Abolish California's Public Employee Pensions

We have been warning readers about the pension crisis for a few years now. In a nutshell, the problem is the following: California public employee unions – which are virtually unregulated despite the fact they operate in the uncompetitive public sector – have pretty much taken over California’s state and local governments. In recent years they have negotiated pay and benefit increases so dramatic that the average government worker in California often earns 2-4x what globalized private sector workers earn to do jobs of comparable worth. This dramatic disparity is largely due to the value of their retirement pensions. The present value of what someone collects in retirement must be applied to the years they work, in order to correctly value their annual compensation. And by that measure, pretty much every employee working for the state of California is a millionaire.

Please note there is a huge difference between unions that operate in the competitive private sector, and unions that now arguably control our public sector. Also please note this commentary is in no way meant to disparage the good men and women who work in the public sector to perform vital services for us. Moreover, this commentary is not suggesting we eliminate government services – on the contrary, this commentary simply advocates making taxpayer funded government services and benefits apply to all workers equally. Currently the public sector serves itself first, leaving the scraps for the taxpayers. This must be challenged.


During the internet bubble, then the housing bubble, most financial analysts understood we were experiencing unsustainable economic growth. But this didn’t stop the public employee unions from using these temporary surpluses as an excuse to serve their members at the expense of the taxpaying private sector workers. Crowing about excessive “executive compensation” collected by an insignficant handful of corporate executives, they demanded endless hikes in pay and benefits. The fact that they should have been comparing their compensation to their ordinary counterparts who work in the private sector was a fact they conveniently ignored. If politicians opposed them, they could be crushed in the next election. The fact their pension funds invested in the same evil corporations they routinely demonized was also conveniently ignored.

Schwarzenegger’s disastrous attempt to
reform the public sector in 2005 was, ironically,
perhaps California’s last chance to financially
guarantee their state worker pensions.

Back in July 2004 I recall reading an ad in a local newspaper placed by someone who held regular classes to teach people how to get jobs with the State of California. The ad said “Land a State Job and Become an Instant Millionaire.” I read the ad closely, and kept a copy.

Space and copyright laws prevent publishing the entire text of this ad, but it was factual, and filled with comments like the following: “The California state government provides a “defined benefit” pension plan to each of its employees. Such “defined benefit” pension plans are far more generous than any 401K or defined contribution pension plan available from any other employer in the state! In fact, the plan is so generous that it makes the average state employee a millionaire after only 22 years of work!”

In this ad and others, written with an astonishingly complete lack of irony, the writer explained in detail how much an employee would have to save every year in order to acquire sufficient wealth to retire with an annuity this generous. In other ads, the writer explained how many days off California’s state workers receive – holidays, personal days, vacation, comp. time, and the “9/80″ program where they get yet another day off every two weeks by working nine hour days for nine working days in a row. Show me an example of a conscientious salaried worker in the private sector who doesn’t work nine hours a day! In all, most state workers get between 50 and 75 paid days off per year. There is a staggering cost for all this.

Now the chickens are coming home to roost. For years, California’s public employee retirement funds – and others in other states – have overestimated the rates of return they could earn, at the same time as they underestimated how long their beneficiaries would live. Despite being the biggest collection agencies the average local government has ever seen, and despite being able to heavily influence our elections, and despite salivating over the prospect of collecting carbon auction proceeds (the real reason “the war on global warming has only just begun”), the unavoidable truth is this: California’s public employee pension funds are no longer anywhere close to fully funded. Huge reforms are finally going to come – initiated not by political reform, but by fiscal reality.

The good news is by liquidating public employee retirement funds, and instead giving government workers social security like the rest of us, several benefits will accrue to society:

  • What’s left in these public employee retirement funds can be transferred to the social security administration, bolstering the solvency of that fund.
  • All workers will receive social security, instead of public sector workers receiving far more generous pensions. Having the same retirement formulas apply to all workers will create the critical mass of voters, at last, to demand genuine upgrades to the social security benefit.
  • Public employees will no longer be slaves to their pensions – they can try out work in the private sector. Of course in the private sector they will no longer get 50-75 days off every year, but at least they won’t be slaves to their pensions.
  • The biggest liabilities on state and local government balance sheets, their payables to the state employee retirement funds, will be wiped away. Nationally, eliminating these unpayable trillions in debt may very likely prevent the great depression of 2010 from happening.
  • Government operating deficits will disappear. State and local governments will be able to fund investment instead of issuing bonds (translation, raising taxes – debt service on a bond is an expenditure, too, requiring tax revenue to service). With payments to public employee pension funds abolished, more cash will be able to go into public works and better public sector services.

For more on the pension crisis and how public sector unions and environmentalists have both helped create this crisis and are attempting to stop reform, read: Unionizing Silicon Valley, Unlocking California Gridlock, California’s Global Warming Act, Public Sector Reform, Unions, Ideals vs. Reality, Unions Aren’t Green, CEQA Hijacked, and California’s Deficit.


Categorized | Business & Economics, Other
103 Responses to “Abolish California's Public Employee Pensions”
  1. R. Rat says:

    What a load of crap! I put good money into my California public retirement fund and I have no intention of bailing out a failed state government! Our country/state have dropped the ball leaving it up to the individual to look out for themselves. Well I have, and those that haven’t need to own up to their personal failures.

  2. Ed Ring says:

    Mr. R. Rat, with all due respect, even if you did make elective contributions to your retirement fund that were deducted from your pay, your total contributions will almost certainly represent a very small portion of what you are promised to get back when you retire – here again, the disparity between your contributions and your benefits – compared to social security deductions and social security benefits – is gigantic. It’s just not right. And unless you only recently started to work for the state, the retirement benefits you are now being promised – since they have been continuously and retroactively upgraded over the past 10+ years – are far greater than anything you expected when you started your career. You and all of your counterparts in the public sector have no business treating yourselves as special citizens. You should honor all labor, not just your own. You should collect social security like the rest of us. Maybe when reform comes, those of you who are longtime state employees can keep most of your retirement benefits, since that is what you had planned on. But incoming state workers will need to be treated the same as workers are treated in the private sector. All working American citizens should have the same taxpayer funded formula apply to their retirement benefits. It’s only fair.

  3. R. Rat says:

    “…You and all of your counterparts in the public sector have no business treating yourselves as special citizens…”

    Pardon? You know what makes me special? Unlike you, I had the foresight to work hard, real hard for my living. For 40 years I worked in the streets for a couple of things. I worked to serve my community and have a retirement that will serve my needs when I get old. Through my choices I’ve raised a family and paid my just dues to society through volunteer work and adoption. How dare you assume that your ilk take, take take…rather than give back to the people that have given so much and for so long. Would you prefer that I give my home up as well? How about the shirt on my back and the blisters on my fingers. You want my shoes too?

    Through consistence and service is anyone to gain rewards from their work.

    As I have told my children, your rewards in any job comes through performance and consistence.

    Take some time to look up the word ‘vested’, and union. Your ideas as stated are socialistic.

    Now, please go off into your corner.

    Thank you.

  4. Hey there, I’ve just visited your website and it looks pretty interesting… A lot of useful stuff out there…and I like the way you treat your visitors. I want to congratulate you…. Anyhow…maybe you’ll be interested in a way to monetize even more from your visitors…and to offer them something that I’m sure they are interested in. It’s a book about how to save energy…and create your own solar panels and windmills. I can assure you that my website converts very well on broad traffic…and the payout for you is 75% for $67 …which translates in almost $50. Plus, we offer full support with the customers, low refund rate…and we have integrated a recurring uspell (more money for you) . All the details are here: http://homemadepowerplant.com/aff If you’re ready to give it a try or you want more details …just let me know. Regards, Frank Patrick.

  5. Richard Rider, Chairman, San Diego Tax Fighters says:

    This commentary is spot on.

    Here’s a similar piece with a somewhat different strategy that I worte for in the NORTH COUNTY TIMES (San Diego County, CA). I’m a columnist for them. http://www.NCTimes.com

    Like you, Ed, I’ve been warning of this inevitable debacle (market meltdown or not) for over a decade.

    RICHARD RIDER OP-ED

    The Market Meltdown and Your City Taxes

    The market’s dramatic decline adds to (and grows from) our other financial problems – the mortgage tomfoolery, high energy prices, failing businesses, soaring unemployment, record foreclosures and massive bailouts. It’s unnerving, if not frightening.

    But it’s no big deal for one large segment of Americans – government employees. Most governments are still hiring, not firing. Salaries are increasing, not decreasing. Taxes and government debt are going up, not down.

    Most government workers still retire many years before private sector employees. Their opulent pension benefits are fully guaranteed, regardless of their pension fund’s performance.

    It’s times like these that should remind government employees how much better off they are than the private sector rubes who pay the taxes. Instead, they whine about how tough things are for government employees – plus, they can’t feel the love. Incredibly, our local government employees have the audacity to call beleaguered San Diego County taxpayers “cheap” – demanding that we pay ever higher taxes.

    If your pension is a 401k plan and/or an IRA, you’ve seen the plunging value of your retirement. Almost all private sector pensions are variations of these “defined contribution” (DC) plans: You and hopefully your employer put money aside in your earmarked account, but what you get is strictly dependent on how well the investment funds perform. No guarantees.

    However, if you are a government employee, you inevitably have a “defined benefit” (DB) plan: Under a generous formula, your pension is defined as some percent of your highest salary times the number of years worked. Regardless of how well the pension fund does, or how little money is put into the fund, these benefits are guaranteed by your employer – a.k.a. taxpayers.

    So, as it turns out, you taxpayers have two different pension plans to worry about – your own, and “your” government employees – working and retired. If there is any shortfall in the funding or performance of government pensions, it must be made up 100% by the taxpayers.

    One thing’s for certain – if you live in a Southern California city, (indeed, just about America) your city workers’ pensions are seriously underfunded. ALL our cities are in that position. In addition, your county workers’ pensions are underfunded. Plus your state workers’ pensions. And that systematic underfunding was true BEFORE the market meltdown.

    How did this happen? From a politician’s standpoint, it’s the perfect labor union concession – instant, retroactive, underfunded DB plan increases, where the true cost doesn’t become apparent until years later (usually after the guilty politicians have retired).

    Moreover, the politicians, city managers – everyone in the government – benefits from these luxurious pensions. There’s no taxpayer voice in the process.

    Compliant actuaries use outdated mortality tables that underestimate lifespans by five or more years. Unrealistic annual earnings rates are assumed, with disastrous consequences when earnings fall short, let alone turn negative. DB plans all fail to perform as promised, with taxpayers getting the bill for the shortfall.

    We must end DB plans for new government hires. But the damage has already been done.

    Therefore we need to contract out every possible government function to the private sector, getting politicians out of the pension giveaway business. That, plus the threat of formal bankruptcy, are all we taxpayers have left as weapons.

  6. Richard Rider, Chairman, San Diego Tax Fighters says:

    Ed, if you still have it, I’d love a copy of that “instant millionaire” ad. That deserves further dissemination.

    Can you scan it and send it to me? Your website has my email address. If you need to use a fax, I can provide that number.

  7. JohnnyVegas says:

    Great commentary-and R. Rat is your typical government employee who thinks they are “entitled” to ripping off the taxpayers-because the fact is illegal retroactive pension spiking is where the MAJORITY of his pension came from-and I would be willing to bet he paid nothing, or close to nothing, as his employee portion of the contribution to his pension.

    Hey Mr. Rat, take a look at this and read it real good, you’re next buddy;

    http://www.wsws.org/articles/2005/may2005/unit-m13.shtml

    Like Richard Rider, I too am from San Diego and have been saying the EXACT same thing you have commented on here.

    I too get the “Well CEO’s are making billions” argument from overpaid, over pensioned government employed welfare queens.

    I have a feeling that after the market drops into negative territory for the year that Calpers will be heavily underfunded–just like 75% of all CA muni’s are today.

    BTW-here is a recent paper on public pension underfunding;

    The Intergenerational Transfer of Public Pension Promises

    Robert Novy-Marx
    University of Chicago – Graduate School of Business

    Joshua D. Rauh
    University of Chicago – Graduate School of Business; National Bureau of Economic Research (NBER)

    September 2, 2008

    Chicago GSB Research Paper No. 08-13

    Abstract:
    The value of pension promises already made by US state governments will grow to approximately $7.9 trillion in 15 years. We study investment strategies of state pension plans and estimate the distribution of future funding outcomes. We conservatively predict a 50% chance of aggregate underfunding greater than $750 billion and a 25% chance of at least $1.75 trillion (in 2005 dollars). Adjusting for risk, the true intergenerational transfer is substantially larger. Insuring both taxpayers against funding deficits and plan participants against benefit reductions would cost almost $2 trillion today,**** even though governments portray state pensions as almost fully funded. ****

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1156477

  8. Lee says:

    The author seems to like to compare the public to the private sector. While this may work for certain positions, would the author care to direct me to where I can apply for my present position as a deputy sheriff in the global ‘private’ sector?

    “What’s left in these public employee retirement funds can be transferred to the social security administration” The author must be on drugs, enough said….

  9. Lee – you’re right, it isn’t easy to make comparisons between public sector jobs and private sector jobs. The notion of comparable worth, which the feminist movement once wanted to use to regulate salaries of, say, librarians vs. heavy equipment operators, was considered unworkable because it would have required government regulation of compensation packages within the private sector. But the notion of comparable worth is worth weighing when one compares the salaries of public employees to people in the private sector – because taxpayers are paying the bill! Nobody is saying it is easy.

    Also complicating this question is the gross disparity in compensation within the public sector. A sheriff in New York or Florida or Texas may earn a far different rate of pay than one in California; even within states, pay rates vary widely. But the question is how much is too much? In California, for firefighting positions in many localities, the number of applicants dwarfs the number of openings, time after time. This would suggest getting one of these jobs pays far more than most of these applicants would be able to earn doing anything else. That would suggest they are making too much, and the taxpayers pay for it. If you apply the present value of retirement packages, plus paid days off and overtime packages, many of these folks are making more than Obama’s “rich person” threshold of $250K per year! Very few of us working stiffs in the private sector, even those who are highly educated and carrying huge responsibilities (and liabilities), make that kind of money. In the public sector when you include the value of present and future (retirement) benefits, it is common to make that kind of money.

    So how much is too much? Where you work, you may be underpaid. But in California, public employees are rarely underpaid. And they have, through their unions, acquired so much power that they pretty much exercise absolute control over California’s legislature and many if not most of the county and city governments. This is not democracy.

    It is easy to suggest that merging social security and public employee pensions funds is a zany idea, but I happen to agree with the author. All Americans should have their taxes going towards providing the same deal for all American workers when they are old. It is not right for public employees to retire in their early 50′s with benefits many times greater than what social security pays, while private sector employees have to wait until they are in their mid-60′s to retire. And since private sector workers now make LESS than public sector workers, how on earth are they expected to save for retirement? Only when everyone, public or private, gets social security, will we finally reform and upgrade social security. Maybe special provisions can be made for people who take extra risks to protect the public, but again the question must be asked, how much is too much?

    Finally, it is hard to venture these reformist suggestions if you believe in government and respect government workers, especially those of you in public safety jobs. Like the author, I am not a libertarian, and I have great respect for the work you do. But how much is too much, and how are we going to start having government serve all the people again, instead of just government workers?

  10. Worker says:

    I am a professional. I can demonstrate statistically that I am one of the best in the country at what I do. Thirty years ago I decided to lend my talent, training and ability to the public sector and since then I’ve worked at a non-union government job that paid 1/2 to 1/3 of the minimum amount I would expect to earn for the same work in the private sector. I did this because I wanted to be of service. A number of times during the past thirty years I gave careful consideration to moving into the private sector to haul in more dough, but each time my bosses reminded me about the value of my government guaranteed pension and each time I decided, on balance, that the stability of that pension and the privilege of serving the public outweighed the immediate benefits of higher income, a potentially unlimited income, in the private sector. Now I find that some of the people I’ve served for 30 years want out of the deal. They think I’m not worth what they promised to pay me and they want to cut me off. Sorry, folks. A deal is a deal. I’m going to perform my end of the bargain and I can guaran-damn-tee you that I’m going to collect the money I was promised. Sorry if that bothers you. I’m sorry all you voters have repeatedly and continuously voted for programs and politicians that built unsustainable empires and hired way to many union drones to do it. I’m sorry for your poor judgment, but that isn’t going to excuse you from the bargain you made with me and others like me. If you think you are going to screw me, have another think and I’ll be seeing you all in court.

  11. Ed Ring says:

    Dear Professional – implicit in your well reasoned remarks is that a meritocracy would have done you well in either case. Perhaps you should have stopped believing these promises if they seemed so good. The fact that anyone would get all this security, and not just extraordinary persons like you, should have gotten your guard up. Indeed you all will probably meet in bankruptcy court, or contend with reform initiatives – you can’t possibly think that virtually taking over campaign funding for the elected officials who subsequently negotiated your benefits constitutes a binding contract. The fact is these rewards you are defending should be something all citizens and taxpayers earn, all the uncertainty and all the benefits accruing to government programs should be earned by all of us equally.

  12. Pete says:

    This crisis has been years in the making, and now finally people are starting to pay attention. There is one aspect that gets almost no attention, that of age cutoffs for government, public safety and military careers. It is bad enough that many federal, state and local governments have cut these lopsided deals with their employees; what’s worse is that they often mandate – by law – that one cannot begin a career in these fields after age 35. Why? Because the government requires in-coming cops, firefighters, soldiers, tradesmen, etc. to be able to work enough years before mandatory retirement to collect a pension after 20 years service.

    I tried for years to get into the military after 9-11 simply to do my part in the GWOT, but I am in my forties and thus overage. I was willing to waive a pension, but was told again and again that I had to get into the military in time to “do my 20″ and get that pension!

    Given the looming fiscal crisis facing underfunded pension plans, shouldn’t these organizations be overjoyed to get applications from people who cannot qualify for a DB plan?

    Leaving aside the other issues that affect entranced into these careers – i.e. physical fitness, etc. – it is 180 degrees wrong to insist that everyone qualify for a pension, given that the gov’t. will most likely be unable to pay what it has already promised.

  13. Pete says:

    A few more points:

    Like many of you reading this, I admire the service and the sacrifices made by our military and public service personnel. If and when it comes time to restructure DBP plans, these folks should be last affected. We owe them that.

    However, consider the following: My uncle is a retired USN carrier pilot, with over 400 take-offs and landings, many dangerous missions, etc. He most assuredly earned his pay and then some. However, he retired as a LCDR in the early 1970s, and has been collecting a percentage of that final rank’s salary plus full medical benefits since then. He is now 80 years old.
    Multiply this scenario by the number of retired personnel and the figures very quickly get out of hand. The system is unsustainable, and will collapse if not reformed.

    DB pension plans and mandatory retirement ages are relics of the industrial age, and do not reflect the demograhic or fiscal realities facing our nation. They were designed in an era before globalization during the peak of American economic dominance, when people died younger and medical care was less expensive.
    Further, in those bygone days, there were ample young workers coming up to replace their older counterparts; that is no longer the case as fewer people have children or have fewer of them.

    We must spare workers now too old to work, or otherwise incapacitated. However, everyone else will have to share the pain in order to avert a collapse. It is probably not going to be a choice between getting a full ride, or not, but between getting something and nothing. Remember, government employees – no matter how important their work – generally do not create wealth. It all comes from the private sector; weaken that too much and no one gets anything.

    Several possibilities exist to lessen the problem, or perhaps even solve it.

    1. Phase out DBP plans going forward; pay public employees a fair salary and expect them to save for the future, just as private sector workers do now.

    2. No one “retires” at 50 on a full-ride pension. If you get it, it starts at age 68 or perhaps 70. If you quit after your 20, then plan on a second career to tide you over.

    3. Those collecting pensions at midlife will be offered a lump sum buyout or lesser levels of benefits. There is no “right” to get a pension at age 50 or 55; if the fund goes broke, you lose your retirement plan. Is this fair? Of course not, but that’s life, folks… there is no free lunch.

    4. Cancel some high-dollar weapons systems we don’t need to fund, on a one-time basis, shortfalls in the federal pension system for the military.

    5. Develop a formula for pro-rating benefits for gov’t employees, based not on time in service, but on the nature of service. Jobs involving physical danger, risk of life or health, and foreign deployments or service should get first call on benefits. Sorry, folks, but being a HS principal or superintendent of schools does not and should not qualify one for a life of luxury or near-luxury at taxpayer expense. If you’ve been shot at, or otherwise risked your neck for your nation and community, you go to the head of the line. It will be tough to draw the line here, because not all military or public safety personnel share the same level of risk…. but it does have to be drawn. Choices will have to be made.

    6. Cut the benefits for the top people – whether in the military, education or wherever, the top dogs almost always overpay themselves at the expense of those in the trenches. By the way, this includes cutting way, way back on those gold-plated deals Congress votes itself, with full vestiture after – what? – five years?

    7. No more unfunded mandates: Increases in public employee benefits must be funded on an as-you-go basis, or they do not go into effect. All packages should be indexed to economic indicators, tax revenues and the like to assure that costs rise and fall in sync with the larger economy.

    8. No double dipping – getting mutiple pension payments as some ex-military, ex-public safety types do. Again, should they be penalized for being saavy enough to use the system to their advantage? In an ideal world, no, but we aren’t living in an ideal world.

    9. Everyone who wants to work and needs to can; that means the government and private sector must work together to out everyone to work. Regardless of the what our future holds, we know that people forced into retirement or under-employment consume resources, not create or sustain them. For the private sector, that means quit pretending that all of the folks over fifty can by working as greeters at Walmart. For the government, that means moderninzing your work rules.

    IMHO, unless we give serious consideration to steps similar to the above, the system will go broke. The worst part is that it does not even take into account funding SS, medicare, medicaid, etc. – which are also broke, or soon to be. And then there’s that national debt problem… man, I’m giving myself a headache!

  14. Worker says:

    Many of these remarks are just hopelessly naive. Mr. Ring doubts I have a “binding contract.” Care to litigate the question? Your side will be argued for you at taxpayer’s expense by government lawyers who expect to collect a pension and will be decided for you by government judges who expect to collect a pension. Good luck on that. And you seriously expect that, in an unprecedented scenario in which a state government, with virtually unlimited authority to tax its citizens, declares bankruptcy, the state is going to be able discharge in bankruptcy vested pension obligations? Good luck with that.

    It is time conservatives start to act on the beliefs they claim to have. The debts incurred by decades of liberal profligacy are coming due. It is the deadbeat liberals who think they can make these debts disappear with the stroke of a pen, who don’t take their own promises seriously and who lack any moral sense of their own culpability. What we have here is a teachable moment. Conservatives should be arguing that the government absolutely must pay its lawful obligations as its very first priority. After all, these pension liabilities are chicken feed compared to the ongoing expenses of maintaining the bloated empires our state and local governments have become. Conservatives should use this opportunity to force liberals’ feet to the fire. Here, sir, is the result of your over-indulgence. Now, maybe you would like to cut all these programs you’ve created to take money from those who work for it and provide free services for those who don’t and for those who need deporting rather than supporting and, instead, pay your lawful debts with the tax money you have confiscated. Maybe, just maybe, once we force our overlords to pay these debts by discontinuing unnecessary programs, firing useless employees and practicing fiscal restraint, maybe, the voters will find that they really didn’t need all this useless bloat and will be more circumspect the next time some pettifogging demagogue tries to convince them that government services are free, free, free. At least the pension benefits will be paid to people who actually earned them.

  15. Ed Ring says:

    I’m not sure there’s much here we’re disagreeing over. The only certain item would be these “binding contracts” where you have stated my opinion – that public employee benefit contracts enacted by legislators whose elections were funded by public employees can be declared unenforceable due to conflicts of interest – is naive. And on that you may be right.

    Your apparent preference for more limited government is one I share, although not to the point of being a libertarian. As we embark on a new round of public works – which appears inevitable – our most realistic hope is these public works yield genuine benefits to society, and the expanded government entities that operate these projects are reformed. The first place to look for reform – in my opinion – is in the inequitable and unsustainable benefit structures of public employees.

  16. rnrinvest says:

    It would seem to most that you all have valid points. A deal is a deal and should be honored as that, when the deal is made in good faith. But as is easily seen by us outsiders, my local gov. workers spend more time hiding in their trucks under the trees or being so incredibly non responsive to getting things done in a time frame as to be cost effective, that it is very hard to be sympathetic to a state employee’s pension shortfalls. As to the sheriff, those of you that did your duty, my hat is off to you and I’m grateful for your service. That is the handful of you that actually did your job the old fashioned way. Not parked in the back of the local Wal-Mart trying to hide from the watch commander. Most city or state employees are an embarrassment to the working few in the same position. They spend most of their time leaning on the shovel instead of pushing one. And I can’t count the number of retired city workers from the north east that brag about how little work they did while employed and now retired at 55. Didn’t the speed limit used to be 55, and is now been raised to 70 in most places??????

  17. KoryO says:

    I don’t know the specifics of California’s many pensions. If they are anything like the public pension plan I qualify for (Arizona), I have a state constitutional right to the benefits I was promised during my term of employment.

    I paid into that plan with the understanding that I would receive a certain stated benefit in the future. I have documentation to that effect, with a promised payout amount in the future. It’s basic contract law. Again, I am not familiar with the specifics of any other pension plan, but I am sure that many beneficiaries of California’s public pensions could present similar documentation.

    Besides, where do you get the idea that none of us paid into Social Security all along? It came out of my check every single time, just like it did for my friends in the private sector. Now….you want to take my constitutionally mandated pension account and put it into Social Security, so I get to pay twice (or three times….or more) for that, simply because you are ticked off I’m getting something you aren’t? I don’t friggin’ think so!

    Last point…..if you are so worried about Social Security, why don’t you propose propping it up with everyone’s deferred comp/401k/403b/IRA/Keogh/what have you balances swept in along with the public pension funds? I know why…..you want to keep what YOU earned, right? Same here, Ed. I earned those benefits as part of the compensation plan offered to me when I accepted a post with a government agency. I fulfilled my part of the deal, and in a few years, it will be Arizona’s turn to fulfill their part of the deal.

    If you want to pressure the government to offer smaller retirement compensation packages to future employees, that’s your right. Go for it, and if you get that on the ballot as a proposition you just might win. But whether you like it or not, you cannot rewrite the terms of a contract without the other party’s consent.

  18. boprn says:

    Of all the irresponsible articles I have seen regarding govt, and govt pensions, this one takes the cake. It is dishonest in nearly every line (which would take a near book to explain), promotes actual theft from those who have paid into retirement plans, misleads the public buy a grand margin regarding benefits that public employees get. It is just astounding.

    What is even more astounding, is that as a country we were able to provide these retirements in the past to a much larger percentage of our population. What happened that we have gone from a nation that offered pensions to a large percentage of our employees, to a nation that offers pensions to less than a 1/10th of the total population? What is the motive behind taking the few pensions left and flushing them down the toilet?

    Here is a better idea: let’s get back to the old days (say the 1950s) where a lot of people had pensions, didn’t face an uncertain old age. You know, the time where everyone paid into state & fed tax. Currently 50% of the people in this country don’t even pay state/fed taxes. I’m not speaking of the rich; I’m speaking of the lower/middle income. Everything has been given on a golden plate, with silver spoon so we can look so P.C. A flat tax is the answer, and it would force this county to save for the future.

    Just an opinion.

  19. Ed Ring says:

    Dave – thank you for your email, and for your opinion. I agree with the last paragraph of your email, where you suggest everyone get equal treatment – in your case you feel that would be accomplished via a flat tax. Not only does a flat tax seem like a great idea, but what we are suggesting in this article is, essentially, proposing “flat” entitlements. There is nothing wrong at all with taxpayers funding a certain minimum and decent level of health and retirement security for everyone, nor is there anything wrong with workers earning, if they pay higher taxes than average (even ala a flat tax) a proportionally higher level of health and retirement security. But in many sectors within public employment, unions have convinced the government workers that they aren’t entitled to a little more than what taxpayers get, but many times what taxpayers get. In my opinion, public employee labor unions have absolutely destroyed the solvency of public institutions through negotiating unsustainable wage and pension packages, and they have done this by taking control of our politicians through funding their elections. Sure, corporations exercise influence at the federal level, and sometimes at state levels, but at the city, county and state level, more often (that’s an understatement) it is the public employee unions who call the shots. This is undemocratic, it is inequitable, and it is bankrupting the public sector. There’s nothing wrong with a flat tax, Dave, or with taxpayer funded health and retirement security. But to point out that public sector unions are largely responsible for destroying the solvency of the public sector is not irresponsible, it is accurate. And now that they are trotting out “carbon emission auctions” and “carbon mitigation fees” to refill their pilfered treasuries, it becomes relevant to this environmental publication.

    KoryO – it is hard to get up to speed on all of the public sector pension plans, everywhere. In some states they are quite equitable, but in California, most of them are way too generous and they are also bankrupt. I completely agree with improving social security and medicare – and the idea that public employees get something different from that never made sense. As for the contracts – there are at least two ways they can be altered, (1) if a government agency goes bankrupt, as is beginning to happen already with many cities, or (2) if it can be demonstrated the politicians who agreed to these unsustainable packages were unduly influenced by public sector unions, particularly if they were only supporting one political party. The Hatch act actually prevents much of this abuse from happening with federal workers – the role of unions in the public sector needs to be examined and regulated anew. Read Unions – Ideals vs. Reality.

  20. boprn says:

    Here is some more info:

    I happen to be a veteran of the federal system, and three state systems. I am extremely well versed in retirement pensions on a national basis. The picture you paint for your readers here is far off the mark of what the truth is. The fact is that there are states that offer far better retirement than California. For example, Nevada and Alaska (to mention two) offer retirements after 25 years of service at any age. I used to work in the Nevada govt, and have a very good friend there that retired after 25 years of service at age 45 (and yes, I’m jealous). To even remotely assert that Cali has some kind of golden gift to it’s public employees is very misleading.

    To the point in your article that the state is putting away 40-50,000 a year per employee. That is just laughable. The state puts away LESS than 24k per year for it’s 3%@50 police officer/fire fighter employees. The member has the rest (about 7.5k/year) deducted. That’s a grand total of 31.5k/year for the highest retirement factor. The normal retirement factors (2%@50 and 2.5@50) have much less put away. You can actually go to CalPers site, and do a ‘cost estimate’ to find out exactly what 1 year costs in various retirement factors. It is of course dependent on other factors also.

    The idea that money can somehow be taken from state employees, and given to social security is perhaps the most irresponsible and senselss thing I have ever seen posted regarding pensions. First, that is stating theft is a legitimate tool in solving the states problems. Second it is illegal as hell. Third, employees have BINDING CONTRACTS. Fourth, most of us have given up far higher paying jobs in the private sector so we could secure these benefits.

    Which brings me to the next poing. You say that govt jobs make more than the private counter parts. Study after study (even those by DPA in Sacramento) have shown that state workers are grossly underpaid. How one can dispute that, esp with DPA itself stating this, is beyond my immagination.

    Lastly, your article reeks of what is wrong today – never do you propose getting rid of the benefits for illegals, for welfare queens, and so on. It is the working people who supposed to get it put to them. Think – if we got rid of all programs for illegals, problem solved. If we got rid of all the entitlement programs for those who are just scamming the system, problem solved. But like most people you don’t want to address that. Instead, let’s go after those DAMN STATE WORKERS. After all, look what they got. It’s an easy target to lead the simple minded around by the nose.

    It is sad that people uneducated about financial matters, legal matters, and the way govt works are given a voice to lead the gullible around.

    Stop trying to tear down the future some have, and start trying to build that same future for others. How to do that is a very long discussion, but I am willing to get in to it if needed.

  21. Ed Ring says:

    Dave – using Alaska (small population, oil revenue) and Nevada (small population, gambling) are not very good examples of systems that would be financially sustainable in other states. I agree with you that we need to try to build a more secure taxpayer funded retirement system and healthcare system for everyone. In my opinion, especially in California, this goal has been hijacked by state (and city and county) employee unions who care more about themselves than they do about private sector taxpayers. The reforms advocated here are not meant to disrespect the important work and the risks that some government workers take, such as in public safety. This also isn’t suggesting that all government workers are overpaid. But for every example you provide of underpaid government workers, there are plenty of examples the other way. Your example where you note that California is ONLY putting away $31K per year towards the retirement fund for a worker is telling. Where on earth are most people going to find $2,500 per month to put away towards retirement? Where are we going to find half that? This is unimaginable to most people in the private sector, and you are using it as an example of how California state workers are undercompensated – there are months when many of us operating small businesses are lucky if we can take home $2,000 per month, let alone save all of it. Of course it isn’t easy to compare the worth of some jobs in the government to jobs outside the public sector, but how much is too much? Government jobs in many cities and counties in California have become ridiculously overpaying compared to private sector work. There are jobs in the public sector that pay well over $200K per year (applying present value of future benefits to years worked), and that is arguably too much – according to Obama, that is what wealthy people make who need to be taxed more than the rest of us. So I’m not sure by what yardstick such workers would not be considered overcompensated. I do not believe the sentiments expressed nor the facts presented in this article are unreasonable or inaccurate. There is no reason why taxpayer-funded retirement formulas shouldn’t be the same for all workers in America.

    As for merging public employee pension funds with social security – I believe this should happen gradually. I agree existing employees working in government jobs who are nearing retirement should keep more of what they previously negotiated than those entering government service. But the concessions to labor in the last 10-15 years have provided far more retirement benefits than anyone entering the government workforce 25 years ago ever expected. Nobody is suggesting stealing anything – but it would be nice to have some independent actuarial projections of just exactly how much money is in these funds – there isn’t enough money in them to make good on these retirement contracts anyway. Many of them are going to be renegotiated in bankruptcy court; this has already begun. And of course you’re right that other entitlement programs should be eliminated – no argument there.

  22. boprn says:

    You have a way of twisting data, facts, and what people say. I did not use the 31k as an example of what ‘California is ONLY putting away’ per worker. I used that at as an example of what the MAX being put away is. That is what a TOPPED out officer with a 3%@50 retirement (who happens to have a life expectancy of 58) has put away. The typical person is having far less than that put into CalPers on an annual basis. In fact, I will run the numbers myself on CalPers right now: Using the most common retirement formula (2%@55), with the most typical mid term pay rate (3400/month) and most typical age, and so on, the AVERAGE person has $4,765.58 put away each year into CalPers. Of that amount, the member contributes about $1,600, the state about $3,200. If this same person was in the social security system, the contributions would be: $3,121 for employee, and $3,121 for employer, or $6,242 per year. The net savings to tax payers is $1,476.42/year for this employee.

    So, why does the person with CalPers get a better retirement than the person with SS? Because CalPers puts the money into investments that return on average of 12%. SS put the money into welfare programs for illegals, scammers, and so on. There is the difference.

    You can keep playing games, or perhaps you’re not. Perhaps you have (like the governor himself) never really looked into this at depth, and just don’t know what your talking about. Certainly you have a gullible audience that follows what you have to say. People are angry, and there is no better target than those DAMN STATE EMPLOYEES. The same kind of grand standing worked for some pretty infamous people in the past. Never with the truth, but always with the half truths.

    One last thing. If it’s such a good deal, why aren’t you doing it?

  23. Ed Ring says:

    Dave – you’re correct – you had used the $31K example as a best case in terms of annual retirement contributions for a state worker. When I highlighted the amount by saying ONLY $31K that could easily make it appear I’m trying to distort the point you made. Sorry. It seemed to me you were suggesting $31K is not an outrageous amount of money – and in my opinion it is definitely an outrageous amount of money.

    I agree with you that ALL workers should have improved taxpayer funded health and retirement security that is tied to how much they earn during their careers. But I believe as long as public employee labor unions control our state, city and county governments – and in my opinion that is usually the case in California – we are not going to have workers standing up together from the public and private sectors and asking for these improvements. Social Security and Medicare are both defined benefit programs that simply need to be made much better. I cannot see why anyone should get anything else.

    One point you may wish to check is your comment that CalPers can earn 12% per year. Funds as big as CalPers – with hundreds of billions under management – cannot possibly sustain a return of 12%, year after year. A globalized fund that big can only grow, over the long term, at the rate of speed the global economy expands. CalPers returns for the last 10-15 years have been unusually strong because they invested in booming economies (which will slow down), and in real estate and the internet (which were bubbles). If CalPers ever thought they could keep these 12% returns going over generations, they were deceiving themselves – and you.

    I respect and appreciate your comments. I agree that government employees are not all overpaid, and that there are examples of the opposite. But in general, I think the city, county and state employees in California have used their unions to take over our politicians and negotiate for themselves pay packages that the rest of us, who pay the taxes, can only dream of, and it is bankrupting our great state. The idea they are now going to use global warming as a pretext to balance their budget and strip away more of our freedoms should have anyone concerned.

  24. boprn says:

    Social security has been run improperly, that is for sure. As to why anyone should get anything else – because it is what they agreed to as part of the compensation package in lieu of higher pay that another job would have provided. It’s just that simple. If things are to change, then it must chnage for future employees, that way they know the ground rules on the way in.

    The 12% average annual return is what CalPers uses. I agree that in these days it’s a bit rosy. That said, the historical standard is 15% over many many decades, so they made 12% their measurement. Again, I agree going forward that 12% may be over estimating the future gains in the market.

    What I see (and I see it on a daily basis working for the govt) is that we have become a society of enablers. For instance, we give LOTS of inmates mental health diagnosis so they can collect benefits when they get out of prison. We give unending ‘housing aid’ to people who don’t wish to work full time (I know, I actually rent to a couple in this very situation). We give away welfare like nobody is actually paying for it. We have become a society of enablers – enabling those who simply don’t wish to contribute to society. On top of that, as a voting block, the people of Calif. vote for initiative after initiative that gives away even more ‘free’ aid to those who are supposedly in need of it. And this leads into my next paragraph.

    This is actually where I have a problem with what you suggest in your article. Rather than deal with all the people who leech off our society, illegals, or even the fed govt that takes 20% of our states tax revenue, you go after the working people. Saying these people are ‘over paid’ or have ‘too good a retirement’. It is absolute rubbish. When I worked in Nevada in the same position for the govt, I made about the same amount as in Calif. Of course I state taxes in Calif, and the cost of living is higer in Calif. The net effect was a 20% pay cut. When I worked back east in the same job, for another state govt I made less. But when the cost of living was factored in, I still made more back east than in Calif. Calif govt employees are grossly underpaid. Which leads me to yet another paragraph…lol

    A lot of people will compare pay in very general terms, as you did in your article. Most like to compare civilian avg pay to govt avg pay. There is no way to do it. The govt is full of professionals, the civilian sector has professionals too, but also people working at WalMart, Burger King and so on. Of course the avg pay is going to be less in the civilian sector. But when you compare job to job, the civilian sector is paid more.

    I did take note that you did not address the comparison I made of SS vs CalPers, and how that actually saves the state 1,400$/year on an avg employee. I bet you didn’t know that…?

    OK, last point. I do agree with you that going forward, the CalPers system is in trouble. That something needs to be done to save it, if for no other reason, that the people who have paid into it get what was promised them. It is important to remember that a lot of these people are not covered by social security – so the benefits must be paid. It is part of the agreement between the fed and the state. So, how to protect the system? The fed protected it’s own PERS system by lowering the retirement factors for new hires after…1984 I believe. If you were hired before 1984, you were in a 2%/year program. After 1984 it was a 1%/year program. That is a fair, and more importantly, legal thing that can be done to correct and protect the future of CalPers. Police/Fire with the fed govt is at a 1.7%/year retirement factor.

    There it is. Fire away!! =]

  25. Ed Ring says:

    Dave – you make a lot of interesting points, and as you have also noted, this is a discussion that can go on without end. Of course, that is our goal – the more discussion there is, the sooner (hopefully) we will evolve as a society.

    There are a lot of areas of agreement here. I think you are correct that we have become a society of enablers. In your profession you probably see this first hand. While I am not a libertarian at all, I do believe we always have to guard against creating chronic dependency on the government when our original goal was only for the government to help people.

    Your comments about the federal system are also well taken. I think the federal employee benefits system is a reasonable compromise – it is far more financially sustainable, but it still rewards the service of federal employees with a health and retirement package that is, in general, somewhat better (but not ridiculously better) than social security and medicare.

    Please remember how these federal employee benefit reforms came about. I would challenge you to think about how unions might appear to those of us who have never belonged to one. Sure, there are still underpaid people in the public sector, and yes, the proportion of professionals in the public sector is higher than in the private sector, making one-to-one comparisons difficult. But thanks to union contracts, there are people working in public sector jobs – thousands if not hundreds of thousands of them – who are collecting $200K or more per year (when including the value of health and retirement benefits to the years they work) for jobs that require far less skill than one would need to earn that kind of compensation in the private sector.

    The problem with union influence on government goes beyond just financial concerns. Unions have regulated how job descriptions are written, how management can operate, how employees can be managed. In my opinion, they have undermined the meritocracy in government organizations and undermined the work ethic of government employees, and they have spewed an unceasing rhetoric of “us vs. them.” I don’t think any of this is helpful to society or the taxpayer, or, for that matter, to the good people in government who are talented and want to work hard.

    Finally, the idea that unions can take (usually) mandatory dues from government employees and use them to control our elections, so, to cite example among many, many small cities end up having to pay entry level firefighters six figure salaries (before overtime and the value of future benefits), is a crime (in my opinion). Be careful when you talk about “stealing our pensions.” Because pensions and pay that are negotiated in this manner might be considered stolen to begin with, and taking them back might be considered recovering stolen goods. I’m really not sure unions should be allowed to operate in the public sector because of how easily they are able to take over, and because of the inherent conflicts of interest.

    It is my hope that conservative members of the public sector themselves demand that the power of public sector unions is regulated again, and demand that the retirement and health security of public sector workers is no longer so far out of line with what the rest of us get. The idea that we are going to use new taxes and fees and new regulations relating to “fighting global warming” to pull even more money into the public sector – instead of implementing reforms – is a tragic farce and must be challenged.

  26. boprn says:

    “our original goal was only for the government to help people”

    I look at govt as a means to provide the security and infrastructure so people have the base on which to build buisness. Security – to provide a lawful environment where people don’t feel threatened, or corruption can take root. Infrastructure – roads, bridges, electric, water, so buisness has the raw materials, and the availabilty of them so buisness can grow. Of course this takes govt employees. Most of these are going to be (at least SHOULD be) experts in the fields they represent. After all, don’t we want the best people creating the basis on which our buisness, and our society rest upon. These people who serve the public should be well compensated for what they do, as they have given up the opportunity to (remember these should be the best people) own their own buisness, and the high profits that go with it.

    Regarding the fed system retirement. I agree that Calif pension needs to be modified for new/incoming employees. I don’t know that I would go as far as the feds have. The 2% retirement factor is probably the fairest. Make it 2% at 60, and for police/fire 2.5@55 (due to short life span). The medical that state employees receive is really not too big a deal, except that the state has never addressed the funding of it. That is where the real issue lies with the health care benefits in retirement. Remember, once a state/county/city retire hits the medicare age, they are converted to medicare (with a small side health package from the state). All state employees must pay into medicare. The result is from the age of retirement to the medicare age, the state is covering a large % of the cost of health care. That said, the state would be covering it if the person was actively employed. At any rate, it all goes back to honest funding. Currently most states (including Calif) have ‘pay as you go’ health care for retires. It’s not a good idea due to the mass of baby boomers retiring soon. That will have an impact on the budget for sure. But!!! – are the employees to blame, or the state govt to blame for this? It is of course the govt as one of these elected officials (just takes one) could have brought this very problem sometime in the last…say 50 years.

    Regarding unions. I agree there is some bad, but there is some good too. First, let me disclose my position on the state union I belong to – I loathe it. It is corrupt, dishonest with it’s members, disrespectful of the elected officials…I could go on. At any rate, the unions do offer some positives to the state, and as a result to the taxpayers. The people high up in each department (the C.E.A. positions), and the elected officials above them often do not understand the inner working of each department they are charged with. They often come up with ideas that are so far off the mark that you have to wonder how they got into the position they are in. This is where the union comes in. The union will say ‘wait – have you thought about doing it this way instead’, or ‘wait – that is not safe, and puts our officers at risk’. The unions can be beneficial, but of course they can be a detriment to the state also. Currently there are only (as I understand it) two bargaining units with the state that have current contracts. TWO. This has happened since Arnold came into office. It is bad for the state, the taxpayer, and the employees themselves. The public really has no clue how bad a governor we now have. But, he knows how to play to the cameras – that’s for sure.

    Mandatory dues. This was actually made unlawful about 18 months ago. That said, many people still have dues taken out that probably wouldn’t if they didn’t feel some sort of threat. I happen to be in that position myself. Perhaps a larger issue is how the money is spent. Many in the public don’t like the unions donating to politicians (neither do I). That said, someone once said ‘if PACs can contribute to politicians, why can’t unions’ , after all unions are full of people who also want to be represented at a higher level. Is it right to say that unions can’t participate in the election process? After all, who knows more about the ‘state of the state’ than the unions, who are comprised of govt employees? It would make sense for these unions to participate in the political process, and if all went well (which is not always the case) it would be for the betterment of the State.

    Lastly, a point I would like to bring up on my own. Perhaps the most unjust thing of all has happened in (??) Orange county. Not sure if that is the right county. The pay/retirement packages offered to county employees is now up for popular vote. It is the job of elected officials and DPA to decide these things. Why? Well, if I can vote my neighbor zero pay, and not have to pay tax for his job – that’s what I will do. The same people who vote for every ballot measure, will vote no for every pay/retirement package for a civil service employee. People want all these goodies – they just don’t want to pay for them. By putting civil service employees pay up to a popular vote, the elected officials have absolved themselves of any responsibility for doing the job, and therefore have done an end-around from any responsibility that goes with it. It is a cowards game. But that seems to be what we have for leadership anymore. Perhaps that is the largest challenge going forward – finding real leadership.

  27. John says:

    I haven’t studied the California situation in any great detail, but as a retired Federal worker, I have an interest in this type of issue. I worked hard for my pension and I fully expect to continue to receive it. As a civil servant, I made much less than I could have made in the private sector. But there was a trade-off of sorts. Less pay while working, but good pension benefits. So I went along with the deal. And now some clowns want to change the rules?

    Fine. Do it for the new hires. Let them know the deal going in. But don’t cheat the retirees or those close to retirement or with a vested interest in the retirement plan. It isn’t right.

  28. John – I think you’re right, a solution to public pension insolvency needs to recognize the predicament of rewriting the pension plan for those close to retirement. A few points:

    1 – Many pension plan benefits were retroactively increased in recent years. Rolling those back only puts people close to retirement back to where they expected they would be at retirement – up until a few years ago. These recent, retroactive pension benefit increases were unsustainable and should be repealed.

    2 – Changing the rules is necessary because the pensions became insolvent – and they were on track to become insolvent long before the recent credit crisis hit.

    3 – In the public sector, in general, the professionals are paid less than they would make in the private sector – although even that has changed in recent years. But workers in the public sector are generally paid far more than their counterparts are in the private sector. A entry-level landscaper working for many typical Californian cities can make literally 2-3 times as much per hour as someone doing similar work in the private sector. Nobody’s saying workers in the public sector have to be exploited, but they should not be collecting 2-3x more per hour than market rates, especially if they are going to also get all those extra days off and health/retirement benefits.

    4 – The crux of the problem was these pension fund managers believed they could earn inflation-adjusted annual returns on their stock portfolios well in excess of the real growth rates of the global economy, and with funds that big, that is not possible. It’s that simple. They need to reset what they think they can really earn, and lower pension benefits to something that rate of return will sustain.

  29. Donald says:

    Dave: Thank you for all your accurate and excellent comments in refuting many errors Mr. Ring made.

  30. Ed Ring says:

    Donald – I would characterize the comments back and forth between me and Dave as a dialogue. It is impossible to report with complete accuracy on an issue this complex. Dave pointed out some facts in particular cases that refuted some of the generalizations I’d made, but agreed with me on other points. For example, he agreed that CALPRS probably was too optimistic when they projected ongoing average real rates of returns on their fund of 12% per year. In my opinion, a fund that big cannot grow, decade over decade, at a rate per year any greater than the rate of real economic growth in the nations in which they invest. And that rate would be around 3-5%, historically.

    If there are specific errors you would like to call attention to from this post, you are invited to go ahead and list them. I stand behind the substance of the assertions in this post and others, although, again, I agree this is a very complex subject.

  31. Bull says:

    “Worker” said …. Worker Said ……..
    “I am a professional. I can demonstrate statistically that I am one of the best in the country at what I do. Thirty years ago I decided to lend my talent, training and ability to the public sector and since then I’ve worked at a non-union government job that paid 1/2 to 1/3 of the minimum amount I would expect to earn for the same work in the private sector. I did this because I wanted to be of service. A number of times during the past thirty years I gave careful consideration to moving into the private sector to haul in more dough, but each time my bosses reminded me about the value of my government guaranteed pension and each time I decided, on balance, that the stability of that pension and the privilege of serving the public outweighed the immediate benefits of higher income, a potentially unlimited income, in the private sector. Now I find that some of the people I’ve served for 30 years want out of the deal. They think I’m not worth what they promised to pay me and they want to cut me off. Sorry, folks. A deal is a deal. I’m going to perform my end of the bargain and I can guaran-damn-tee you that I’m going to collect the money I was promised. Sorry if that bothers you. I’m sorry all you voters have repeatedly and continuously voted for programs and politicians that built unsustainable empires and hired way to many union drones to do it. I’m sorry for your poor judgment, but that isn’t going to excuse you from the bargain you made with me and others like me. If you think you are going to screw me, have another think and I’ll be seeing you all in court.”

    Yup, we certianly WILL see each other in court …… BANKRUPTCY COURT, wherupon ALL your rich Pensions & Benefits will go …. bye bye !

  32. Private Worker says:

    This is a useful dialogue; thanks for starting it Ed, and to the thoughtful people who have agreed and disagreed. It is indeed a complex issue which needs this kind of refinement.

    Suggestion to Ed: In your proposal, consider the actual contributions (payroll deductions) made by employees, expanded by actual (not projected) returns on investment, as separate and sacrosanct; those can be considered defined contribution (or converted to defined benefit based on market rates given current actuarial expectations). The issue is not about returning to the workers what these real contributions actually earn, but the blank check made by taxpayers – providing a guaranteed benefit “as if” the pensions would have really produced 12% returns for ever, and beyond what the market would have provided as annuities. (And the escalation of benefits over time as you often point out).

    Regarding 12% (etc) returns. There is no one “market” rate of return even in an ideal economy – it depends on risk taken. Getting higher returns is virtually always at the cost of more risk. You can afford to take that risk if somebody else (taxpayers) is guaranteeing your investment (ie: carrying the risk for you). Imagine this – I have a high tech startup which should probaby pay 15% per annum ROI over the next decade if all goes according to plan, but there is real risk of major losses. Would you take it? How about if I guaranteed that I’d make up the full difference from another source (taxpayers) if the investment fell short – so you’ll effectively get 15% ROI no matter what happens. You’d be a fool not to take that risk-free ROI! That’s essentially where the public union pension contracts are at (tho not the example 15%). They can take and demonstrably have made high risk high yield investments to justify the level of defined benefits, with the taxpayer covering those risks. When the boom ends, the pensioners are 100% covered to live as if the boom was continuing indefinitely, with private sector workers making up the difference one way or another while feeling the brunt of the recession, a double whammy.

    Promises and contracts. I believe in fulfilling one’s financial obligations and have personally done so all my life. Of course it’s the right thing to do to honor any agreements. However, you can’t squeeze blood from a turnip – I’ve been left hanging when a small company which owes me money goes bankrupt or out of business. That’s not right or fair (I deserve 100% of what I contracted for), but it’s life. If government goes bankrupt (eg: Vallejo, CA), then the contracts they signed with other governments, with businesses, with unions, and with individuals are all potentially in need of renegotiation. Public servants are exactly as entitled to sympathy in that case as I am when a private firm goes bankrupt – no more and no less.

    One complication is whether we need to drive a government into bankruptcy BEFORE taking serious action – can we repair the bulkheads before we hit the iceberg or not? By then the damages may be pretty severe – even pensioners may be forced to take fewer “cents on the dollar” settlement than they could have gotten if the problem had been addressed earlier. It’s possible that a few bankruptcies will cause other public sector unions to be more open to early renegotiation. So long as they believe that by just sticking adamantly to their guns they will be guaranteed to get 100% of their finanical pension promises fulfilled forever no matter what happens to the rest of the world, they may be steering us all towards that iceberg of reality.

    There seems to be a myth that public sector employees are generally paid less than private sector for comparable work (to be traded off against a better pension); that was often the case when I was young and may have been a fair tradeoff then. Currently in my field however (Geographic Information Systems) there is no such disparity – if anything the government workers are paid more even before considering the present value of their vastly better pensions and benefits (health care, days off, etc). Not the 2-3 times more cited above for landscape workers, but still substantially more. As others have noted, there have been lots of applicants for each job, including people happy to abandon the private sector for a better paying government job. Even among folks too old to build up a pension – just for present salary and benefits. Likewise look at private teachers and public teachers – do private teachers make vastly more or somewhat less than public? Even in law enforcement – does the typical retired street cop get a huge boost in salary as a private security guard? Yes there are some jobs which are hard to compare – Sheriff would be one of them. But where comparison IS possible, I don’t see evidence that public workers are underpaid.

    By the way, in my job I work with a lot of public employees – local, state and federal. The ones I work with most are hard working and competent and I respect them and enjoy working with them. I have nothing against them – but I do not see them as underpaid! They do work hard for their money – just as I do!

    I don’t advocate wholesale privatizing of law enforcement and schools; but I do question whether we should continue the trend of overpaying them compared to the private sector and then adding generous pensions on top of that. As you say, how much is too much?

    I too an not a libertarian, but they make a good point: if a private enterprise overpays their employees compared to others with the same level of productivity, they will eventually lose market share and go out of business. We cannot afford to let government go out of business so that reality check needs to be replaced by some other negative feedback mechanism to achieve homeostasis or stability – some “push back” to appropriately counterbalance (but not overwhelm or go to opposite extremes) the self interest push of public employee unions.

    Vallejo is an example of a “positive feedback” system veering out of control. Public employees are extremely well paid (high even by the standards of the Bay Area), they have strong and well funded unions, the unions are very active in local politics, they get politicians elected who increase salaries and benefits for union members, who can afford even more dues and political contributions. Now three quarters of the budget goes to public safetly.

    The balance that once existed between “low salary with good pension” for public employee is in many areas a myth now; the union feedback loop has caused them to have high salaries and gold plated benefits. This is nothing against the folks involved; nearly every one of us here would be glad to accept more generous compensation if it were offered to us, and and many of us would be glad to pay dues to an organization which would bring in many times that much in increased compensation. I don’t think I’m morally superior to public employee union members; they are only looking out for their own interests as effectively as they can (and like all humans they can rationalize that as being for the common good somehow).

    However, it has come to the point that we all need to ask if this system is sustainable, and if not how it can be repaired most fairly and effectively.

    What’s fair to everybody? Well, consider an actual or impending bankruptcy. Let’s agree that what’s most “fair” is that everybody gets 100% of what’s been promised to them. If there isn’t enough money to cover that, then the next most fair thing is to spread the necessary pain among those being treated partially unfairly. We may be heading in that direction – via formal bankruptices or to head them off.

    The proposal to merge public employee benefits into social security may be too radical – but it can’t be off the table just because one group has been promised they won’t ever have the share the pain of future financial meltdowns with everybody else.

    (All this said, we need to know the real numbers without being cooked by either side – the so called pension tsunami cannot be used as an cover to enforce political ideologies. I’m calling for opening a serious discussion with few sacred cows – not for smashing unions and going to the opposite extreme)

  33. Private Worker says:

    Previous post was very long, sorry if that’s too much.

    To reiterate a key point…

    If the ship is forging ahead fairly well, then the first class passengers deserve the (pension retirement) comfort they bargained for.

    If we start to sink, we may all have to bail. It’s not going to work if all the sacrifice comes from the layoff and downsized private sector, while the public sector lives as if we were still in boom times.

    If we enter a prolonged recession or depression, and the public employee pension funds are not making their 12% (and may even be losing money on stock or real estate), the taxpayers have to cover the difference “as if” we were still in boom times. That’s just not going to work if said taxpayers are suffering from a deflationary spiral, where their taxes keep having to be increased to insulate public employees from the pain everybody else is feeling. That’s the double whammy which is not going to seem “fair” enough to sustain forever, no matter what promises policians made during boom times.

    If the economy, and the California budget, get chugging again soon then the crisis will be postponed, unless benefits keep growing faster than the economy as a whole.

    We cannot count on that, thoough.

  34. safety employee says:

    I think we all agree there needs to be a balance, public and private employment. The one thing to remember, the bulk of my government paycheck goes to the private sector, shopping, dining our, automobiles, etc. Maybe you should be more concerned with the private sector sending jobs out of country. My starting pay of 800 dollars a month was the sacrifice I made to be in a secure job. I did not choose to go for the big bucks in the private sector, I chose to serve the public and spend my hard earned money in our great country. Thanks to all the public and private hard working folks out there that support the astrinomical salaries of the CEO’s and bank exec’s.

  35. barbara says:

    My husband has worked his behind off for close to 25 years – day shift, night shift, weekends, holidays, birthdays, transfers (6 hours one way away from home) – just to have a solid, stable future. To say he is overpaid is an insult. He has contributed to his Calpers pension and worked day after day looking forward to the day of retirement to finally collect on what was promised and what he worked for. Some people speak as though we don’t pay taxes, that we don’t pay the same living expenses as the rest. Well I can tell you that’s bull! I’ve been working at my same job for close to 20 years – contributing whatever I can to my 401K – isn’t that what we’re supposed to do – prepare ourselves for the future. Well we’ve done the “right” things – and now we should be punished because the government didn’t properly handle the money we were forced to give them, because our arrogant governor has wasteful programs and ran out of money?? That’s where the greed is, not with the hardworking people who have scrimped and saved.

  36. Barbara – it may be in your husband’s case he is not overpaid. But when discussing this issue you have to deal in averages – it may be your situation is not typical, but most public employees now make more (especially when you consider the many more paid days off and generous overtime packages) during the years they work. Since they now make more than the rest of us, they can no longer claim they are entitled to better pensions than the rest of us. This means the old bargain – work now for less, but get a better retirement plan than social security – no longer applies.

    The just thing to do is move you all onto social security. Maybe some accomodation can be made for those public employees close to retirement, but otherwise now is a good time to normalize state-funded retirement benefits for all American workers.

    Everyone works hard. The sense of special entitlement that seems to come from many public employees is unfounded. Where were you when you knew your union was asking for things that couldn’t possibly be sustainable? Do you actually think the rest of us in the private sector are supposed to work till we drop so you all can retire when you’re 55 years old? Don’t suggest we should have saved money – private workers (who now earn less than public workers) contribute about 14% of their compensation (employer + employee contribution) to social security, and public sector workers contribute barely more, I’ve seen 16% or 20% in some cases – barely more. But with this marginally greater annual contribution to their retirement fund, public employees are entitled to retire 10-15 years earlier and collect 2-3x what social security pays? This is impossible. The math never held up.

    There was no way these public pension funds could continue to earn 12% or more each year. It was never sustainable.

  37. barbara says:

    To Marsha Jackson -

    Wait, you think someone who made a decision (that anyone else was free to make) to work at a particular place (in this case, the state) should be punished or feel bad for making this choice? So because someone works for A or B Company and they don’t have a retirement package, or they didn’t put away enough money themselves for later, we should all just be willing to share our blood, sweat and tears! Do you think that money doesn’t come out of state employees wages to fund their own retirement? So your begrudging a person who works just as hard as the next person, to collecting on a promise that was made? There’s plenty of people who make a lot more than a state employee – so we should expect them to share with us?? So if I didn’t go to college I should just expect someone who did and has a higher earning capacity to pass something down to me?? I’ve worked hard too – private sector. It’s no one else fault that I don’t earn more or have a nice benefit package or job security. When I leave my company, I don’t get anything – and I’m too young for the social security that I\’ve been paying into.

    And fyi…my husband can retire (is 55) but can’t because we still wouldn’t be able to afford our humble living expenses! Oh and yeah – I guess you know we’ll probably be getting IOU’s as pay next month – and a pay cut . Hmmm I wonder if all our creditors will take an IOU from us?? Do you feel better now? Are we more “equal” now?

  38. Barbara – with respect, you are ignoring my key points. In the past, public sector workers exchanged lower wages for higher retirement & health security. But now they make more than people in the private sector, not less. So they no longer have the right to expect better retirement benefits than people in the private sector, or not by that logic, in any case.

    In your comment you also neglect to understand that you were mislead by your unions and your pension fund managers – although many of them probably believed themselves what they were telling you. A private employee contributes 14% of their pay to the social security fund (employer and employee). On average, a public employee contributes (employer & employee) 16-20% of their pay to a pension fund. This marginally higher level of contributions, between 2-6% more, will not fund a retirement pension that starts 10-15 years earlier than social security and pays out 2-3 times as much. It is financially impossible for this marginally greater contribution to yield a benefit several times better.

    Now that the bubble economy has burst, this reality is painfully clear – but it was always there for those of us paying attention. There is no way taxpayers can (or should) support a government workforce that retires 10-15 years earlier than the rest of us and collects a retirement benefit for all those years that is 2-3x better than social security. You might consider not what is fair vs. unfair, but rather consider what is possible vs. impossible. In many cases public employees are not overpaid, but in California, there are thousands of examples where they relentlessly negotiated increasing pay and benefits to a point way, way beyond historical averages, and now the whole financial house of cards has collapsed.

  39. Rick from Chicago says:

    Mr Ring, I wish you were named as the new Illinois governor, becuase we have the largest pension deficit in the US. For some of these public sector employees to say they were paid less then private sector, or they could earn more in public but they stayed in for the benefits, that is certainly not true in Illinois, we have some of the best paying teachers jobs in the nation, and on top of that they receive incredible benefits that private sector employees could only dream of.. this is a call to action to all voters we must act together to stop this, we need pension renegotiation legislation now…How do we do it, we need a leader!!!

    Rick

  40. Tim says:

    Ed, is there any organization in California supporting a ballot proposition or something of that nature to address this problem seriously?

  41. Bill Hoyes says:

    I agree and disagree with many of these findings. I work for the Commonweath of PA. I agree with many points at this site, but many are way off the dial and does investigate other areas that are actually the main culprits to this mess. Case in point: Health care costs. Want to know about power and organized labor? How about the American Medical Association (AMA), which is the second largest contributor of cash to politicans in Washington, DC. The AMA lobbies against “socialized medicine” with tongue and wallet, and with their hands they take government monies in a very big way. Most hospitals take and rely on medicaid, medicare, and union health care benefits to
    support their lavish ways. Fully 60-70% of budgets at hospitals in the U.S. are (drum roll, please!) funded by (more drums and a little louder!) government money! Imagine, we here how bad “socialized medicine” is, but by golly it’s the people who drum up a load of BS against socialized medicine whilst filling their wallets with guvvy cash and lobbying for more and more and more. All the while, our health care system is the most expensive in the world, with outcomes at the bottom in the industrialized world. THIS COSTS MONEY………BIG MONEY. Take a gander at health care costs to government for medicare, medicaid, and government worker benefits over the past 20 years compared to the rest of the world, then bitch and moan. This is the real national issue.

  42. Ed Ring says:

    Bill – Our concerns about special interests certainly aren’t limited to the underregulated power of labor in the public sector, but we’ve focused there because at the state and local level their power is unique. In many of the larger states, certainly in California, their power is unrivaled. As you correctly state, at the federal level there are many competing special interests who may wield inordinate power over our politicians.

    The other reason we’ve focused on underregulated union power in the public sector – especially at the state and local level – is because of what we believe is a direct connection between the crippling costs for overpaid (many, not all) public employees, and the fees and regulations enacted in the name of protecting the environment.

    When you use environmental regulations to artificially create scarcity, two things occur – you can charge more for services that the public sector or public utilities provide such as water, energy, and transportation, at the same time as you don’t have to invest in upgrading or increasing them. The extra money goes into pension funds and payroll instead of into investment in infrastructure. Can’t threaten that “open space” or endanger yet another species, after all.

  43. For years the politicians and bureaucrats have been dividing us into classes. Rich against poor, labor against management, young against old, man against woman, black against white, environmentalists against business, liberal against conservative, Christians against everyone else, and on and on. It’s time to come to the realization there are really only two classes of people in this country.
    Those who pay taxes, and those paid by taxes.

    If we the people who pay taxes let the people paid by taxes destroy us, then the whole country will be destroyed, because it is the taxpayers that pay for everything.

    Following that reasoning, no government employee is more valuable that the average taxpayer. So no government employee should be paid more than the average taxpayer. Therefore, we must begin limiting government employee incomes to that of average taxpayers. For instance, if the average income in an area is $35,000 a year, then the top pay for any government employee in that area should be $35,000. Why should a teacher or even school superintendent be paid more than what the education they are providing is worth? Better yet, eliminate the public education system that costs over $10,000 per child and let’s just cut a check to each 18 year old for $130,000. If a couple of 18 year old kids want to get married then they would have over $250,000. to start their lives…..a much better start to their adult lives than the socialist k-12 education they now receive.

    I further see a solution to this pension problem which fulfills our obligations and creates a more equitable balance between private and public sector employees. We need three new taxes exclusively for government employees, which are the only undertaxed group in our society. 1)With the exception of military employees, for every year a person is employed by government, or collects a government pension that government employees’ estate taxes should be increased by 1%. Example, if you worked from 22 to 52 in government and then collect a pension from 52 to 87and then pass away at 87 your estate tax would be 65%. If the average taxpayer provides for a government employees’ priviledged lifestyle, then that government employees’ estate should be returned to the taxpayers, not their spawn. 2) If a retired government employee is collecting an initial pension, any new pensions or other earnings above that first pension should be taxed 100% up to the level of that pension. After age 65 an amount equal to social security should be exempt. 3) Current government employees should be taxed at least an amount equal to the private employee FICA total employee/employer contribution of 15.3% of wages for their pensions and they should pay at least 50% of their health care benefits out of their pocket.

    How do we initiate this with the government employees in control of the political process? We start with local government by using initiative petitions to trim the benefit plans of new government hires and through initiatives that limit the taxing authority of local governments. When we get enough of the local government employees laid off due to lack of funds, and turn them from being paid by taxes to paying taxes, we will have enough political clout to elect common sense state and national representatives who will follow through at that level. Joe Biden said it is patriotic to pay taxes. At this time in history it is actually most patriotic to mitigate yours and every other taxpayers’ tax liability as much as possible to keep the people that are paid by taxes from destroying our country. How do you do that? 1) Vote against and encourage others to vote against every tax increase, and further work to eliminate existing local taxes and the ability of local governments to raise taxes. 2) Deal with local businesses and pay cash, and if you can’t do that, buy off of the internet. I would rather give UPS $10 in shipping for a $500 item than pay my state $40 in taxes to get that same item. At least with UPS my money would go to people who pay taxes, not to people paid by taxes. We must act before it is too late. Currently over 15% of the population is employed by government, be it fed, state, local, or school system. By letting these people retire in their 40s and 50s pretty soon over 45% of the population will be government employees or retirees. Add to that 15% of the population receiving SSI, 15% still in school, 7.5% unemployment, 5% criminal element and another 5% who truly need our help and soon we’ll have only about 7.5% of the population left paying taxes for everyone else. It can’t be done.

  44. someguy says:

    When all goes bad blame the firefighters, cops??????????

    I have been in public sector for few years and honestly there are times no amount of money could convince me to what I do. But I do it so that people can express their opinions here, freely. I do it because that is what know how to do.

    There have been plenty of ads for these types of jobs everywhere and with not much interest I might add. Reason? Because no one wants to deal with all the dysfunctional people that you have raised. I have heard of agencies, cities paying up to 10,000 bucks as a bonus and plus a good salary and still not getting much interest. Why? Because there was not enough interest. I think that when the ship begins to sink, finger pointing begins. But we would be all better served if people like you asked, what a guy like “Madoff” have done with your/our money. Which Swiss bank account the money is sitting in right now? And possibly how many Madoff’s are out there?

    I am not too bright but with all the money promised, paid, outstanding and stashed on loans, houses, banks, private firms, investment banks, your mother’s mattress…and you finally found the culprit. It was the state employees who dragged us down the ditch. Bravoo Sherlock…

    I am not concerned that I will lose my job or pension because I know none of you will be running to the bullets or to the fire. Because if you could or would, you would have campaigned so hard to have this job in the first place that people like me would not even be able to fill out an application. And for that, I sleep comfy, knowing that people like me out there right now, looking out for me and for you.

  45. Eliza says:

    One thing to keep in mind: in my experience, state jobs pay less in actual salary. I don’t know whether that is true in Cali, but I have several family members in Virginia who are state employees. And having a good retirement is much of their incentive for doing the jobs they do, because otherwise there isn’t much money in it.

    Now, in Virginia, they actually have taken away much of the pension for new employees. They are phasing it out. Since the new employees are in a lockstep system with regard to pay and raises, they really don’t make much money (and won’t until they have been with the state for awhile), and they don’t have much in the way of pension. The older state employees in my family complain that new employees are not interested in their work, always running off to second jobs, not invested in their professions, etc. Of course! Because they need to put food on the table and save for retirement!

    So, I wonder if we were to phase out pensions here in Cali, what sort of service we would receive from state employees. Maybe some of them are actually overpaid. Could be. I don’t know the system here very well. But if not, well, those folks have traded spare cash now for a good retirement later.

    And things can be just as unfair in the private sector. PacBell sent numerous employees into early retirement around 2002. We call those folks lucky.

  46. Paul says:

    I work 12 hrs a day in the private sector and will get a pension worth about 1/3 of my annual salary. My neighbor works for the CA state, 8 hrs/day and takes a 2 hour lunch. He will get 100% of his salary in retirement.

    Boy, am I dumb or what.

  47. David Stanley says:

    All,

    Just have to face the facts, no one is disputing whether public employees work hard or not, of course they do and hey, every choice has positive and negative benefits to it.

    Be assured though, there is NO WAY that taxpayers are going to foot the bill for over performing pension funds, it’s just not going to happen and sadly, the public employees pension funds are easy targets.

    Just read the numbers and while most folks are arguing out of there current position, public employees — during this recession/whatever you want to call — you are going to see a tax revolt and you can forget about receiving over performing pension funds based upon tax dollars. You can let your emotions argue for you, but then you sound just like home owners, realtors and mortgage brokers – who got upset if anyone happened to mention that there was a credit/housing bubble. Remember those days of not long ago? Well, that the chair you sit in. Sorry, but better to face reality and make wise plans to react to the current crisis. Tax payers are not going to fund you riding off into the sunset. It ain’t gonna happen. Best of luck to you.

  48. Jim Hardy says:

    I keep reading about these comments from public employees blowing their own horn about how qualified they are, what a great job they do, and how they deserve these obscene benefits. Personally I do not see it. I can honestly say I have never been impressed by the job performance of any public employee I have worked with. The State is bankrupt, the infrastructure is badly decayed, the water system is inadequate, the school system measured by test scores world wide is a failure, fires burn out of control because bureaucrats argue about jurisdiction and refuse help from other sources. The only thing I see them doing is wasting massive quantities of tax dollars and fiddling while Rome burns. It is time for change, it is time to clean house.

  49. Carl says:

    My entire life has been screwed up by the California government – And I have no pension / retirement / benefits – NOTHING. Why am I forced to pay for this?!

    END THIS IMMEDIATELY. It is a scam.

  50. Mick Russom says:

    Mr. “R. Rat” Screw off You are a rip-off artist that leeches society in a communist anti-competitive system. Please step aside and let that Mexican scab take your job to it ca get done at a 20th of the cost. Oh, that bothers you all of a sudden. Meanwhile I lose well over half my pay to state, local, county, property and federal taxes. The bottom line is to continue your cushy entitlements, the rest of society pays out the ass for them.

    You are a defensive scumbag “R Rat” and you are a societal leech and a thief. You don’t work hard. Go be a Chaiwalla in India and then tell me you work hard.

    I see it. I work in accounting FOR THE STATE. I see the “un-fire-able” people. I see the absurd pensions. I see the rest of society suffering and the police HIRING. I see the waste. I see the bills from contractors for the state.

    The state, if properly run, could fire 25-40% of all state employees across the board and the quality of life and standards of living for Californians would go up because there would be enough money to actually afford a functioning government.

  51. AmericansAreThieves says:

    I was reading thru the comments up above from some poor, uninformed bastards who talk about their “retirement benefits” and who boast about the “wisdom” of their “investments.”

    YOU HAVE NO RETIREMENT BENEFITS ANYMORE STUPIDS!!!; all your retirement accounts have been raided and EMPTIED in order to finance the MASSIVE bailouts currently underway for Wall St. Banksters and fraudsters. All your effort and savings will go tho THEM, NOT to YOU.

    In fact the entire United States is BANKRUPT and IT SERVES YOU WELL for illegally invading other countries, torturing people and committing international mortgage fraud, among other things.

    DROP DEAD AMERICA!

  52. Ed Ring says:

    One of our goals at EcoWorld is to foster rational and civil dialogue on issues we believe are central to the environmental movement in its broadest context. In that spirit, we have attempted to report on the public sector in general and public sector pensions in particular, because we believe environmental laws and regulations are influenced by a hidden agenda on the part of powerful public sector interests.

    Our premise is that at the state and local levels, and increasingly at the national level, global warming alarm and other environmental concerns are being used as a pretext to increase taxes and fees. This in no way meant to suggest we aren’t concerned about genuine environmental challenges, or that we aren’t enthusiastic about genuine and practical ways to address these challenges. But we believe the insolvency of government entities – again especially at the state and local level – is primarily because public sector entities have given themselves increases in pay and benefits over the past 10-20 years at a rate significantly exceeding that of the private sector, and raising taxes under the pretext of stopping global warming should not be a way to avoid lowering public sector pay and benefits to equitable levels.

    These are difficult issues with a great deal at stake for a lot of people, and it is understandable that emotions run high. But our unyielding position on this dialogue is one of respect and empathy for every single individual who is affected by these issues or who has passionate opinions about them.

    So far we have not had to delete any comments and we hope we won’t have to start doing that. Please refrain from profanity or extreme name calling. It is possible to take whatever position you wish on these issues without resorting to that. We reserve the right to delete or edit comments.

  53. Cal says:

    The author was way too nice in this article. The employees referred to here are simply this: tax moochers. They suck and bleed off the bodies of hard working people. Hard working people who worry about their investments, rent, mortgage, jobs, etc. Tax moochers, like all parasites, do not need to work, they just need to learn the tricks to stay attached to the host body. A leech for example will not aggravate the host in fear of being plucked off, while at the same time doing just enough work to get the blood. ALL, not some, but ALL State employees are tax moochers. This is a fact, they receive unearned dollars for people who do earn dollars. Now some tax moochers do a good job, especially teachers. But ALL of these people are classified in the species chart as taxious moocherous.

  54. Ed Ring says:

    Cal – perhaps your characterization of the government sector workers as being of the species “taxious moocherous” has much validity, but others might name these good people part of the “governmentus neccesitiansis” species. Being nice is necessary as well, when one recognizes we cannot live without good government. Unless one is a pure libertarian – an abstraction – one must appreciate government in general, and typically we are nice to those we appreciate. All of this discussion should simply have to do with how much government and at what price, and what is equitable, not moocherous?

  55. Rene says:

    50-75 paid days off per year? I want to know where you got this figure and the formula used to come up with those very broad numbers, because if your math isn’t bogus, I am interested to know how I can get at least half of that paid time off you say we state employees get.

    You are crazy if you think I want to bail out social security with money I have paid into my pension.

    Is reform needed? Well of course, but your figures are way off my friend. Your story just bashes employees. While you have every right to criticize the public pension system, I also get to offer you some unsolicited criticism-you failed miserably as a reported uh editor…in getting your facts straight.

    Sounds more like your are bitter for working for a company that fails to compensate you fairly and whose pension…oh wait, you probably dont have one…..I mean your 401k will not provide for you or your family if you ever get to retire.

    Thank goodness for freedom of speech, in this case it revealed that you are not a very good fact finder….for someone that gets to paid to be one. Maybe you can do a follow up to this sorry excuse for an editorial.

  56. EM says:

    If by “upgraded” you mean that social security benefits should be increased, you are insane. Social security is ALREADY a quasi-WELFARE program and any “upgrading” would almost certainly make it more of a one.

    There are three general problems with Social Security and none of them are related to the current benefit levels unless your agenda involves more ENVY FILLED POPULIST DEMAGOGUERY.

    First, it is compulsory which is contrary to how a supposedly free society should be organized. This is an attribute of SOCIALISM.

    Second, the benefits are not received in direct proportion to “contributions” paid. That’s what makes it another form of politically compelled income redistribution and a partial welfare program.

    Third, the partcipants have no private property rights in the system though there is the “survivors” benefits which is frequently also another form of welfare given that the benefits paid are politically versus actuarily determined. Someone could pay into the system for years, even decades, die prematurely and their estates get one big fat gooseegg. Its simply a form of THEFT.

  57. Ed Ring says:

    EM – you are right, our editorial position is not libertarian. If I read you right, your position is there should be nothing whatsoever provided by taxpayers to retired workers, not those in the private sector or public sector. We respectfully disagree. We believe in a taxpayer funded defined benefit for workers that applies a formula to provide retirement income at a level tied to the level of contributions each worker made – with a ceiling and floor. We believe every retiree should receive medicare. And we believe all workers should have the same formula applied to earn these taxpayer funded benefits. Question: If some of the problems you point out regarding social security were corrected, would you change your position?

    Rene – there is nothing wrong with pensions and benefits for workers. We can disagree as to the magnitude of the disparity between public and private sector workers, but that misses the larger point, which is this: Until every worker receives the same formula to earn their taxpayer-funded retirement benefits, there will be two Americas – and because such a high percentage of voters are public sector workers who don’t currently rely on social security or medicare, needed votes to finally enact genuine reforms and upgrades for those programs are not politically possible. Think about it.

    As for the claim that public employees get up to 75 paid days off per year, I will concede this is probably a best case scenario, but here goes: 26 days via the “9/80″ program where a salaried gov’t worker puts in 9 hours for nine workdays, then takes every other Friday off. By contrast, in the private sector a salaried worker typically will just work the extra time with no additional compensation. Add to that 17 paid holidays, 12 personal days, and 15 vacation days. That’s 71 days. I think in many cases public employees get even more days off than that. They earn “comp time” for extra hours that salaried workers in the private sector would more likely just work for nothing extra. They often get more than 15 days paid vacation. What about teachers? Also, often the way overtime is calculated effectively contributes to additional paid days off, especially in the public sector. You can’t seriously think that in general public sector employees have less paid days off than private sector employees.

  58. tall trees club says:

    CALPERS retirees and workers need to wake up. Their contracts will soon be null and void because they are basically giant PONZI schemes. Your exaggerated sense of entitlement is sickening. What normal private sector jobs do you get to retire at 45 years old with 90% of your pay, tax free for life and subsidized medical benifits. Quite whining you narcissistic babies. Most normal workers will never even come close to enjoying your tax payer subsidized gravy train. Wake Up !

  59. What Ever says:

    The entire notion that state employees are millionaires after just 22 years of service is laughable. My wife is a professor at a California college and I can assure you, after looking at her retirement statements, I know it\’s going to be my job supporting us in retirement.

    There are so many false arguments in this article, I don\’t even know where to begin…
    Look, there are a lot of jobs that are important (like teaching, like firefighting, like government administration, like military service) that don\’t pay very well, are thankless, and sometimes dangerous. The only way to get good people to take these jobs is to offer better job security and retirement benefits.

    California public employee unions – which are virtually unregulated despite the fact they operate in the uncompetitive public sector

    Regulation for unions? Should we regulate business groups too? What about political parties and lobbying groups? Religious groups? They all are essentially the same thing, groups of people protecting their common interests and promoting their agenda. What kind of regulation do you think we need? Do you really think the government will do a good job of watching over these things? Yeah right.

    In recent years they have negotiated pay and benefit increases so dramatic that the average government worker in California often earns 2-4x what globalized private sector workers earn to do jobs of comparable worth.

    This is not at all true from what I\’ve seen. Teacher\’s pay rates have been frozen for the last few years. The teachers\’ union that my wife belongs to has to fight tooth and nail just to get cost of living adjustments and to keep their existing health care coverage. Do you have some facts to back up these statements?

    \”earns 2-4x what globalized private sector workers earn to do jobs of comparable worth.\”

    Hmm, you mean the firefighters in California make 2-4x what some poor schmuck in China makes? Well, I\’m ok with that. Most Americans in general probably make 3-5X what someone else does in the developing world. How many people in Africa make $100k per year? Central Asia (India, Pakistan)? China? A lot of people make that much in this country and it is not something to be ashamed of. It is shameful to portray our public servants as the only ones who enjoy this advantage, they probably get proportionally less than say, someone in corporate finance, an engineer, or other profession. You argument seems to be suggesting that if we take the average teacher\’s salary of $55k and cut it by 50%-75%, then we\’d be more in line with the rest of the world. I suggest you think a little harder and stop scapegoating unions for the financial crisis.

  60. PublicEye says:

    Please keep up the great work Ed and “continue” to get the word out to the public. This is a topic of tremendous importance for the welfare of our country and all of its citizens! Yes, this may not apply to all, but to those that it does, change is certainly coming and absolutely necessary.

  61. PublicEye says:

    The true spirit of service does not involve any kind of monetary gain; it is free and selfless.

  62. Mark says:

    The discussion here is amazing. I’m a California teacher, but one who will only have teached 18 years or so, if I teach til I am 65. My pension at that time, if I stick it out will be in the neighborhood of 25,000 per year. I will get a small amount of social security on top of that (but less than I would have if I hadn’t worked for the state)

    For the record, nobody retires at 45 with 90% of their pay. Maybe if they started at age 20 and worked to age 45, they would be able to start collecting 70% of their highest pay BUT ONLY WHEN THEY ARE 65 !

    People commenting here, talk out of their wrong orifices as if they knew so much more than they do. I read much of this with amusement, but also fear.

    For the record, if anyone is interested in learning the facts before having an opinion, I suggest reading the excellent back and forth between the author Ed Ring, and “Dave” which starts about 17 comments in to the discussion. I can’t do it any better than Dave
    did, but I find it truly bizarre that you many of you feel entitled to steal what I was contractually told I would receive when I started this job, all the while looking down from your high horse.

    Please get some clear facts, and then form your opinion.

    Many of you are right about one thing, America is in trouble.

  63. Ed Ring says:

    Mark – in the private sector, if an executive trained in finance and business operations grants a concession during negotiations with a union, and they give away too much, it is more likely they may be held accountable for this mistake. Go ahead, blame the big three’s financial dilemna – unsustainable pensions – on the management of those automakers during the 1950′s when these concessions were made. Then again, even GM executives in the 1950′s who granted unsustainable benefits would have had to have had a crystal ball in order to have predicted they would eventually have an retired employee population that exceeds the population of active workers, and that 40 years hence, their company would be shrinking in size and market share due to the emergence of global competitors.

    There are natural checks on union influence in the private sector (at least until the “Employee Free Choice Act” is passed, the reason we did not endorse Obama), because of the presumed financial expertise of the executives who they negotiate with, and because of the competitive environment in the private sector wherein a company that pays their workers too much goes out of business. There are natural self regulation mechanisms that make unions a vital part of the private sector, instead of the dominant part.

    In the public sector, concessions were granted to public sector unions in far more recent years by politicians whose elections – especially at the state and local level – utterly depended on the support of public sector unions. Moreover, these politicians, elected because of their skill in politics, not business operations and finance, are citizen representatives who are scarcely qualified to assess just how unsustainable their actuarial assumptions really were. And of course, government agencies are monopolies, they have no competitors, nobody who can bid down the costs of doing business.

    The financial meltdown occurred for many reasons – and I wrote about this back in Sept. of 2007 in a post entitled “Inflation vs. Deflation,” putting the blame of the crisis that was looming on “the most irresponsible periods of lending practices in American history…” ref.
    http://ecoworld.com/blog/2007/09/25/inflation-or-deflation/

    In that post a reference is made to another post from 1998, where I warned about the internet bubble. And both the internet bubble and the housing bubble are part of something bigger, the fact that the United States has had a trade deficit every year since 1975, and that deficit has been largely balanced through accumulation of debt. So please don’t think this discussion is meant to single out anyone, or that we have recently come out of the woodwork looking for scapegoats. There is plenty of blame to go around, for example:

    (1) Not regulating the mortgage lending industry to prevent loans to unqualified borrowers and to prevent loans that based qualifying on rates that would later reset to higher levels. Blame anyone who fought these reforms – and they came from right and left alike.

    (2) Repeal of regulations that prohibited insurance companies and banks from using their assets to collateralize hedge funds. Again this was a bipartisan bungle.

    (3) Opportunistically using this phony growth as the pretext to negotiate unsustainable benefits, holding politicians careers hostage to compliance. The bottom line is these benefits were not sustainable, they never were, and as we readjust as a nation, the public sector should not be immune to reform – which includes rollbacks of benefits to equitable and sustainable levels.

    As a nation, we are acting appropriately – hopefully – to re-regulate our financial institutions including the mortgage lending industry. But the only scapegoats we seem to be relentlessly hearing about are the corporate CEOs. The additional reality of organizations of public sector employees exercising utter control over our local and state elections – and subsequent policy – is wrong, it also contributed to the crisis we must overcome, and also begs reform.

  64. A. says:

    “There are a lot of areas of agreement here. I think you are correct that we have become a society of enablers. In your profession you probably see this first hand. While I am not a libertarian at all, I do believe we always have to guard against creating chronic dependency on the government when our original goal was only for the government to help people.”

    Ed is absolutely right. Take for example the recent trillion dollar transfer of public monies from the Treasury to the financial sector. Consider also the hundred of billions reallocated each year from the public’s pockets to the defense sector, fostering in the Western states particularly a whole class of white collar leaches. Try telling these guys to get real jobs!

    What we have here is the enabling of industries that suck directly from the public teat. What of those that do so indirectly? For example, in my state of Mass., a few years ago, Fidelity Investment asked the state for a series of tax subsidies, threatening to move operations to Rhode Island if the legislature refused to comply. Naturally the gov. caved. Less money for roads schools and such, but more for Fidelity.

    Another case: the fishing industry here lobbied to have fishing practices deregulated. They succeeded, and promptly overfished Georges Bank–causing the state to close what had been the richest fishing area in the world. The governor then had to go to Washington to ask the Feds to declare it a natural disaster. So tens of millions of public dollars were spent repopulating the bank, which the fishing industry immediately set about re-utilizing, paying only pennies on the dollar for the externalities effectuated by their trade.

    Examples multiply. It happens in every state: government enabling the bad habits of the large private enterprises that own…the government. Wealth gets redistributed upward, and the taxpayer is hopelessly left holding the bag.

    Bravo Ed for bringing these sorts of scams to our attention. There’s nothing we can do about it (“politics is merely the shadow cast by big business” to paraphrase John Dewey), but, nonetheless, ignorance isn’t bliss.

  65. Mark says:

    Ed, can you find some specific examples of income earned by typical teachers, policemen or other state workers, showing how much the worker pays into their fund and how much the state pays in and how this cis such an incredible rip off to the taxpayers.

    It’s too easy to make general statements, as if they must be true if you are writing them.

    I’ve heard your blanket vague generalities about how the unions got us a deal that’s unfair, and that therefore we deserve to have everyone steal it. But I want specific details and examples that verify your inferences.

    As I’m sure you know, state employees don’t pay in to Social security. Instead they pay into their pension funds and the state (the employer) does too.

    Earlier Dave laid it out quite well,..

    “sing the most common retirement formula (2%@55), with the most typical mid term pay rate (3400/month) and most typical age, and so on, the AVERAGE person has $4,765.58 put away each year into CalPers. Of that amount, the member contributes about $1,600, the state about $3,200. If this same person was in the social security system, the contributions would be: $3,121 for employee, and $3,121 for employer, or $6,242 per year. The net savings to tax payers is $1,476.42/year for this employee.”

    You never responded to this. You changed the subject.

    And yet your thesis above was that somehow that you feel entitled to steal from my pension fund, and the implication from you and many uninformed commentators was that we caused the states financial problems with our excessive benefits.

    Is it possible you were mistaken ?

    Please, don’t answer that. Just change the subject again okay ?

    I wouldn’t have read this even had not patrick.net had a link to it.
    I am disappointed with him as well.

  66. Ed Ring says:

    Mark – you may wish to evaluate the figures put forth here:

    http://ecoworld.com/blog/2009/02/08/calculating-employee-compensation/

    From that post here is one excerpt that compares social security to public sector pensions:

    “California state workers on average earn somewhat less than this; they will get 2.0% per year typically towards this retirement calculation – do the math and you will see that a California state worker who completes their employment after 30 years at a final annual working salary of $65K will get an annual retirement benefit beginning around age 55 of $39,000 per year.

    To compare this to social security, you have to work backwards. If you reference the “Social Security Estimator” webpage, you will see that a person who pays into social security, retiring at age 65 (ten years later, working 40 years instead of 30 years) with an ending salary of $65K, will earn $19,308 per year in social security payments. This annual amount, earned after 40 years instead of 30 years, is only 49% of what state workers will typically get, and only 36% of what city and county workers will get. If you use their terminology, it equates to 0.7% per year, versus 2.0% or 2.7% per year for government workers.”

    To your specific suggestion that I respond to Dave’s calculations: There never were “net savings” to the taxpayer. The idea that public sector employees could contribute less to their retirements than they would have within the social security program, then collect more during retirement than they would have gotten from social security, rests on the assumption of unsustainably high returns for these pension funds. Period. I provide calculations in the link you can reference earlier in this comment. The long-term average returns on these funds were ALWAYS overprojected. Maybe these fund managers really believed they could beat the market by several hundred basis points every year forever (impossible with funds this big), and maybe they really believed we could fuel our economic growth on debt forever. I didn’t, and am on record saying so. You don’t have to be an economist to have been able to see what was coming, you just needed horse sense. Maybe all the “experts” were so smart they couldn’t see the forest for the trees. Nobody wanted to put on the brakes, and now everyone must share in rebuilding our system of taxpayer funded worker benefits according to a more equitable and sustainable model.

    Please understand these posts are not designed to demonize the public sector workforce, or unions. Unlike libertarians, I believe in government, and unlike many on the right, I believe unions still play a vital role in many private sector industries. But when associations of public employees take over our elections, and on the state and local levels in many places I believe they have, then reform is necessary. Moreover, I don’t think it is unreasonable for some public employees to earn a premium for the risks they take. But the question remains, how much is too much. I think the model for Federal employees may be something to look at as an example of where we might reset the benefits of state and local public employees in a reformed, rebuilt system.

  67. Mark says:

    “The idea that public sector employees could contribute less to their retirements than they would have within the social security program, then collect more during retirement than they would have gotten from social security, rests on the assumption of unsustainably high returns for these pension funds.”

    No it rests on the fact that it is a real pension fund. I pay in to it (my paycheck shows each contribution. And my employer pays in to it (my employer happens to be the state – a big part of your issue)

    Social security is not a real invested fund, although like my pension, both the employer and the employee pay in to it.

    Actuaries defined my pension up front so that it would fund based on reasonable assumptions, not on assumption of huge returns. Much of what you say is fiction, although I will compliment you on sounding like you know what you are talking about enough to get some angry idits saying YEAH !,….HERE! HERE !

    I think it’s criminally wrong for any employer to renege on a pension commitment. Yes, GM is in trouble because of benefits promised, but that is another subject. The state can’t renege on what it’s pension commitments, no matter how many partial truths or outright lies you make up out of nowhere.

    But the state happens to pay reasonable benefits (not excessive)
    that include a real pension. Bless those people who work hard their whole lives and have a respectable retirement income.

    This is unrelated to the states other financial problems or to the federal governments handling of our social security money as if it is just another source of revenue to be spent now.

    I get your point of view. It starts with your anger about Unions pushing for fair pay. From there you weave lies and half truths to support an argument that could not be made if not for this extreme emotional bias you have that the unions have fracked us all over.

    You don’t know what you are talking about. But hey, you almost sound like you do. That’s something.

  68. Ed Ring says:

    Mark – You will have to do better than that. Go through the math reasoning in this piece:
    http://ecoworld.com/blog/2009/02/08/calculating-employee-compensation/

    Explain where there are flaws in that reasoning. Better yet, explain how everyone else could be wrong about the credit fueled economic growth which caused unsustainable returns on these funds, but somehow your actuaries were right, when everyone else was wrong. It is easy for you to attack anyone who calls for reform across the board, i.e., not just Wall Street and corporations, but also public sector unions, as an idiot. More difficult would be for you to point out any flaws in the quantitative reasoning herein. I would welcome genuine criticism of that sort, whereas your name calling just wastes our time and exposes the weakness of your position.

    If there is any bias in the position we take here, it is based on the fact that the public sector, using my taxpayer money, has brainwashed our population into thinking the private sector is filled with unscrupulous profiteers and speculators, while the corrosive excesses of unregulated public sector unions have almost completely escaped scrutiny. The hypocrisy is stunning – who do you think all those funds you had were investing in? Whose unsustainable debt fueled profits do you think were providing your funds with all those unsustainable returns? Weren’t corporations and Wall Street your intimate partners in this mostly unwitting fraud, enabling your fund managers to think they could earn real returns of 8% per year or more – impossible rates for funds this big to sustain?

    It would further this dialogue if you might consider there are two sides to this argument. My “bias” is simply the other side of this story, and in no way should suggest I am not equally critical of the unregulated excess on the part of, for example, the mortgage lending industry. And the idea that private corporations can restructure their pensions when confronted with bankruptcy, but the taxpayer remains on the hook for public sector pensions when confronted with bankruptcy, is simply not realistic. To say these two challenges are not related is wishful thinking.

  69. someguy says:

    Speculation? Oh no? there is no such thing. But can you explain what 35 to 1 leaverage is? Not speculation right? It was only a year ago when some of you Harvard grads laughed at what we made in the public sector. Now that grass is not so green on the other side, it is so much more productive to cry about how much taxes you pay. I feel for you because WE PAY TAXES TOO.

    It is all cyclical in couple of years when the economy is booming and your modest salaries begin at 150K (plus bonuses and tickets to Nicks games) then you will still be laughing at what we make. Making 70K, working in public sector is not same as being on welfare and I don’t care what kind of mathematics you use to slice it or dice it. And I do not know where you are getting your infor but we do not have 75 to 80 paid holidays but may be 10% of that. I think that evetually our pension system will change and that is sad because I know we deserve it. Regardless of what pay or benefits, I would not trade my job for anything in the world. Until next time…

  70. Ed Ring says:

    someguy – your comment is very illustrative of one of the biggest misconceptions of all, the notion that we are all “Harvard Guys” making $150K per year during “good years.” The overwhelming percentage of workers in the private sector are blue collar and white collar working stiffs who are lucky to make more than $50K per year, even in good years, with nothing for retirement but social security. And I am with them and I am one of them.

    As for holidays – you are trying to tell me you get more like “10% of 75-80 paid days off?” That would be eight days a year. Just paid holidays in the public sector number at least 16 per year, often more.

    What you might consider is not the sometimes extreme compensation packages of perhaps a few hundred thousand highly compensated executives in the private sector, but the compensation packages of the hundreds of millions of blue collar and white collar workers in the private sector. Compared to those people, public sector workers make more in base pay – this is well documented, and in spite of that, have also negotiated unsustainably generous pensions. Your penchant to bash the handful of rich people in America obfuscates this basic fact.

    The irony is it is YOU who are in league with these ultra rich speculators who you decry. YOU are the ones who, through your union control of our elections, used anti-rich, anti-corporate rhetoric and phony debt fueled prosperity to justify unfair increases to your compensation, and YOU are the ones who, through your pension funds, speculated just like they did on the backs of working people.

  71. Mark says:

    When I said you Mr. Ring don’t know what you are talking about, I didn’t mean it as name calling. For that, there would be so many more colorful ways I could say this.

    I did read this:

    http://ecoworld.com/blog/2009/02/08/calculating-employee-compensation/

    I’m not going to take it point by point. At least in this case you only ask that we be compensated less, rather than the more incredibly immoral unethical (and yes, I’ll say it – stupid) suggestion that our past compensation in the pension fund should be raided by the people.

    You have said my position must be weak, but you really never did indicate that you understand what a real pension is, or what it actually costs the taxpayer. I’ll apologize again that it’s better than how many others are compensated.

    As a teacher I do get a lot of time off. But considering the nights weekends and other time out of class spent, that time is actually needed to not “burn out.”

    It’s true that compensation can be netted out for comparison purposes. Let’s say that the 65k or so, is actually more like 80k if you include benefits, and even more if you normalize for paid time off (although, as I said – that time is needed – you have no idea).

    And then if you want to argue that my total pay is too high, then maybe it should be lowered, and maybe I should leave this profession. But kindly keep your hands off of the money that I put into my pension and the money that the state put in (IN THE PAST AS PART OF MY COMPENSATION).

    The above request doesn’t even have anything to do with your lies or your faulty logic. It’s just an appeal to common decency and common sense.

    Just because in this case my employer was the state (indirectly you the taxpayer) does not mean somehow you should be able to take it my pay back. That’s still stealing and yes you are an IDIOT if you don’t get this.

    I’m done, and time for you to change the subject again.

  72. George says:

    I can’t wait to see the corrupt states go bankrupt. Get rid of 99% of government workers, privatize almost everything. I don’t want to pay for lazy gov workers to retire at 50. Everyone gets ss, if they don’t like it quit. Time to get rid of unions, they are killing this country. NO MORE PENSIONS!

  73. George says:

    I get a laugh at these people saying we are going to steal their pension funds, that the tax payers pay for. They actually think they deserve taking other peoples money so they can retire early. Nothing but legal thiefs, what a corrupt gov we have. PAY FOR YOUR OWN RETIREMENT, STOP SUCKING OFF THE TAX PAYERS.

    I’m going to enjoy watching all these gov funds go broke, they will know what the average person worries about when the get to retirement age, 70. It’s time people get together and say, No MORE!

    I’m hoping Glen Beck is for real, maybe something good will come out of his show.

  74. darrrr says:

    Hey, Ed. Good job ! There is a huuge market of uneducated angry (dim bulbs like George) who love to read this shizzle. You really know how to package the bs.

    My hat’s off to you.

  75. Ed Ring says:

    Mark – I’m not trying to change the subject. There is nothing to hide. If my command of the facts or my analysis is flawed, please explain how. I appreciate your agreement that total compensation has to include the amount of time off and the amount contributed by the employer to benefits.

    It is impossible to generalize about these issues, but that should not be an excuse to poke holes in a solid argument. Of course there are some public employees who are undercompensated. Of course there are still some examples of cities, counties and states who have not yet been taken over by public employee unions – but we are speaking in general terms. Maybe some teachers are undercompensated – I’m sure this is true. But maybe if the teacher’s union hadn’t made it impossible to fire incompetent teachers – and by extension it is nearly impossible to fire anyone who is incompetent in the public sector – and if union controlled bureaucrats hadn’t bulked up the administrative and special needs sectors of the teaching profession beyond all reason, then good teachers could make more money and we’d still be solvent.

    Moreover, teacher’s pensions are not the most eggregiously generous of the lot, as we all know. It is the “public safety workers” who are taking home, after retirement, in many cases more than they made when they worked. Should public safety workers get more in retirement than someone who spent their careers in a less hazardous environment and collected social security? Yes. The question again is how much is too much.

    The purpose of this blog is not to further polarize the parties to this debate, but to increase awareness of the challenges we face and to propose solutions. I think a good place to start would be for everyone to get social security and medicare. Then public sector employees could explain why their particular profession deserves more than what the rest of us get.

  76. George says:

    Hey darrrr, sorry to say your worthless government job will soon be coming to an end. God forbid you have to earn your own retirement. I will enjoy watching our entire gov implode if that’s what it takes to get rid of all the worthless gov jobs. I bet as the gov keeps raising taxes to support all of the useless ones, people will revolt sooner or later.

    Kind of funny, i’m in Florida for the winter, this state is a frigon mess. It’s all hush hush in certain places down here, about the housing crisis. In some areas there are 30% vacant homes just sitting, the banks don’t want people to know the truth.

    The funny thing is they kept building 3-4 million dollar fire stations all over the place. Now they have to fill them up with firemen, block houses don’t burn well, lol. My buddy is retiring from the FD here, he made 111k last year, he is retiring at 51 with 90% of his pay. Plus 200k for some drop program.

    Of course the unions are involved, his daughter makes 12 bucks an hour working for the gov, non union job. Already she has to take 2 days off a month, forced. I told my buddy he is why his daughter will end up losing her job, its all about greed.

    I asked him how many house fires he went to last year, he just smiled and said not many. I’m glad i left this state it’s going down the drain quick, with it’s huge taxes and insurance. I have to say i will enjoy watching this state self destruct as i am CA now.

    Florida should have volunteer FF’s just like where i live now, it’s the biggest scam job, of all time. Privatize 99% of all gov jobs and everyone gets ss, NO MORE SUCKING OFF OF A BAD SYSTEM.

    CA and FL will lead the way in this horrific crash, probably the two most screwed up states in the country. Until they start firing government workers there is NO chance of recovery in either state.

    Hey darrr, just to let you know i retired at 26 years old i’m now 50. Morons like you just don’t get it. I was in CA for a month last june you do have some of the nicest parks in the country, but you cities are frigon slums. In fact we have been traveling for the past year now, over 50 np’s. From here we go to our lake house, for 3 months back to MA to visit Dad for 2 months then back out west for 4 to 5 months. I’ll wave to you on the way by, lol.

  77. George says:

    Government jobs = worse than welfare

  78. Mark says:

    I didn’t know that there even was a debate about whether or not to steal my pension. IT’s the first I’ve heard of it. Hey, I guess if you decide this is a debate, then it must be.

    Yes, people are surely angry about many things, including the fact that social security (payroll taxes) are spent alike they are part of this years budget. But your “logic” says that because I have a better deal (with PAST MONEYS CONTRIBUTED BY ME AND MY EMPLOYER YES “GEORGE” THAT IS WHAT I CALL EARNING MY RETIREMENT) that you shold kill my deal, and what, steal from my retirement fund because you are not happy about social security ?

    There’s this fictional George guy who says I should earn my retirement. That’s what I’m doing, with real work. Really hard work that contributes to society.

    Eco world. More like ego world. Or….

  79. Ed Ring says:

    Mark – first of all, please don’t discuss a “fictional George” because he is very real and unique. I see every commenter’s IP address, and unlike you, who have masqueraded as at least two entities within these many comments, this “George” is definitely a unique individual who has assumed no other alias. And why did you decide to pose as a new commenter who disagreed with your own position – using patently bad grammer? Were you trying to discredit the other side of this argument? Paint them as morons and creeps? Well they aren’t. They are hard working people just like you.

    Secondly, you may wish to be more careful about discussing “stealing pensions” because that can cut both ways. In my opinion, the day your public sector unions took control of my state and local governments, any pension boosts you received became not a decision made by a democratically elected body, but a theft, engineered by politicians who were puppets of your public employee unions. Reducing your pensions in my opinion is nothing more than recovering stolen goods. Moreover, that the amount you (and your employer) paid into your pension is anywhere near equivalent to how much you expect to receive someday in retirement is almost certainly ridiculous.

    The idea that public sector pensions could be retroactively increased belies any claim that anyone so favored would have paid an adequate amount to fund their pension, even if public sector pension funds actually could have earned the ridiculous rates of returns you were mislead into thinking they could earn. So lighten up. These are difficult challenges we face, and your sense of entitlement, your declarations that you have some kind of job that requires extra time off because you have so much stress, your feelings that you should be exempt from the return to earth the rest of society is experiencing – all reflect a singular lack of empathy for what is happening to the rest of us.

    You might refrain from so much psychoanalysis and concentrate on the problem at hand – our state and local governments are broke, and the reason they are broke is (1) tax revenue and pension fund returns are way down, and (2) on average (maybe not in your case, Mark) we are paying public sector employees far more than people make in the private sector. We have to address both of these problems if we’re going to get anywhere.

  80. someguy says:

    Trust me, I get nowhere near 16 days but I will count EVERY SINGLE ONE OF THEM when I get back to work and you will be the first to know…

    “First they ignore you,
    then they ridicule you,
    then they fight you,
    then you win.”

    Until next time…

  81. PublicEye says:

    Sorry to post this twice, but please keep up the great work Ed and “continue” to get the word out to the public. This is a topic of tremendous importance for the welfare of our country and all of its citizens! Yes, this may not apply to all, but to those that it does, change is certainly coming and absolutely necessary.

    The true spirit of service does not involve any kind of monetary gain; it is free and selfless.

  82. boprn says:

    Ed Ring,

    Seems you and I got into a discussion on this issue the last time you wrote about this. Rather than steal the pensions people have earned per the contract they agreed to upon employment, get rid of the countless benefits to those who do not contribute to our society – welfare recipients, illegals who bring crime (but swallow lots of tax dollars), workman comp scammers, and so on. Instead you choose to go after the people who have worked for what they got, instead of the programs that are really costing the state. For every state employee who provides a service to the public, there are countless recipients of that public service. As an example, a social worker who costs 60k/year to employee by the state (and is working) provides benefits of about 3.6 mil/year to people who don’t work. Which is the problem, the social worker who is filling the job as required by the state that makes 60k/year, or the 200-300 people/families on her case load that don’t work and cost 3.6 mil/year. How come you arn’t addressing THAT???

    Now to the second point, which is a complete destruction of your half baked truths. The state puts away $ into CalPers, and requires an investment from each employee into CalPers also. This money is placed in equities, bonds, so on. In most decades it provides easily for the retirement benefits that are paid out by CalPers via growth in the markets. It provides retireent to people like myself, who have not paid into SS (nor has the state for me). Now, if we had paid into the state instead, my retirement would be 1400$/month, but instead, with LESS dollars invested by the state of Calif (a cost savings to the state), I will get about 3300$/month. Upon retirement I will have more income to spend, which props up the local economy, and thus provides jobs when combined with others disposable income. Oddly enough, this investing in the markets is what Replublicans wanted to do with SS money 8 years or so ago. Over the long term it works very well, but there are bumps along the way. We happen to be in one of the down cycles right now, and the cost is MORE than SS would be at this time. Looking at it on a historical perspective, it is less. Why arn’t you talking about the cost savings that the state has realized over several decades of using CalPers vs SS? Why arn’t you talking about the extra dollars that are flowing back into the comunities as a result of the return on investment dollars from CalPers and other Defined Benefit plans. Why arn’t you talking abuot what it at the root cause of the financial problems facint the state – illegals, and welfare?

    Your belief that stealing the benefits earned by honest, hard working people reeks of liberal facism. Using the current economic difficulties, and the support it fosters to further your goals is shameful at best. There are those of us who have taken the time over the years to educate ourselves to defend against those, such as yourself, who would use the outrage of the mob mentality in the face of such an economic crisis to further your goals.

    If you want to get into another debate regarding this, it will have the same outcome as last time – and in case you forgot, you lost.

  83. Ed Ring says:

    boprn – I think we have more areas of agreement than disagreement. Here are a few points in response to your latest comment, and I would be interested in your response:

    (1) In many respects, the government feeds on social problems. If the government solves a problem, they have to shed government jobs. If for no other reason, this conflict of interests is why government employees and overstaffed government agencies should not be allowed, through their unions, to control our state and local governments.

    (2) A social worker making $60K per year, when taking into account all of their extra present and future (retirement) benefits, is actually making $120K per year. In the private sector, adding the value of benefits only adds about 25% at most to compensation. Read:
    http://ecoworld.com/blog/2009/02/08/calculating-employee-compensation/

    (3) Of course we need reforms to eliminate the scams that multiply the costs of our social programs beyond what was intended or what is legal. My point has always been simply to stop focusing on reforming Wall Street and Corporations while turning a blind eye to government reform. It is fine to reform both aspects of government corruption – the abuse of the system by welfare scammers etc., and the abuse of the system by public employee unions.

    (4) Your point about how much money goes into your retirement plan is valid – the assumption you are making is that private equity funds earn a higher return than the social security fund where the money is just parked and not invested. My point is also valid – these funds were grossly overestimating how much they could earn over time. For calculations regarding what funds as large as CALPERS and others should really expect to earn, read:
    http://ecoworld.com/blog/2009/01/16/humanitys-prosperous-destiny/

    (5) It’s funny you would accuse me of liberal fascism. Have you read the book with that title? It describes in great detail how tyranny can come upon us concealed behind nothing but good intentions. It is a terrific book that explains in many ways why we have taken on the issue of public sector reform in this website which was founded with the goal to promote sustainable, free-market, property rights based environmentalism. Here is our review of that terrific book:
    http://ecoworld.com/blog/2008/02/23/what-is-fascism/

    I just don’t believe government workers should receive taxpayer funded defined benefit plans that dwarf what workers who pay these taxes receive. If we are going to have some kind of safety net for our citizens, the same formula should be applied to everyone. And while a mob may have formed in recent months – on both sides of this difficult issue – we saw this coming quite some time ago and are simply adhering to the principles and the predictions that for us were obvious. Read:
    http://ecoworld.com/blog/2007/09/25/inflation-or-deflation/

    Thank you for your email. It is good to hear from you again.

  84. boprn says:

    A short reply to you.

    (1) In many respects, the government feeds on social problems.

    In my opinion, the function of government is to accomplish two things.
    a) To create an enviornment where private industry may flourish. That is not as simple as it sounds. The govt must provide protection from external hostile forces, regulations so biz’s don’t interfere with each other’s properity, and so on.

    b) To accomplish programs/projects that are of such magnitude, that no individual or coporation has the resources to complete the task.

    While I don’t believe that the govt should be in the biz of providing social programs, the govt the only thing capable of providing social programs on a scale that is society wide. Again, wish it wasn’t so, but that’s the way it is. While these programs should be temporary, they are abused by the very people they are intended to aid. The population growth precludes our social services from getting smaller in size as there are always more people to service. Because of this, I don’t see govt as growing as a result of unions, but as a result of population growth. In fact, Calif has fewer govt employees than all but 48 states. That’s an accomplishment in itself. When pay/benefits are compared to other states, and cost of living is factored in, Calif govt employees are paid somewhere in the middle of the pack.

    (2) A social worker making $60K per year, when taking into account all of their extra present and future (retirement) benefits, is actually making $120K per year. In the private sector, adding the value of benefits only adds about 25% at most to compensation.

    The retirement benefits you speak of are because of GROWTH of equity. That is a benefit, not a cost to the state. This goes back to the old saying – there are lies, damn lies, and statistics. Using the equity that has been built via the investment abilities of CalPers is statistical trickery. The truth of the matter is that retirement that is given to the govt worker costs about the same as that given to the private industy worker – the difference is, as you said, the private industry worker has the money parked in SS with no chance of growth. While the govt employee has more time off (more holidays), the private worker has better medical insurance. The private worker has stock options…the comparison could go on, but it gets nowhere. The truth of the matter is, if working for the govt is such a good deal, why are there always vacancies?

    (3) It is fine to reform both aspects of government corruption – the abuse of the system by welfare scammers etc., and the abuse of the system by public employee unions.

    I’m not sure what abuse you speak of. The public employee unions have negotiated in good faith with the DPA, and administration to arrive at the contracts that are in force. If it was/is abuse, then why did the govt agree to it? What exactly is abusive? People in the govt make less than counterparts in private industry. For the lower pay, they get more stability, and a better retirement (hopefully). Giving up a few dollars today, so you can get them in the future seems like good planning, and exactly the kind of rational thinking that the country needs. Everyone is so driven to spend every dollar they have, to consume and buy things on credit that it has driven this country into the ground. The public employees have gone the oppisite road, investing for the future – what’s wrong with that?

    (4) My point is also valid – these funds were grossly overestimating how much they could earn over time.

    CalPers has a pretty good track record, not missing the mark very often. The rate of return they expect is about 8% to cover expected payouts/costs.

    Here are the rates of return for the past 20+ years.

    YEAR MID END

    1984 ‐3.1 12.9
    1985 35.4 28.0
    1986 24.6 15.9
    1987 13.8 4.3
    1988 3.9 12.8
    1989 15.7 21.3
    1990 9.7 ‐0.8
    1991 6.5 23.0
    1992 12.5 6.5
    1993 14.5 13.4
    1994 2.0 ‐1.0
    1995 16.3 25.3
    1996 15.3 12.8
    1997 20.1 19.0
    1998 19.5 18.5
    1999 12.5 16.0
    2000 10.5 ‐1.4
    2001 ‐7.2 ‐6.2
    2002 ‐5.91 ‐9.5
    2003 3.9 23.3
    2004 16.7 13.4
    2005 12.7 11.1
    2006 12.3 15.7
    2007 19.1 10.2

    The above yields an annual of 11.85%

    Because the rates of return, on average, have exceeded the 8% mark, the amount required by the employer has been lower than the cost of SS. This produces a savings for govt, and thus for the tax payer. In addition, when people retire from this type of program, the additional retirement income means more spending & more jobs for the community.

    So there is a win for the tax payer in the front, and a win for the tax payer (via increased sales tax revenues and other taxes) on the rear. Where is the problem here?

    (5) It’s funny you would accuse me of liberal fascism.

    What else could it be called? Your position is that ‘those people shouldn’t get what they agreed, by contract to get’ because it’s more than these people. It is the liberal ideal at work, where everyone is (supposedly) equal. Even if bringing that so called equality means stealing from those that had the foresight to get an education, get a good job, and save for the future. Your idea of fixing the problem is tyranny in a way. If you were to say that you would like to see changes in retirement forumulas for FUTURE hires, then it would be agreeable. Then people would know what they are expecting. The idea of changing the laws that govern such things in the middle of the game reeks of a liberal facist ideal, and brings tyranny to an otherwise orderly system.

    I just don’t believe government workers should receive taxpayer funded defined benefit plans that dwarf what workers who pay these taxes receive.

    The difference is due to equity buildup in the investments that Pers systems across the country have developed. Trying to compare the two is just unfair. If the cost is virtually the same, WHY DO YOU CARE? The cost is what is important – and the cost basis of both these retirement plans PERS VS SS is virtually the same.

    If we are going to have some kind of safety net for our citizens, the same formula should be applied to everyone.

    That reads liberal facism. There will be always be differences, even among private companies.

    Regarding inflation/deflation – the printing presses of the FED are churning away to pay for programs that can not be afforded. The govt taking care of every little ill that passes it’s way is breaking this country. The bailout of AIG (which happens to insure the pensions of Congress), the bailout of other banks (including banks in Germany, UK, Scotland, Switzerland), the bailouts of free enterprise companies are forcing our fiat currency to devalue at an alarming rate. A large part of the basis of our country in the world is the belief in the U.S. dollar as safe place to invest. The current administrationis policies of printing money will only lead to the devaluation, and flight from the dollar. Once the flight starts (and China is already considering it) the cost of oil will soar. Everything will rise in price, imported goods esp. But this is another subject.

    Hope this posts right, as my software and the bulliten board system here don’t like each other too much.

  85. Ed Ring says:

    boprn – a short note! We’re really going to have to take this dialogue onto a new post – which I will try to oblige you with hopefully soon.

    Several issues here – and again, a fair amount of agreement. Coming back to the pensions themselves, the rates of return you cite are before inflation, first of all. And certainly in recent years, these high rates of return were based on unsustainable debt fueled growth, worldwide. I stand by my position that real rates of return for funds as big as CALPERS cannot, over time, exceed the real rate of growth of the global economy, which would be about 5% best case.

    The problem with saying the market can give state workers better retirements than the rest of us has to cut both ways. If the market lets you down, then these benefits have to also be scaled down. Laying this on the taxpayers is unfair, when public sector unions have controlled our state and local elected officials for years – not through strikes, but through usually being the overwhelmingly largest source of financing for their elections. The political process in California at the state and local level is largely controlled by public sector unions and this is wrong. In my opinion it renders all of the contracts the politicians were coerced into signing null and void. I can quote some of your own statement about unions in earlier comments you’ve made here. Certainly you can’t think this is black and white.

    Not only should public employees who rely on a sustained bull market to fund their defined benefit plans be willing to lower those benefits if the market lets them down, but there is also a sense of equity and fair play that should apply to defined benefit plans, and all benefits that public servants enjoy. To use an extreme but very relevant example, there are thousands of cases now where retired public employees are making more in retirement than they made when they worked. This would be just fine if the rest of us could enjoy such largesse as well; as it is this is a travesty.

    Our position is there is no reason for taxpayers to be supporting public sector pay and benefits so great that the only good jobs left in the economy are working for the government. And our core reason for broaching this issue remains – hidden taxes in the name of fighting global warming are the only way the public sector might restore solvency without cutting their expenses.

    Other points: In general stock options are rarely, very rarely a source of financial security for private sector workers, despite those stories of boom millionaires here and there who were fortunate enough to get into the right company at the right time. I think you know this. And since when do private sector employees get health insurance that is better than the state workers? Are you kidding? What about all those holidays state workers get? There is a cost for all this. The idea that the average public employee make less in total compensation than the average private sector employee, certainly in the case of California, is patently false.

    Finally, you state “Calif has fewer govt employees than all but 48 states” which I assume you mean per capita. Then why does California have one of the highest tax rates in the nation? I submit it is because they have among the highest paid public employees in the nation.

    There is nothing easy about coming out of a national debt binge. The readjustments, such as rolling back retroactive pension bumps in the public sector that were muscled through local and state governments during the phony boom, will need to occur alongside with equivalent pain in the private sector.

  86. boprn says:

    A briefer note…….
    Coming back to the pensions themselves, the rates of return you cite are before inflation, first of all.

    While these rates of return are before inflation, they still exceed the goal set by CalPers by about 3.5%/year.

    And certainly in recent years, these high rates of return were based on unsustainable debt fueled growth, worldwide.
    I disagree somewhat.

    The rates of return wwere based on unsustainable debt by the United States – not worldwide. Once the world stops feeding the debt addiction of the U.S.A, stocks should do quite nicely. Even if the rates of return were off 33%, CalPers would be meeting it’s goals.

    I stand by my position that real rates of return for funds as big as CALPERS cannot, over time, exceed the real rate of growth of the global economy, which would be about 5% best case.

    Well, you are guessing what the future might hold, instead of looking at historical data. I agree that rates of return will decrease, but hitting an 8% mark is not really that difficult. ADRs in Canada will pay nearly that much and are completely safe. How can one throw out all the historical data and say the feeling they have is more valid than historical data? Historical data that pension funds such as CalPers only have to partially hit…

    The problem with saying the market can give state workers better retirements than the rest of us has to cut both ways. If the market lets you down, then these benefits have to also be scaled down. Laying this on the taxpayers is unfair…

    This would be a good place to talk about fair/unfair. Is it fair that taxpayers in Calif pay for the illegal population, the huge welfare population here? I think you would have a lot more traction, and be standing on firmer ground if you were to use your website for discussing these issues. The people that the state hire to provide these benefits are not the problem, the people who get these benefits are the problem. The employee who goes to work every day, dealing with a drug induced homess population is the person you take issue with. Isn’t the issue that we provide benefits to people who have chosen a life path that leads to the needs for these services?

    I can quote some of your own statement about unions in earlier comments you’ve made here.

    I’m happy my past posts were so memorable. =] I do agree that the unions are a problem, however they do provide some benefits also. But, overall I am no fan of the unions.

    Not only should public employees who rely on a sustained bull market to fund their defined benefit plans be willing to lower those benefits if the market lets them down, but there is also a sense of equity and fair play that should apply to defined benefit plans, and all benefits that public servants enjoy. To use an extreme but very relevant example, there are thousands of cases now where retired public employees are making more in retirement than they made when they worked. This would be just fine if the rest of us could enjoy such largesse as well; as it is this is a travesty.

    Thousands of cases!! It is pretty rare, very rare indeed, when someone gets paid more in retirement than they did working. The last loop holes for that were closed about 5 years or so ago. There was a max on the POFF 3.0 retirement of 90% @ 30 years. The problem was, is you had other formula types it could be combined to exceed 90%. It would take at least 34 years of service to reach that point, and it has happened very few times. I believe there is a flaw in your analysis of these retirement benefits – and this seems to be common among people who take issue with CalPers retirements. Let’s say Joe works 30 years and is a CHP, he gets 90% – a lot of people say 90%!!!!! It’s too much!!!! Well, if Joe had stopped at 20 years (and met the age requirement), and got 60%, people say ‘well, that’s ok’. If Joe did stop at 20 years, you would still be paying out the other 30% – just to another new hire. CalPers will be paying out the 90% regardless because all those CHP jobs must be filled.

    Our position is there is no reason for taxpayers to be supporting public sector pay and benefits so great that the only good jobs left in the economy are working for the government.

    How about that sentence read: Our position is there is no reason for taxpayers to be supporting private sector pay and benefits for AIG, GM, FORD. Where is the vast majority of corruption in this country? We are now paying trillions, not billions of dollars to bailout private sector companies due to widespread corruption. TRILLIONS.

    Other points: In general stock options are rarely, very rarely a source of financial security for private sector workers.

    The people I associate with (which are mostly professionals) have these ‘very rare’ stock options, and all make more than me when the options are included.

    And since when do private sector employees get health insurance that is better than the state workers?

    It is now days. The recent hires with the state have been amazed at how bad the medical coverage is. In fact every single one has said to me that the medical converage they had in the private sector was better in every way than the coverage the state has. Shocked me too. I thought we had a good coverage. Times are changing.

    What about all those holidays state workers get?

    I did address the extra days off that govt workers get, but I will expand my comments. Quite often, when the state was supposed to give a cost of living raise to it’s employees, it found itself cash strapped due to the large payouts in ‘entitlement’ programs to illegals, welfare queens, so on. The state would go to the bargaining unit and say ‘well, we don’t have the resources to meet the agreed COLA in the contracts, can we do something else’. The various bargaining units would agree to a holiday instead of the already agreed to COLA to save the state money. As the years go by, it is forgotten that the bargaining units helped keep costs down by doing this and we get people who have no idea of how govt works, or how things came about going on about all those holidays. If you find a nearby mirror, you can look into the eyes of one of those individuals.

    Finally, you state “Calif has fewer govt employees than all but 48 states” which I assume you mean per capita. Then why does California have one of the highest tax rates in the nation? I submit it is because they have among the highest paid public employees in the nation.

    Yes, I meant by capita – thanks, I should have put that in there.

    The cost of the employee workforce of the state is a very small fraction of the overall budget. Then why does Calif have one of the highest tax rates in the nation? Yahoooo, now we can get to it. Calif has about 1/9th the population of the U.S., but we have 1/3rd of the welfare cases. We have this high number because our elected officials have chosen to buy votes via programs for the poor. The cost of giving benefits to 1/3rd the welfare cases nation wide is very high. Illegals – we spend about 30 billion a year on illegals in Calif (medical, education, welfare, police, prisons, so forth). We have this high cost because the fed won’t enforce the boarder, but does require the state to provide all kinds of entitlement programs for these people. Taxes going out of state – for every 1$ that the people of Calif pay into fed tax, we get 81 cents back.

    Now lets look at those above numbers – 30 billion for illegals. The state work force cost less than 1/2 of that.

    Fed taxes with no return are: 2Tril *.45 * .19 = 171 billion dollars. There was a time that Calif could support the rest of the nation – that time is past. We can’t afford to send 171 billion dollars out of state to support other state govts. I can only imagine you agree with this?

    2 Tril = approx fed taxes
    .45 = % of GDP that Calif reprsents
    .19 = loss of fed taxes due to non return to state in form of program money

    To wrap this up, do we address the real issues such as:
    1) cost of illegals
    2) cost of excessive welfare
    3) cost of unequal fed distribution of tax money

    Or do we bash govt employees? Everyone is welcome to take a govt job if they are so inclined. For people who work for the govt and have reaped the rewards of stability during these hard times, it is a payoff for thinking ahead. Is envy the answer to this forward looking approach? I hope not, as I think your coulmn can do more of a service than that. You column could be focusing on those things that are doing real damage to our country – none of which are pensions that have existed for 80 years.

  87. someguy says:

    Ok I did count them; I get 12 days a year and most of the time, I work those holidays. And Mr. Ring there was no funny math stuff involved when I counted those days.

    And Mr. Ring, this is no name calling but I think you are more marxist then Karl himself because all you are preaching is how the wealth should be spread out.

    If we were to follow your formula/advise we would have to hire more (5 times more then now) “public” employees to make sure the wealth is distributed equally among the “community” or the “communists.” We would then turn into a USSR.

    Marxism, Communism and all that went down the drain along with USSR, ummmm….like years ago. Or was Marx right when he said that Capitalism would produce enough tensions that will eventually lead to its destruction. Hmmm…

  88. Ed Ring says:

    someguy – one of the problems with generalizing about public sector benefits vs. private sector benefits, obviously, is that there are various deals. Public sector employees in many states are still compensated according to the traditional arrangement – they make less during the years they work than they could make in the private sector, and then they make more in retirement because their pension exceeds social security. But in most California agencies, and in most of California’s cities and counties, for several years, California’s public employees have been having their cake and eating it too. They make more than they would make in the private sector, and their pensions grossly exceed what they would earn under social security. We can disagree as to the degree to which this is a true statement, or whether or not it is true at all, but read the daily news stories on http://www.pensiontsunami.com for a few weeks and then see what you think.

    Here is what a California worker makes in retirement under various retirement schemes:

    (1) City/County government worker – works 30 years – $65K annual salary at retirement – earns 2.7% per year, equating to $52,650 per year in retirement pension.
    (2) State government worker – works 30 years – $65K annual salary at retirement – earns 2.0% per year, equating to $39,000 per year in retirement pension.
    (3) Private sector worker – works 40 years – $65K annual salary at retirement – earns, in effect, 0.7% per year, equating to $19,308 per year in social security benefits. To verify this statistic, ref. this Social Security Estimator.

    I can see how any suggestion we upgrade social security could be construed as socialistic, and I’m certainly not unaware of the dangers of moving further towards socialism, especially now. But what we have now are two tiers of taxpayer supported retirement plans. One, called social security, provides a minimal safety net for private sector workers when they are retired. The other one, using California as an example, provides public sector workers with benefits significantly better than social security. So we already have taxpayer funded retirement security – we just have two of them, a marginal, minimal one for private sector workers, and an unsustainably generous one for public sector workers.

    The public sector pension funds were willing participants in the speculative bubble that led people to think they could earn 10-15% per year or more on passive investments, which I submit was a ridiculous delusion. Now we have a choice – we can raise taxes or we can cut benefits. Perhaps it is the notion we have to raise taxes that is socialistic.

  89. boprn says:

    Ed Ring,

    There are so many things wrong with that last post of yours, I don’t know where to begin. First you admit that the private sector employee makes more, then for the purposes of your analysis of retirement benefits USE THE SAME PAY BASE. If the non public employee stuffed the extra cash in the VERY SAME STOCKS that CalPers uses for public employees, they would far exceed the CalPers retirement (yes they would have risk). Instead, the private employee spends they money, then come bad times points the finger at the steady turtle the public employee represents.

    Then!!! Then to top it off, you say 10-15%/year return on passive investments? That is just nuts. CalPers says 8% is more than enough – the real figure per CalPers itself is 7.75%, but I always try to give you the benefit of the doubt.

    So, the big questions are:

    1) Why do you say to the public employees, it’s ok for you to make less, and when you do get a decent payoff for being prudent (taking that govt job) – ‘it’s unfair’?

    2) Why do you use fuzzy math, using the same base numbers for salary, which lowers the payout in SS relative to public pensions, and more importantly, removes the difference in pay that could be used to fund the very same type of retirement that public employees get?

    3) Why do you say 10-15%, when it’s 8%?

    What is REALLY going on here? I’m starting to think you were kicked out of govt employment at one time, or perhaps not accepted at all. Feel free to delte this post, as it doesn’t meet with the marxist ideals of ecoworld.

  90. Ed Ring says:

    boprn – here’s what I said “But in most California agencies, and in most of California’s cities and counties, for several years, California’s public employees have been having their cake and eating it too. They make more than they would make in the private sector, and their pensions grossly exceed what they would earn under social security. We can disagree as to the degree to which this is a true statement, or whether or not it is true at all, but read the daily news stories on http://www.pensiontsunami.com for a few weeks and then see what you think.”

    How does that translate into “admitting private sector employees make more?” I’m just trying to be reasonable. Maybe in your case you could make more in the private sector. But I don’t think that’s true in general – certainly not in California. One of the problems in the public sector is the managers and executives are – sometimes, not always – paid less than they could make in private industry. But non-management employees in the public sector often make far, far more than they could ever make in the private sector. And the non-management employees are by far the most numerous portion of the public workforce and represent by far the greatest expense.

    Without knowing details of your specific situation, it is hard to challenge the points you make. In general, in California, public sector employees make more than private sector employees. AND they have pensions that dwarf social security. AND their pension funds are now grossly underfunded AND they want the taxpayer to make up the difference. It escapes me how if my publication wants to take an editorial position challenging this, that makes us Marxist.

    What I might be tempted to call Marxist is how the public sector intends to dramatically increase their role in regulating our economy (and dramatically raising taxes and fees) under the pretext of stopping global warming – a futile idea based on flawed logic. And I see a connection between budget deficits caused by underfunded pensions, and money flowing into the public sector thanks to global warming hype. That is why we cover this issue here.

  91. boprn says:

    “they make less during the years they work than they could make in the private sector”

    You typed that, not me….and I used it out of context, much like you do CalPer stats. Just isn’t right IS IT? LOL

    Regarding my specific situation – is that I was paid roughly 1/2 of what I could make in the private sector for many years. Over that last 2 years or so, my pay has caught up with the private sector. So why did I take a job that had such low pay? For the pension of tomorrow. Now you say ‘wait, it’s not fair that you get that pension’, a pension that has about the same cost basis as SS. You look at one side of the issue, but not the other. You pick and choose stats, and just plain make up others to suit your editorials. You could/should be working for the Sac Bee with such journalistic integrity.

    Regarding the global warming end of it – completely agree. HYPE. The idea of bio fuels, windmills, and solar energy has been tried in Germany. It has been a great failure. The obvious future is electric vechiles powered by nuclear power plants. We have discussed this in the past also. A question regarding this, do you think that government has no place in the future energy industry? I am of the belief that the problem is so large that government is the one source that can solve it. Of course govt is going the wrong direction regarding this issue, but if the ship was pointed in the right direction, great leaps could be made.

    Enjoy the sparring. Keep it coming, I love the smell of victory.

    Editor’s reply: What is intriguing to me – and encouraging – is that we seem to agree on everything except these pension issues. One of the areas where we are not having a meeting of the minds comes down to this – do you think the economic growth of the past 10-20 years, particularly in equities and real estate – was sustainable, or was it fueled by unsustainable accumulation of debt? Depending on how you answer that question, you will either think a real rate of return, after inflation, of 7.75% per year (or more) is sustainable, or you will believe it is too high of a rate to sustain in the long run. With a fund as big as CALPERS, I don’t believe you can average a real rate of return significantly higher than the rate of economic growth for the economy at large, which worldwide was 4% during the second half of the 20th century, and probably will not exceed that rate, on average, for the decade through 2010.

    The other area we disagree is regarding what accurately describes compensation rates for public vs. private employees. But you have acknowledged your rate of compensation is now equal or greater than in the private sector – and it is your final rate of compensation upon which your pension is calculated. Let’s assume for a moment I’m right in asserting that public sector pay is now equal to or greater than private sector pay. If that were true, do you still think public employees should get retirement packages 2-4x greater than what they would have gotten under social security?

  92. boprn says:

    I have just noticed that I have posted on this article in the past under the name ‘Dave’. Thought it should be disclosed….

    Editor’s reply: I have taken the liberty of renaming your previous posts to come from “boprn” based on this comment.

  93. boprn says:

    Some valid questions you bring up, so I will adress them one by one.

    1) do you think the economic growth of the past 10-20 years, particularly in equities and real estate – was sustainable, or was it fueled by unsustainable accumulation of debt?

    We both know it was fueled by debt. We agree here. (more below on this)

    2) (Do) you think a real rate of return, after inflation, of 7.75% per year (or more) is sustainable long term.

    A rate of return greater than the growth of population of this country, for a company that is mature is not possible. That said, many companies are expanding into areas overseas, and these new markets offer a very large % growth, and thus, a very high chance of a rate of return that exceeds 8%.

    The rate of return of many companies was not only fueled by debt, but increases in productivity, foriegn market penetration, and so on. The question of how U.S. stocks will do in the future depends on how new technologies are marketed to foreign nations. It is a reason that I believe our govt should become a leader in funding for alternative energies that make sense. If the U.S. can establish itself as the leader in new energy techonolgy, we stand a good chance of doing very well in the future. That menas high returns. =]

    3) Will leave the employee compensation of public vs private out for now as you asked.

    4) Do you still think public employees should get retirement packages 2-4x greater than what they would have gotten under social security?

    I believe that there should be just as much put away for a public employee as a private employee. For instance, I don’t get SS when I retire, having to rely on CalPers only. The cost of CalPers to the employer (the state in this case) is about the same as SS would be. Since those dollars are invested, instead of parked I will get a higher retirement than SS. The cost is roughly the same, so where is the problem? If you would prefer that public employees get SS instead, the cost to the taxpayer would be the same, and there would be less retirement dollars spent by these retirees in the future – which means a poorer local economy. You follow what I’m saying? CalPers is not only a benefit to it’s members, but to the communities where those members retire. How could someone not want that?

    2-4x greater than SS.

    The average CalPers retiree gets 1800$/month. At 3x higher (the median of your statement), that means the average SS retiree gets 600$/month. It just isn’t true. This is a case of using the data you want to make your point. The 1800$/month can be fact checked on the CalPers website.


    Regarding my pay. It is interesting to note that you take issue with the fact that my retirement will be higher since my pay went up, BUT NOT THAT MY PAY WAS LOWER FOR 20 YEARS. You only see one side of the issue, over and over again. Don’t see a problem there?

  94. sumguy says:

    What would you pay for the fallen heros in Oakland? More then we have paid to AIG? More then what their CEO’s got for “job well done?” Or is it just occupational hazard?

    You are not required to reply. And this is not meant as an assault on your words, thoughts…

  95. boprn says:

    I wanted to thank Ed Ring.

    Recently I had some work done on a commercial building I own. I had my usual guy do the work, and I have always paid him for material up front, and the remaining balance after the job was done.

    Recently the Govenor has imposed a 10% pay reduction on govt employees via furrloughs. When the contractor was done with his work, I told him I couldn’t pay him because the amount was no longer ‘fair’ due to my pay cut. He said that we have a contract, where I pay for part up front, and part after the work is done. I told him I realized that, but in the interest of fairness that I wouldn’t be paying him what was agreed to. I said that Ed Ring of ECOWorld had enlightened me that contracts mean nothing. I told him that he should have asked for everything up front, rather than rely on the good faith of his employer (me).

    I gold him that Ed Ring could be contacted via the ECOworld blog/forum on the ecoworld.com site. He was not happy.

    Again, THANK YOU Ed Ring for explaining fairness to all of us. A fairness that I had never understood before.

  96. angry_contractor says:

    Al right. Who is this Ed Ring fellow? I have been doing work for an individual for years, and all the sudden he tells me he’s not paying me. He says talk to Ed Ring of ECOworld. What is ECOworld, some nutty Calif style tree hugging, frog licking, bird watching neo communist hippy website? What is this ‘fairness’ stuff? This guy said he would not pay me because he lost 10% of his pay, and that Ed Ring said it was OK? Now I will have to tell my debtors that I won’t be paying them – in the interest of fairness.

    WHERE ARE YOU ED RING?

    Communists can be so sneaky.

    Editor’s reply: We have never argued in favor of extrajudicial breaking of contracts. We have suggested that in court there could be legal remedies to what have become, in the opinion of some of us, at least, unfair and financially unsustainable pension obligations to public sector employees. Bankruptcy, for example, once recognized in a court judgement, typically leads to contracts being renegotiated. This fact, common in the private sector, is now being tested for bankrupt public entities, as it should be. There could be other potential legal remedies – for example, in the federal sector, public employees are prohibited from engaging in political activity. At the state and local level, however, often there are little or no restrictions on the ability of public sector unions to provide the financing to elect – or remove – politicians who don’t comply with their wage demands. It is possible this activity could be ruled illegal for the same reason it is illegal in the federal sector. It is a clear conflict of interests.

    The fact that many people in the public sector disagree, quite understandably, with our position, which is that everyone should have the same formula apply to any taxpayer funded defined retirement benefit they may receive, is not justification for them to overstate the position we’re taking here. It is always surprising to me when people who disagree with our position accuse us of advocating socialism or communism. America is already socialist by any criteria that such an argument would have to depend on – we are simply suggesting let’s take these arguably socialist programs, social security and public sector pensions, and let’s move towards a consolidated program for every worker that is equitable and financially sustainable. And to restate a nuance to our position that the original piece didn’t include, such a move would have to be phased in. Clearly it isn’t fair to impose such a reduction in public sector pension benefits on people nearing the ends of their careers, nor is it likely necessary from a financial standpoint. One formula that could apply would be to grant the current package to public employees for the years they’ve worked so far, but for the years they work from now on, grant the consolidated package.

    I still believe the benefits of having all American workers, public and private, experiencing the same taxpayer funded defined retirement benefit, which would be a beefed up social security program, outweigh the many detriments. Nowhere, in any context, however, are we arguing anyone, anywhere, should break a contract absent a court judgement empowering them to do so.

  97. boprn says:

    You state: “Clearly it isn’t fair to impose such a reduction in public sector pension benefits on people nearing the ends of their careers, nor is it likely necessary from a financial standpoint”

    So, you are saying that the govt (which means people of Calif) should stand up to the agreed upon contracts with the public employees. ABOUT TIME YOU SAID THAT.

    You state: “One formula that could apply would be to grant the current package to public employees for the years they’ve worked so far, but for the years they work from now on, grant the consolidated package.”

    It would be simpler, and probably more cost effective (and legal) to have a new retirement package for NEW hires. The fed govt did this back in the 1980s when it reduced fed pension from 2% a year to 1% a year. I have stated before on somewhere above that I am agreeable to a different package for new hires. In fact, a new package is the only way to sustain the system. The current percentages need to be reduced by about 1/3.

    You state: “I still believe the benefits of having all American workers, public and private, experiencing the same taxpayer funded defined retirement benefit, which would be a beefed up social security program, outweigh the many detriments”

    Depends on how you ‘beef up” SS. Is SS parked dollars, or are they invested in equities/bonds/real estate (RIETS)/other asset classes? A beefing up of SS by throwing everyone into a parked dollar system would only mean less wealth in the country – of course it would be equal. Everyone could suffer equally I guess. Communism at work.

    You state: “Nowhere, in any context, however, are we arguing anyone, anywhere, should break a contract absent a court judgement empowering them to do so.”

    The state of Calif can not default on it’s obligations via a court process. The state would have to prove that it has no way to raise the capital required to pay the pension obligations that it has made. To prove this point, the state would have to be incapable of raising further taxes/fees. The state will always be able to raise taxes/fees, so it comes down to changing the system for new hires. Then you don’t have the obligation for them, and the current pensions can be met with relative ease. This is why I believe a new system needs to be made for new hires, not by attempting to dodge current agreed to contracts.

    —-

    Another discussion we had: Can CalPers meet it’s growth estimates. I have done more research on this, and believe it can. The coming collapse of the dollar will push stock prices up – of course relative to the decline in the dollar there will be a loss of real assets. However, CalPers will have more dollars on the books, and will have no problem paying out it’s pensions. The pensioners will suffer the decline in real puchasing power.

    Looking forward to your response as always….the guys at the office need a laugh.

    That was a joke.

  98. upthecreek says:

    BOOHooo to all the public pension holders in calif….you are sponges on the tax payers of california.
    your days are numbered…

  99. withoutapaddle says:

    The $250 payments would also go to those receiving veterans benefits, disability benefits, railroad retirees and public employee retirees who don’t receive Social Security

  100. guity says:

    I was always a good student; graduated from an Ivy League college, obtained a Master’s degree and became a college instructor. I could easily have gone on to and graduated from a prestigious law school, as did one of my less intelligent brothers.

    I make $80,000 a year contributing to society. My brother the lawyer makes more than $400,000 a year sucking bone marrow from it. I personally believe there should be a law dis-allowing any lawyer from earning more per year than the average pay of teachers. All the money lawyers have made so far could be re-distributed into both Social Security and state pensions as well as state coffers, and everyone would be cash flush and happy (except, of course, my stingy brother).

    It could be argued that my brother made the smarter free-market decision when he chose his occupation. But by the same token, it can also be argued that I too made a smarter free-market decision if I am compared to other workers who chose private sector jobs with little or no retirement benefits.

    I can only condone the confiscation of my retirement benefits under one condition — that the majority of my brother’s (and all other lawyers’) earnings be confiscated as well.

  101. FedUp says:

    Public employees-the help
    Taxpayers-the Boss
    Why would the Boss give the help a better deal than he gives himself? In a country where common sense ruled instead of corrupt vote-buying schemes, he wouldn’t!!!!!!!

  102. guity says:

    The reason the boss would give the help a better deal than he gives himself is that the boss isn’t too bright. But the fact that he’s too dumb to make a smart deal doesn’t entitle him to back out of it. The best he can do is make sure that future deals he makes are more reasonable (which he would do right away, if he were a little brighter).

    The people who outsmarted “the boss” are entitled to reap their profits just like the clever lawyers who have outsmarted just about everybody, trading their parasitic activities for gold.

  103. guity says:

    I have been investing in airline stocks along the way. They tend to go down when the price of oil goes up. For the most part oil doesn’t go up because it is scarce — lately it goes up because heavily financed brokers at Goldman Sachs purchase millions of barrels of it and then park it in tankers off the coast of the United States until the shortage of oil actually at refineries jacks the price sky high. Then they sell.

    This year Goldman Sachs is passing out bonuses to its employees that add up to about the same amount as this year’s California deficit. But the “boss” who as I said is none too bright, seems preoccupied with a few dogmeats like me who hope to collect better than average pensions if they are lucky enough to survive into their 60′s…

Trackbacks/Pingbacks

Leave a Reply

You must be logged in to post a comment.

Advertisement