Background: partial posting on ReturnToExcellence on December 27, 2010.
"As recently as the 1950s there were no unions for government workers...But that changed in the late fifties with New York City Mayor Robert Wagner's cynical appeal to the votes of city workers (a form of Death Of Democracy)...In 1962 JFK signed executive order 10,988 which allowed unionization of the federal workforce - this also was the genesis of the unionized public work force in many states & cities...Average total compensation per hour worked for state & city workers is $39.66 compared to $27.42 in the private sector according to the BOL & the Cato Institute. Other than a 34% differential in wages & salaries the biggest disparities are that state & city public sector defined benefit pensions are 7 times as large as those in the private sector & public sector healthcare insurance is over twice as costly... Many who have been in the public sector unions for decades can find themselves retiring in their early fifties with an inflation adjusted pension near their full final salary plus lifetime free health care while their private sector employee counterparts continue to work well into their sixties or seventies with their taxes going to support the pension & healthcare benefits of their public sector unionized neighbors. Carol believes this is the basis of a militant relationship of neighbor against neighbor...J.L. Gabbert describes this danger when he writes "'Imagine the irony (little imagination required) when a 60-something worker in the private sector, who is still working @ half his former salary because all he has is a rolled over 401(k) from a chapter 11 bankrupt former employer, is faced with a tax increase to continue funding the six-digit public pension of a state or city worker who retired 30 years ago @ age 50."'
Now I thought we would be talking & writing about the above exploitation of wealth producing private sector Americans for years before people woke up & did any thing about it (if ever) but the public sector union defeat last Tuesday in the Wisconsin gubernatorial recall election as well as measures passed in San Diego & San Jose to rein in public sector retiree benefits really shows how fast positive things can happen in America. Bravo.
I don't think any political party would be smart to read more into the aforementioned results other than people can quickly understand when they are being taken advantage of - once they have the information to know it. On this score RTE has contributed as indicated above in December 2010 plus other postings.
Earlier last week Carol & I participated in a two day higher education program in NYC cooperatively hosted by the Manhattan Institute, the Philanthropy Roundtable, & DonorsTrust. One of the discussion panels presented a link from the Manhattan Institute to compare taxpayer-guaranteed pension benefits for public sector employees to those of private sector employees. I ran a modest example on the site & found that an-other-than fire fighter, policeman, or teacher category in NJ retiring @ age 55 with a $50,000 salary would have a pension of over $27,000 per year. A private sector person would need to save over $645,000 by age 55 to replicate that guaranteed income stream. Similar comparisons to fire fighters & policeman require savings of way over $1 million by the private-sector counterpart. Click on the above site & try a few examples yourself to see if you think the people in Wisconsin, San Diego, & San Jose are on to something. The point is it is just not sustainable, either morally, civically, or fiscally, to have taxpayers who cannot afford similar benefits for themselves - or even worse have no pension or retiree healthcare plan @ all – pay for others.
Many union Democrats are disappointed or even mad with BO who flew over Wisconsin several times during the recall campaign on his way to political fund raisers in Minnesota & Illinois without ever really taking a firm stand (what else is new) for the union candidate. But ABBO endorsers can be equally dismayed with the establishment Republican candidate Mitt Romney who was matching BO stride for stride in not taking a position until all the votes were counted – Mitt also never once appeared in Wisconsin during the recall campaign.
Doug - With a few word changes your article could reflect “PIGS” in Europe. Portugal, Ireland, Greece, and Spain want Germany to subsidize their early retirement while Germans work till 65. Welcome to perversions of Socialism.
ReplyDeleteTo top the insults to the private sector if not all, at least most, of the public management have to belong to the union. I know of one, so the raises and benefits are all exploited by public workers and management. For the bargaining table there is no one bargaining for the tax payer. The tax payer is stuck with the bill. If someone falls behind on their taxes they will gladly take your property without a tear, and an interest rate higher than any credit card.
ReplyDeleteDoug, as I have been saying for a long time - give people job benefits, without any cost to them - they will vote for you.
ReplyDeleteRe Wisconsin - it was not a big win for Mitt Romney. True, people voted against union people – but do not count BO out. He will use other tactics to get votes and all of these tactics will involve the government printing press.
In fact, BO is now targeting Hispanic radio stations, and if he can get the Hispanics to come out and vote, then he has a good chance of winning. In his radio programs BO tells them that he understands that family is very important to Hispanics - if someone gets sick and the family has no assets government will pay their bills. That hits home with them.
Doug, as BO pushes for more social issues for the people, regardless of costs, Romney will have to come up with something to counter other than to say he creates jobs.
Doug - You left out one number. Your hypothetical New Jersey state employee who earns $50,000 and retires at $27,000 has to have worked for the state for 29.7 years. So at almost 30 years of service, the hypothetical state employee receives slightly over half pay in deferred compensation. And that's a current employee. New hires are on a less generous plan and need to work 32.4 years to achieve the same benefit in retirement.
ReplyDeleteTrue, the employee can retire at 55 without penalty, but he or she would have to have started with the state at age 25 (age 22 under the new rules). Decide for yourself whether the deferred compensation for New Jersey state employees is excessive.
A soldier can retire at half pay with 20 years, and many private defined-benefit plans tend to peak out at 20 years and pay a greater percentage of salary up to that point.
Furthermore, ERISA requires private plans to vest after five years of service. State plans vest after 10, so a state employee who leaves after 9 years of service comes up empty.
Your private-sector person who saves $645,000 to get the same income stream can pass that amount at death onto his family. The state employee has nothing to pass on.
The problem in New Jersey is less with the design of the plan than it is with the politicians who failed to fund it. Now we are all paying, public employees and private-sector persons alike.