensions have been pretty much destroyed or made non-existent. Public pensions are considered fair game for demonizing. As Scarecrow notes, George Will and the Catfood Commissioners are intent on destroying Social Security
Never mind that workers likely don’t mind paying a payroll tax — the polls confirm they’d even support exposing more of their incomes to that tax — when it’s explained to them this is their savings that they will get back with interest via Social Security, unless people like Dave Camp and his new friends Simpson, Obama & Bowles steal it from them. Sounds like a perfect antidote to moral hazard.
So we are left with no jobs, no pensions, Social Security being cut/defaulted. But hey! We bailed out the banks!
The future is here and now and it is not a pleasant one.
And because I can:
52 Comments
The punishable offense of the pensioners is their productive lives over the decades, for which now they hold a note due and payable, just when the profit-motivated financial industry wants to renegotiate its end of that contract…meaning renege, after the workers have performed on their end of the contract. This is known as fraud.
You’re right that the public employees (save for a few regulators who didn’t regulate and a few investigators who didn’t investigate) have nothing to do with the state budget crises. However, there are other problems with public employee pensions that have been festering since long before the housing bubble and its subsequent meltdown.
For decades public officials have been awarding pensions but not salting away money to pay for them. Public employees should be able to join unions, bargain collectively, and have decent retirements. But public employee unions should not be able to endorse, contribute to, or otherwise support candidates for office or ballot measures. (This includes cops, firemen, and teacher’s unions.) The reason is simple: once officials become beholden to these groups for re-election, there is no one at the negotiating table to represent the taxpayers.
In many states, officials have deliberately underfunded future pension liabilities because that was far easier than any of the three alternatives:
a) Increasing current salaries. Easier to trade for higher retirement benefits.
b) Curbing pensions that were handed out in lieu of current salary increases.
c) Raising taxes to pay for either (a) or (b).
Under the old Government Accounting Standards Board rules prior to Jan. 1, 2007, states and local governments did not have to account for future pension liabilities through accrual accounting. In California, if your city’s pension assessment from CALPERS for the coming fiscal year was $1.5 mil, that was all you had to budget and set aside, even if everybody knew that the following year’s bill would jump to $5 mil and the year after that it would be $7 or $8 mil.
Public employee pension fund managers and boards at the state level also hoodwinked the public by continuing to rely on ROI projections that had no basis in reality. For many years they earned annual ROI of 2-3% but continued to project future returns at 8% compouned annually. The alternative, telling the truth, was too politically painful. It would mean curbing or reducing pension formualas, diverting money from other budget sectors, or raising taxes (including tax loopholes favored by big campaign contributors, corps, etc.)
In a wild quest to achieve these fantasy ROI numbers, pension boards went away from investments in high grade bonds and treasury notes. Instead they invested in speculative real estate vehicles, including MBS. Catastrophe ensued. When the Stuyvesant Cooper Village purchase in NYC defaulted, CALPERS alone lost $500 mil.
Projections of California’s unfunded liabilities for pensions and post-employment health care range from $130 to $200 bil, but one report I read awhile back said the true figure is $500 bil. That’s half a trillion dollars.
Public employees deserve fair pensions, but in too many states and local governments there are far too many ways to manipulate the system. Examples:
- In your final year of employment, don’t take your vacation, then add your vacation pay to your regular salary, and this increases the figure on which your pension is calculated.
- Another way, used by many upper level managers, is for the last year of employment assign yourself lots of overtime that would normally go to junior personnel. This also boosts your final year salary on which your pension is calculated.
- Retire and then get hired back immediately as a private contractor to do your old job, or a similar one. Often the private contractor rate is higher than your old pay scale, but since you’re a private contractor your pay SS taxes on this money. Retire at 55, work ten years as a contractor, get your pension and boost your SS retirement as well.
I will grant that there are problems within the system as you mention.
But are they the fault of the Public Employees at all levels or are they the fault of the elected officials who do not do their jobs?
And upper management manipulating the system to their benefit is also not the problem of the rank and file public employees. Again, it is the elected officials not doing their sworn duty.
Yet I will wager you that it is the rank and file employees that will bear the brunt of any “solutions” to this problem. Just as it is the retirees in Pritchard, AL who have paid and not the officials who caused the problem
Ah, yes. This is the mentality of highway patrol cops who, given a choice between chasing the person going five over the limit or the driver doing thirty over the limit, always pick the slower one because that’s the one they can catch.
To punish retirees for the sins of the high and mighty is a tacit admission that we are just peons and there is no justice except that which can be bought.
Government Officials did underfund pensions and quite often directed the funds to invest in their friends accounts. They created very Funny schemes to say that they were funded fully.
Do we have any numbers on the states with the most unfunded pensions?
Why are bank debts like Home loan paper the US government’s problem but government pensions are not investing rules governing pensions are federal right?
By not funding Pensions is the Government trying to also save money on Social Security by further cutting people’s cash and in a sense creating conditions that will let them die sooner?
Are these the Real Death Panels? Lots of old white male Tea Baggers are sure in for a surprise.
I haven’t seen those figures but I think a number of state and municipal pension plans that had been considered close to being fully funded took big whacks during the meltdown in ’08 so I’m guessing it’s a deep, systemic problem made worse by inaction and funny bookkeeping
Ding, ding, ding
In New Mexico we have two retirement systems for public employees: the Public Employees Retirement Association (PERA), and the Education Retirement Board (ERB). The PERA covers all public employees except those in education, broadly defined. A few years an alternative retirement system (ARS) was instituted as an option for higher ed faculty.
Under the rules in place when I came on, an ERB member could retire under any of three rules: with 25 years of service, a member could retire without penalty. When the member’s age plus years of service exceeded 75, she could retire. If under age 60, some penalties were attached, which were more severe under age 55. Finally, a member could retire with reduced benefits at 65 with at least 5 years of service.
Losses in the equity markets reduced the funding level of the ERB from 90% of accrued actuarial liability (AAL) in 1990 to slightly less than 60% in 2008. The powers that are increased our employee contributions to 9% and the employer contribution to almost 11% and changed the rule of 75 to a rule of 80 for new employees to fix this problem. The latest crash made things worse, and our Legislature mandated a review of the retirement authorities.
The ERB proposed a set of changes in early November that were draconian. No retirements before 30 years of service and that only at age 65. All others must serve 35 years before retirement: no retirement option that combines age and service credit. Only employees with 22 years of service at the time the new law came into effect would be protected from the new rules. The temporary increase in contributions was going to be permanent, except that the State had never made good on its promise to increase the Employer contribution.
At a meeting held at my campus shortly before the Board made its final recommendations, they were asked why a situation that had taken the better part of a decade to develop had to be fixed immediately. They were also asked why they came forward with a proposal that increased the AAL funding over 100% within 30 years when their stated goal was to reach 80%.
The answer to both questions was essentially the same: forces in our legislature including some Democrats want to do away with the defined benefit systems in favor of defined contribution systems.
I’m nearing retirement eligibility myself, and to say that I’m angered and concerned is a gross understatement of the case. My retirement planning centered on my ERB pension and the Social Security contributions I have made since I began working. Now the New Mexico Legislature is busy trying to weasel out of its commitment to me through the ERB while Preznit Organizing fur Amerika Obama is trying to wipe out my Social Security benefits. Apparently the only things I can count on being mine is a very small deferred compensation account and a small IRA from my previous employer. They aren’t enough for a retirement combined.
Fortunately, I’m a tenured professor. Teaching statistics doesn’t involve a lot of physical wear-and-tear on my body, so I suppose that I can teach for the foreseeable future. On the other hand, my interest in Statistics is waning. I had hoped to move on to other interests, but this seems increasingly unlikely.
I’m ready to grab a pitchfork and march on Wall Street and the relevant capitals.
What the hell do they think these pensioners do with all that money? They spend it on independent living things like houses and RVs, not to mention just ordinary commodities.. What happens when there is no pension? The younger generation is going to be paying for the basics and housing them in their homes or low cost group living. That money isn’t going to be there for the latest smart phone when it is going to the old folks.. Bi better job killer than defunding the pensions.
Every defined benefit retirement system computes its base benefit on the basis of an average salary, usually the highest 5 continuous years, sometimes (more generously) 3 years and sometimes (less generously) 7 years. This serves to prevent the sort of ‘gaming’ of the system you suggest.
Most systems tack on unused vacation time as credited service time (and take the appropriate contributions from it). That’s fair, vacation time is earned and capped in every system I know of.
As I say, the NY Times article linked in the post is a precursor to our future.
Yo. State employee here.
Every one of those article writin’ assholes can go fuck themselves.
And that’s all I have to say about the matter.
hadn’t thought of it that way. good call.
The New Mexico Education Retirement Board is currently at about 60% of its accrued actuarial liability. We’re relatively healthy, but not where we need to be.
Apparently the Illinois systems are among the worst, but I don’t know exactly what their unfunded AAL is at. I do know that a friend who went to work for an Illinois state school opted for a TIAA/CREF defined contribution system because the defined benefit system is in such bad shape.
Pritchard’s problem is that it is too small to run a defined benefit pension system. These are (of necessity) wholesale investment operations.
Hell, San Diego is probably not large enough to be running its own defined benefit system. On the other hand, with a large enough employee base, running a defined benefit system is a matter of statistics. The system has to modify its investment structures based on the demographics of its membership and recent past investment performance, but these things change slowly and predictably.
I guess I’m more optimistic about it than you are, dakine. But the only way we get screwed is if the State Leges and Congress decide to screw us and we allow it.
Yeah, the Banksters and Stocks Brokesters [sic] want to get their hands deeper into our pension systems, and have those sliced and diced so we have to pay retail for their services rather than wholesale (or, in the case of the SSA we aren’t paying for their services at all). But that only happens if we allow it to happen.
What’s happened in Pritchard is a crime. And it is not the public employees fault. It clearly falls on their leaders and the public officials. We cannot allow these promises to employees become meaningless. I wish I had an answer other than to say that. It appears that many will have to take reductions against what they thought they had earned, as I doubt there is either the political will or the funds to do otherwise. That is the precursor to SS as well, as once one goes down the other will follow. Simpson wins.
NJ is another example where both parties abused and gamed the pension system and the State is now bankrupt and so deep in debt behind under funded public pensions, it’s buried. The tax payers in NJ are being raped to pay for these pensions while private pensions have disappeared. There are large segments of the public that having been screwed over by the private sector have absolutely no sympathy for public employees who not only have jobs at this juncture but from a private employee perspective good paying jobs with good health care and pensions. As the private economy has tanked who will pay for these liabilities?
The housing bubble was over invested by pension funds and endowment funds…they lost around 40% capital in that scam. Deregulation and free market capitalism at work.
“Public pensions are considered fair game for demonizing.”
My pension is a form of deferred compensation that I am owed. Messing with this compensation in any way is going to piss me off royally.
I, too, am sharpening my pitchfork.
I warned retired firefighters that have CALPERS but they did not believe it will happen. Sad.
So who’s going to jail?
“Obviously the politicians in these states seem to think that defaulting on their obligations, obligations incurred through good faith bargaining (at least, good faith on the part of the employees) are just so many faithless promises on their parts.”
Obviously running the government more like a business.
If I had to put my complaints into one bag, I don’t think I could do much better than to wish that we could run our government more like a government, and less like a business.
It’s top down for the conservative Republicans/conservative Democrats out to dismantle our society, with the crown jewel of “public pensions” being the Social Security System.
I like Dean’s thought experiment. If we protected the class/social interests of working people as much as we enshrine the interests of the wealthy, then we’d have something that looked like a democracy.
I reckon I’ll go to my grave never understanding my fellow citizens who put their bosses interests above their own. I don’t get it.
It is an unfortunate fact about Ponzi schemes that innocent people get hurt. A pension plan that promises payments based upon 8% annual growth when only 2-3% is ever seen qualifies as a Ponzi scheme.
Someone is going to get burned on this and my guess is that it will be the people who rely on such pensions (like those who trusted Bernie Madoff) who are going to lose out the most. Some groups who are politically influential will be able to lobby legislators to spread some or all of the burden on the taxpaying public, but it’s going to get really ugly.
Many states and large cities are basically broke. Some people who are owed their pensions will call for the State to force companies or high income earners to pay more to compensate, but this will likely fail for two reasons:
1. High income earners tend to have greater flexibility about where they work and can flee higher tax areas for lower tax areas. This luxury applies to some types of corporations as well.
2. In general, companies don’t PAY taxes, they COLLECT taxes. Companies that do not leave the pension-owing state will simply pass their costs on to their customers, making it an indirect tax on the general public. Increasing taxes on the low- to middle-earners, even indirectly, presents a different problem: numbers (votes).
Will the Federal government provide bailout protection for pensions? It’s hard to imagine that happening in the next two years but even if it could, analogues to the problems above still apply (economic flight/higher prices). So it looks like it is going to be rough for the public pension recipients. It’s one thing to get people to agree that you got ripped off and that it’s not fair, but it’s an entirely different thing to get people to agree that they should shoulder some of the burden to make you whole.
Remember when Geithner told us that bonuses had to be paid to employees of failed and bankrupt corporations like AIG, Bank of America, Goldman, CitiGroup because of a pre-existing contractual agreement? It only works one-way in the good ole USA.
The same would apply to pensioners w/ vested benefits. The policy question is whether gvt workers should get 401(k)s in the future. The answer to that question, in turn, is resolved by determining whether we want employees or taxpayers to bear the risk of market downturns.
There’s a problem w/ the bargaining process, though: pension benefits are so far in the future and will be dealt w/ a future government, while the benefit of a too-generous promise accrues immediately to the politician making it. The upshot is that taxpayers are structurally guaranteed to get lousy bargains.
Or rioted over with the resulting destitution of the political class!
As beachpopulist notes, it’s about the structure of the system, and not about good guys and bad guys. Progressives can either come up w/ their own ideas for reform or get left behind as the political discourse – driven by taxpayers that don’t want to bear the risk of pension fund market losses – turns to reform.
An averaging formula reduces the marginal upside of gaming the system, but it doesn’t at all prevent it. It just makes it slightly less lucrative.
I don’t think you’ll ever see the Federal Government making good on or guaranteeing defaulted retirement payments to State employees, yet we guaranteed up to $13 trillion or more of losses to private institutions.
Well, how about having elected officials be honest with the people who voted for them and explain why they’ve failed to fully fund the pension plans.
This “problem” existed well before the melt down of the economy and to put it all on the market losses is to give the politicians who refused to do their jobs a complete pass.
I’m not sure what the IRS designator is but I believe there is already a government worker equivalent to the 401K as part of the move back in the early 80s away from the old style government retirement plans (which in fact did include pay-ins by the workers themselves)
There is, and I think it’s a 414. I wasn’t sure so I went w/ 401k, which conveys the point while being technically incorrect.
State pensions, IIRC, can’t participate in the PBGC (the federal agency guaranteeing pension benefits).
re: loss guarantees: the point of insuring bank losses is to reduce the risk of future loss. It’s like the FDIC insurance: when people know their funds are insured, losses are less likely to result. That insurance – which ameliorates irrationality in the market – is very different from something like pension insurance, which doesn’t impact market behavior. The latter is designed to pay out on loss, the former designed to prevent pay out on loss.
That hasn’t worked out for the past 50 years, so there’s not a lot of reason to think it’ll work prospectively.
I’m definitely blaming the politicians and the voters. It’s their fault. At the same time, the system is set up to reward irrational politicians. They promise shiny new benefits, tell the pension accountants to assume an 8% annual return and unrealistically high mortality rates, and it’s free ponies for everyone.
No system is perfect. But these types of problems are a drop in the bucket.
We’re doing the equivalent of worrying about someone stealing the loose change under our seat cusions while ignoring the guy stealing our banking and brokerage accounts.
Ug, our establishments self seekers are still at it I see. It’s the beaker Ode to Greed sing along:
http://www.youtube.com/watch?v=VnT7pT6zCcA
me me me me
me me me me
me me me me
Thanks, I get the FDIC but I dont’ see how that’s relevant to what happened during the meltdown, given the $13 trillion no stipulation guarantees handed out like Halloween candy.
Short, sweet, and to the point. As a county employee, I must say “well said!”
This is just another divide and rule tactic of the ruling corporatist class. Convince the part of the working class that is, if lucky, employed by the private sector that public employees are somehow their privileged enemy. Then screw the public employees so the disgustingly rich who live in private security-protected gated communities can line their pockets even more and everyone else suffers from loss of public services like, you know, police, fire, and child protection.
And never forget the the disgustingly rich never have to worry about THEIR retirement.
Sickening.
“…public employee unions should not be able to endorse, contribute to, or otherwise support candidates for office or ballot measures. (This includes cops, firemen, and teacher’s unions.) The reason is simple: once officials become beholden to these groups for re-election, there is no one at the negotiating table to represent the taxpayers.”
(sarcasm alert)Oh, that’s just brilliant! Then the banks and corporations will be allowed to endorse, contribute to, or otherwise support candidates for public office with even less competition!
The system is horribly skewed as it is. What you are suggesting would make it even worse.
That’s certainly a fair point.
Agreed. But getting current or former public officials to admit they lied, or own up to their responsibilities, would seem to be a pipedream, akin to the line about “when pigs fly”.
Somebody asked which states are in the worst shape so I went a-Googling and found the following which may be of interest. Headlines, links, and a few random outtakes from each:
1. Pensions: I’ll Buy Your Bonds if You Buy Mine http://dollarcollapse.com/articles/state-pensions-ill-buy-your-bonds-if-you-buy-mine/
[snip]
…Joshua Rauh, associate professor of finance of the Kellogg School of Management at Northwestern University, predicts that without basic reform to the current pension system, many large state pension funds will run out, even if they achieve predicted 8 percent annual returns. As a result, Rauh warns that promised benefit payments would be so substantial that raising state taxes to make the payments would be infeasible, offering no other choice than to call on the federal government to bail out the failing states.
As an example, Rauh points to Illinois. If the state’s three main pension funds earn 8 percent returns and the state makes contributions accordingly, the funds will run out of money in 2018. In the following years, benefit payments owed to existing state workers would be an estimated $14 billion – more than half of the revenue Illinois is projected to receive in 2010 – and states are under legal obligation to make these payments.
[snip]
2. State Pension Problems Are Billions Worse Than Advertised
http://foreclosureblues.wordpress.com/2010/12/24/state-pension-problems-are-billions-worse-than-advertised/
The article explains about how the practice of “smoothing” makes pension fund deficits seem better than they really are, then notes that as of 2010 New Jersey’s various pension plans still “expect average annual returns of 8.25%.” The articles goes on to project actual NJ pension fund deficits (as of March of this year) as follows:
“PERS – $48 Billion
Teachers – $61 Billion
Police and Fire – $36 Billion
Those subtotals net to a combined $145 billion.”
There follows a chart of unfunded liabilities by state, followed by:
“California is the worst state in absolute terms. In per capita terms, Illinois appears to be in the worst shape. However that statement does not factor in all of New Jersey’s pension plans. Then again, the Biggs report does not include all of Illinois’ public pension plans either. The mess everywhere is far bigger than it looks.”
3. You Thought California State Pensions Were Out Of Control? Wait Until You See This List From Illinois
http://foreclosureblues.wordpress.com/2010/10/19/make-this-story-go-viral-you-thought-california-state-pensions-were-out-of-control-wait-until-you-see-this-list-from-illinois/
Highlights:
“Meet Neil Codell an Illinois educator with a $26 million state pension.
Just to drive the point further — if Obama gets his way on his proposed state bailout, you will be paying a portion of Mr. Codell’s pension. ‘Codell, Neil C.’ is 4th from the top of the list. His estimated career pension is $26,661,604. That’s almost $27 million for a single administrator within just one local Illinois school system (Niles, to be exact).”
[snip]
After referencing the problems with California’s Teachers Retirement System it says that the Illinois pension system for educators…
“is — if you can believe it — even farther off the reservation.
Using actuarial calculations from the Teachers’ Retirement System (TRS), Champion News reports that the total estimated pension liability for the top 100 retirees will equal…”
[snip]
“$887,925,790.00
You read this right. The top 100 retirees, by themselves, will cost Illinois taxpayers nearly one billion dollars.”
Note: Article contains charts, incl. from the TRS.
4. State Pensions and Retiree Health Benefits: The Trillion Dollar Gap
http://www.pewcenteronthestates.org/report_detail.aspx?id=56695
(As the introduction to the articles notes, these figures are from 2008. God knows how much worse it is now.)
“$1 trillion. That’s the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.
Why does it matter? Because every dollar spent to reduce the unfunded retirement liability cannot be used for education, public safety and other needs. Ultimately, taxpayers could face higher
taxes or cuts in essential public services.
A new pensions and retiree health care report from the Pew Center on the States, The Trillion Dollar Gap: Underfunded State Retirement Systems and the Road to Reform, shows why states
must take strong action now—or taxpayers will suffer later.
To a significant degree, the $1 trillion reflects states’ own policy choices and lack of discipline:
* • failing to make annual payments for pension systems at the levels recommended by their own actuaries;
* • expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and
* • providing retiree health care without adequately funding it.”
—————–
P.S. My mother was both a teacher and later a public employee. Retired with a combination of modest SS from her earlier private sector employment and a modest California PERS pension.
I agree that it could shift the field toward candidates backed by the corporate power structure. On the other hand, what’s to prevent third-party groups from mobilizing support of candidates favorable to labor, both private and public?
Last but not least, if you don’t eliminate public employee unions as a driving force in the election of people who then set the salaries and benefits of the members of those unions, how do you solve the problem? Who represents the taxpayer? Without the taxpayer there is no one to pay for the promised retiree benefits.
Maybe the solution is a grand jury style system, where private citizens apply for and are chosen at random for a panel (or panels) that negotiates public employee benefit agreements. (Not individual contracts for things like city managers, but group-wide agreements.) Something has to be done to break the link between public employee union responsibility for electing candidates and those candidates reciprocating with promises of taxpayer money that are far beyond the actual, realistic ability of the taxpayers to fund.
And BTW — I’m a proud member of a private sector union, belonged to another one earlier in my life, and been on strike on multiple occasions.
You need to look into how a few more public employee retirement systems calculate their benefits. For public safety personnel in most CA systems the calculation is 3% of final year’s salary times number of years worked. And you can retire at 55 (in some systems even 50). So someone who has 30 years in can retire at 55 with a base that is 90% of final year’s salary (including deferred vacation and O/T). Then they get annual COLAs on top of that, and they get their health care paid for until they reach Medicare eligibility. With the COLAs you often get to a situation where people who have been retired for 5 or 6 years are making more than they did at peak employment.