Thursday, December 22, 2011
Public worker pensions are in trouble across the country - and there's little sympathy these days for people who generally have a better gig than Social Security. Of course, remember that public workers neither pay into nor receive Social Security, so their pension is all they have. And in many places the public pensions are written into the state constitutions, so the state is constitutionally mandated to pay, regardless of what revenues must be raised to do so. And that can be a recipe for fiscal disaster.
I tend to get into trouble with public workers when I argue that the retirement benefits for many are untenable for the future. Retiring at the age of 55 and drawing 80% of salary for thirty years is a hell of a deal for workers, but ultimately not a sound financial strategy for the whole system. Workers will claim they made a deal to accept lower wages in exchange for better benefits and earlier retirement. Somehow, I don't see that as the official statement on the contracts over the years, though workers have accepted it as gospel.
The reality now is that public workers are not necessarily accepting sub-market wages in exchange for a nice retirement deal. Certainly, statistics show higher wages in the private sector for comparable education and experience. But that's not really the point. There is no guarantee that all public workers would be making more if they hadn't "sacrificed the big bucks" for public service. And, wages they "could be making" are really beside the point.
The point is no retired teacher should be drawing a $150,000 a year in pension for thirty years.