Income equality: abolish pensions based on having been a government employee

[JimG]

The Pension Benefit Guaranty Corporation (PBGC) acts as the guarantor for many private pensions plans, just as FDIC insures bank deposits.

pbgc.gov/about/faq/pg/general-faqs-about-pbgc.html

 

[ricmat]

The Pension Benefit Guaranty Corporation (PBGC) acts as the guarantor for many private pensions plans, just as FDIC insures bank deposits.

pbgc.gov/about/faq/pg/general-faqs-about-pbgc.html

But most private sector folks don’t get pensions. So this has nothing to do with anything.

 

[ricmat]

You may want to steal from the government worker to may yourself feel that misery loves company, but thats not how real life works. Ive worked public, private, non profit, academia… theres something called “the full faith and credit” of an entity that comes into question when they pull shenanigans. Private sector can declare bankruptcy start from scratch and pretend it never happened, public is much different. If the public entity fails its obligation, its credit is shot, who pays in the end? You and I do. Its better for Jim and Sally to get the pension they were promised, rather than fail to pay, lose credit and have the taxpayer pay interest at loan shark rates for simple goods and services.

I’m not sure what you’re saying here. " Private sector can declare bankruptcy start from scratch and pretend it never happened" – Bankruptcy is not just a ploy to get around paying pensions. The problems is THERE IS NO MONEY. The private sector can’t just print more money, or send a bill to the taxpayers like the public sector does. The private sector eventually pays for everything the public sector gets.

A few pages ago there were a lot of comments about “fairness” and how “we were promised.” and all that.

How about we (the private sector folks) all get together, and promise ourselves lifetime 100% pensions to start after 20 years of service. We further vote that it will be public sector employees who will pay for this with higher taxes on their income. That’s what is happening now, except “vice-versa.” Do you like this idea?

 

[SyroMalankara]

How about we (the private sector folks) all get together, and promise ourselves lifetime 100% pensions to start after 20 years of service. We further vote that it will be public sector employees who will pay for this with higher taxes on their income. That’s what is happening now, except “vice-versa.” Do you like this idea?

That’s not at all what’s happening. I didn’t, nor did any public sector employee vote on their employment plan. No government employee gets to vote on the percentage of salary they receive, their annual salary, or how many years of service it takes to earn it. You are creating a strawman.
You and any public sector employee votes in a representative (aka politician) that represents the will of the people - including you and all private sector employees - that legislates what is guaranteed and what is optional. The public sector that I had worked for had statutory obligation to pay certain wages, percentages of pension and when. If you want to change those, either go to your state capitol and become a legislator, or vote someone in who agrees with you. Then get the majority on your side, and change future pensions. The one’s currently agreed to will remain in place.

Bankruptcy is not just a ploy to get around paying pensions. The problems is THERE IS NO MONEY. The private sector can’t just print more money, or send a bill to the taxpayers like the public sector does. The private sector eventually pays for everything the public sector gets.

Private firms make use of tax breaks and public benefits as well. Who pays there?

 

[SyroMalankara]

How about we (the private sector folks) all get together, and promise ourselves lifetime 100% pensions to start after 20 years of service. We further vote that it will be public sector employees who will pay for this with higher taxes on their income. That’s what is happening now, except “vice-versa.” Do you like this idea?

So companies do not raise the cost of goods and services to pay for their employees? Are they set at the same rate as 1855? 10c for Gas, 1c for 1000 sheets of paper, a dozen eggs for 25c?

 

[ricmat]

That’s not at all what’s happening. I didn’t, nor did any public sector employee vote on their employment plan. No government employee gets to vote on the percentage of salary they receive, their annual salary, or how many years of service it takes to earn it. You are creating a strawman.
You and any public sector employee votes in a representative (aka politician) that represents the will of the people - including you and all private sector employees - that legislates what is guaranteed and what is optional.

The only people that actually voted on the plans are the politicians (government employees).

Notice how the politicians especially vote themselves even more “special” priviliges. For example, the federal House and Senate have special health plans, just for them. And someone pointed out that (some/all?) government employees don’t get Social Security. That’s because they have a special better plan for themselves, and the rest of us get SS.

The public sector that I had worked for had statutory obligation to pay certain wages, percentages of pension and when. If you want to change those, either go to your state capitol and become a legislator, or vote someone in who agrees with you. Then get the majority on your side, and change future pensions. The one’s currently agreed to will remain in place.

Private firms make use of tax breaks and public benefits as well. Who pays there?

The big difference is that when private firms get “overly generous” with pay or pensions, or if they get overly indifferent to the jobs they do, or if they get overly greedy in terms of setting product prices, or when the jobs they are doing have no more reason for being in existence, then the private firm goes out of business. As it should. Because THERE IS NO MONEY, which is because we all vote with our feet (or our wallets) to do business with a better company. The end result is that poor companies fail and good ones succeed. Again, that’s as it should be.

When these things happen in government circles, like the energizer bunny they just keep going and going and going. There is absolutely no incentive to do something useful, something better than was done last month or last year, no incentive to even show up, no incentive to keep customers happy, no incentive to reduce costs. Those things don’t benefit the government employees in any way. But it does affect all the rest of us. That’s why we’re mad…among other things.

 

[ricmat]

So companies do not raise the cost of goods and services to pay for their employees? Are they set at the same rate as 1855? 10c for Gas, 1c for 1000 sheets of paper, a dozen eggs for 25c?

Of course costs have gone up. Have they gone up only for government employees?

When private firms raise prices, they do so at risk of losing business (and even business solvency) to other firms that don’t have to raise prices.

The government solution is to raise costs (salaries, benefits) in a way totally unrelated to what would happen in a free market. And there are no penalties to be paid…at least by the government employees.

I take it that you didn’t like my plan?

 

[on_the_hill]

Public sector retirement plans that I’m familiar with come with 35 years of service. 20 years would be for a select few: police officers, firefighters, others with dangerous, physically taxing jobs.

 

[on_the_hill]

The only people that actually voted on the plans are the politicians (government employees).

Notice how the politicians especially vote themselves even more “special” priviliges. For example, the federal House and Senate have special health plans, just for them. And someone pointed out that (some/all?) government employees don’t get Social Security. That’s because they have a special better plan for themselves, and the rest of us get SS.

The big difference is that when private firms get “overly generous” with pay or pensions, or if they get overly indifferent to the jobs they do, or if they get overly greedy in terms of setting product prices, or when the jobs they are doing have no more reason for being in existence, then the private firm goes out of business. As it should. Because THERE IS NO MONEY, which is because we all vote with our feet (or our wallets) to do business with a better company. The end result is that poor companies fail and good ones succeed. Again, that’s as it should be.

When these things happen in government circles, like the energizer bunny they just keep going and going and going. There is absolutely no incentive to do something useful, something better than was done last month or last year, no incentive to even show up, no incentive to keep customers happy, no incentive to reduce costs. Those things don’t benefit the government employees in any way. But it does affect all the rest of us. That’s why we’re mad…among other things.

Your misconceptions are baffling.

 

[SyroMalankara]

When private firms raise prices, they do so at risk of losing business (and even business solvency) to other firms that don’t have to raise prices.

The goal of a public entity is to break even or below budget, to maximize benefit to the taxpayer. Would you prefer not to have reliable water, gas, sewage, police, fire, ems?

The government solution is to raise costs (salaries, benefits) in a way totally unrelated to what would happen in a free market. And there are no penalties to be paid…at least by the government employees.

what country do you live in? A private sector Executive Director of a successful, money making firm, of 2500 employees would make what $450k - $1M? A public sector XD makes avg $80-200k (varies by location, small entity vs larger). A good example is MDs in the DOD, a cardiologist in private sector makes $500k easily, DOD $180k+30k housing.

I take it that you didn’t like my plan?

Like? Laughable

 

[signit]

But with the government - pay 100% for the rest of your life starting immediately, never worry about going out of business. Need more money to pay people for not working? No problem, raise taxes. Cut services, raise taxes, cut more services. Raise taxes. Because government employees are special.

I’ve always wondered that, too.

Families have to live within their means; you’d think that government could live within its means.

If your company isn’t making money, you don’t get an increase this year. You might even lose your job. But if the state is having a fiscal crisis they can always raise taxes on everyone else to pay for it.

Notice how the politicians especially vote themselves even more “special” priviliges. For example, the federal House and Senate have special health plans, just for them. And someone pointed out that (some/all?) government employees don’t get Social Security. That’s because they have a special better plan for themselves, and the rest of us get SS.

This was changed in the 1980s.

Federal employees (including members of Congress) now pay into Social Security.

But, they also have their own pension system, which is not fully funded by their own contributions.

Social Security receives no general revenues; if the Social Security fund looks like it’s running out of money Congress will cut benefits.

Also, it must be pointed out that a lawyer with the ability and experience required to be a federal judge could make multiples of a judge’s salary in private practice. At big New York firms, a first-year associate makes as much or more than a U.S. District Court judge. Seems like the pension is only fair (and it’s mandated by the Constitution, so we can’t abolish federal judges’ pensions without a constitutional amendment).

Another example: starting salary for a public sector lawyer is about $40,000. That’s not much for four years of college and three years of law school.

I’d suggest, though, that that salary is not that far out of line.

There’s one big law firm in New York that makes the news every year about what their starting salary is. But that’s not typical of law school grads. These jobs are largely open to the graduates at the top of the class and/or who attended the “top 14” schools. Three years of law school is not a guarantee of a job.

I have to say, I’m a bit surprised to see someone advocating abolition of pensions, even government pensions, in the Social Justice forum.

I support “social justice.” But I don’t especially support nickel-and-diming the working class with higher taxes.

Both my mother and my father were government employees. My mother was a teacher (who was very concerned about her students and taught, voluntarily, in the toughest schools), my father was a judge. Both received pensions.

My husband works in the public sector. He makes much, much less than what would be available to him if he worked private sector. He does have certain perks, though, that’s true - he has good benefits (no pension, though) and he isn’t required to be a workaholic. He’s also not union.

I’ll be the first to agree, public employees should receive compensation that is fair.

My uncle was a schoolteacher. He came from a poor family and struggled to pay for his education. If his job as a teacher enabled him to have a middle-class lifestyle for himself and his family, that’s great; he’s entitled to it.

But I don’t think people like that are exactly poor, either; he was able to afford a nice house on the lake and always seemed to have plenty of money on hand to help his kids out when they needed it. And his pension looked like a lot of money to my mother who got a small fraction of that amount.

 

[Usagi]

Politicians promise a lot of things that don’t happen. I wonder why they promised all this to government workers and not everybody?

Er, because government workers are employees of the government, and the government generally (thank goodness) doesn’t legislate the specifics of compensation for private sector employees?

This isn’t a “promise” as in “If elected, I’ll put a chicken in every pot.” This is a “promise” as in “This is the agreement under which these people took these jobs.” They should receive the agreed-upon benefits if at all possible.

Yes, most private sector employers no longer offer pension plans. That is not the fault of people who do receive pension plans.

Yes, a private company can go out of business and then promised pensions will not be paid. This is generally regarded as a terrible failing on the part of such a company and great harm to those employees. It’s not something we should be wanting to inflict on others.

Yes, it may be literally impossible to pay out all of the promised pensions. That is the one case in which some lesser compensation would clearly have to be negotiated, and governments should learn that lesson and not promise so extravagantly in the future.

But if someone has already traded decades of his or her life on, in part, the promise of a generous pension, we should not be looking for ways to take that away.

 

[ricmat]

Public sector retirement plans that I’m familiar with come with 35 years of service. 20 years would be for a select few: police officers, firefighters, others with dangerous, physically taxing jobs.

That’s really nice. However, private sector jobs that are dangerous, and physically taxing typically come with no pensions at all. My wife just retired from a short public teaching career, and at least in that district, you could retire with 20 years service at age 55.

 

[ricmat]

Your misconceptions are baffling.

This is ECON 101. How capitalism works. How the world works. It’s not baffling, if you watch learn and listen.

 

[ricmat]

The goal of a public entity is to break even or below budget, to maximize benefit to the taxpayer. Would you prefer not to have reliable water, gas, sewage, police, fire, ems?what country do you live in?

I live in the US, in a sub-state of reality.

That may be the goal written on a poster on the wall, but actions count more than what posters on the wall say. Private firms deliver good products or go out of business. And they generally speaking do it with less every year. Look at the cost of things like TVs or cell phones. Even cars, I bought a car in 2012 that was basically the same model I bought in 2002 and it was the same price but with more features. Does the government do that? (Answer is NO).

A private sector Executive Director of a successful, money making firm, of 2500 employees would make what $450k - $1M? A public sector XD makes avg $80-200k (varies by location, small entity vs larger).

A private sector CEO could make more or less than that, but it’s about right. Is the public sector XD that you’re talking about in charge of all aspects of “the company (or department or whatever it’s called)?” 2500 employees? Responsible for marketing, sales, advertising, engineering, accounting, production, quality control, etc? Do public sector XDs ever get fired (as in out the door) when those “poster goals” are not met? Do the poster goals actually have any measurement criteria involved such as “The company will do as much or more than you did last year with 20% fewer funds?” Or how about “The company will do 20% more with the same funding?” Will the “failure” of your XD result in the possible loss of 2500 jobs?

A good example is MDs in the DOD, a cardiologist in private sector makes $500k easily, DOD $180k+30k housing.

Like? Laughable

I’m not familiar with the details of MDs, but much of what I said in the paragraph above would apply. Also, a private sector MD needs to rent (or buy) space for his office, pay his secretary and nurses, pay someone to do his office accounting, pay for malpractice insurance, and so forth, all out of his $500K (or whatever) salary. Do government MDs have those expenses?

 

[SyroMalankara]

I live in the US, in a sub-state of reality.

That may be the goal written on a poster on the wall, but actions count more than what posters on the wall say. Private firms deliver good products or go out of business. And they generally speaking do it with less every year. Look at the cost of things like TVs or cell phones. Even cars, I bought a car in 2012 that was basically the same model I bought in 2002 and it was the same price but with more features. Does the government do that? (Answer is NO).

Not true. You cant make a blanket statement on all governmental agencies like that. If you paid the same price as 2002 for a better car in 2012, you either overpaid in 02 or bought a bargain in 12.

A private sector CEO could make more or less than that, but it’s about right. Is the public sector XD that you’re talking about in charge of all aspects of “the company (or department or whatever it’s called)?” 2500 employees? Responsible for marketing, sales, advertising, engineering, accounting, production, quality control, etc?

ULTIMATELY, yes.

Do public sector XDs ever get fired (as in out the door) when those “poster goals” are not met?

yes, most I interacted with revolve 4-7 years, and no massive severe. Sure, exceptions exist. They should be eliminated.

Do the poster goals actually have any measurement criteria involved such as “The company will do as much or more than you did last year with 20% fewer funds?” Or how about “The company will do 20% more with the same funding?” Will the “failure” of your XD result in the possible loss of 2500 jobs?

it could result in imprisonment for improper use of funds, in addition to personal financial and civil penalties.

I’m not familiar with the details of MDs, but much of what I said in the paragraph above would apply. Also, a private sector MD needs to rent (or buy) space for his office, pay his secretary and nurses, pay someone to do his office accounting, pay for malpractice insurance, and so forth, all out of his $500K (or whatever) salary. Do government MDs have those expenses?

Do you think the military should be privatized to save money? What about police?

 

[on_the_hill]

That’s really nice. However, private sector jobs that are dangerous, and physically taxing typically come with no pensions at all. My wife just retired from a short public teaching career, and at least in that district, you could retire with 20 years service at age 55.

Then the private sector employees ought to unionize and bargain a better deal.

 

[JimG]

Those looking for better pay and benefits might try being admitted to the Mississippi River branch pilots union. It can be dangerous work especially transferring from pilot boats to large ships in the lower Mississippi. But the pay is upward of $300K, although their latest raise is being contested.

“The Advocate reports the raise would boost their average annual pay more than $50,000 over four years, to $473,000 in 2019”.

nola.com/business/index.ssf/2015/10/lawsuit_filed_to_block_raises.html

 

[SyroMalankara]

Those looking for better pay and benefits might try being admitted to the Mississippi River branch pilots union. It can be dangerous work especially transferring from pilot boats to large ships in the lower Mississippi. But the pay is upward of $300K, although their latest raise is being contested.

“The Advocate reports the raise would boost their average annual pay more than $50,000 over four years, to $473,000 in 2019”.

nola.com/business/index.ssf/2015/10/lawsuit_filed_to_block_raises.html

All it tales is 15-30 yrs of advancement as a boat captain and master. Its the equivalent of maritime phD with high risk of loss of life and material

 

[ricmat]

Then the private sector employees ought to unionize and bargain a better deal.

Your comment is similar to many that have been posted already. I’ll give you my own personal thoughts on it. I would not join a union because:

I want my pay, my “value”, my promotions, to be determined by how hard I work, what I accomplish, and my actual real worth to my employer, as determined by fair competition versus other employees or potential employees.

In a union, my pay would be determined by how long I worked there, my devotion to the union, and a pay scale that is totally disconnected from corporate financial realities, or my real worth . Even though it might be “in my better financial interests”, the union kind of arrangement strikes me as basically dishonest. “We negotiated these salaries and benefits, therefore, we are actually worth it.” I don’t think I could talk myself into believing that.

Early in my career, I had a job with a large well known company, going to mostly union manufacturing plants to debug and repair electronics controls. Because it was a union shop, I couldn’t actually take my test equipment and hook it into the innards by myself. I had to point at the right spot and tell the union guy “hook it up right here.” And so forth. If I did it myself, he’d scream “You’re taking my job away from me;” In case you can’t imagine how slow that made things happen, I’ll tell you, it made the repairs take 3-4 times as long as it should have. And it cost his company 3-4 times more to have it fixed. Not surprisingly, they went out of business a few years later.

Later in my career, I was a middle management program manager at this same large well known company. Traveling all over the world negotiating contracts, writing specifications, eating really gross food to be polite, etc. I read in the paper one day that union auto workers on the assembly line who placed the tires on the wheels and tightened the lug nuts got more than 2X my pay and benefits. I thought, that (excessive pay and benefits) isn’t going to last long. And it didn’t. The auto companies went out of business. And when they came back into business, a lot of the union jobs had been taken over by robots. Look at Detroit now versus 50 years ago. Thank you unions. Yes, let’s all join unions then they can do to the rest of the country what they did to Detroit.

Fairly recently (last 5 years or so), I read about 2 union based things in NYC. There is apparently a fairly large building just chock full of teachers, but no students. The teachers sit around all day, paid to do nothing. They get regular annual pay raises, increased benefits, and retire with great benefits. The reason for this is that teachers have no students is that they can’t be allowed into the classroom because they are either incompetent, or a danger to the students. Why not fire them? Because they’re in the union. Who pays for it? The taxpayers. Hooray for the unions.

The second NYC item involved the NY Symphony Orchestra (actual name is - I don’t remember). It turns out that the union guys who move the chairs around on the stage, and push the button to make the curtain go up and down make over $200K per year. Meanwhile, the “first violin”, the most prestigious member of the Orchestra itself gets less than half that, and the others even less. So I ask - are those paying to hear the orchestra play music interested in any way about the precise arrangement of the chairs? Are they paying to see it, or admire the way it’s been done? (In case you’re not sure, the answer is that they pay to hear the music played by the orchestra.) But Hooray for the Union! Look what they’ve done for the chair pushers. So should the musicians join their union? They’d get paid a lot more. At least until people couldn’t afford to listen to them any more.

Sorry for the long post. I realize that others have had different experiences, but I wanted to share those items.