A $76,000 Monthly Pension: Why States and Cities Are Short on Cash(nytimes.com)
nytimes.com
A $76,000 Monthly Pension: Why States and Cities Are Short on Cash
https://www.nytimes.com/2018/04/14/business/pension-finance-oregon.html
276 comments
My problem is that the pensions give the government a way of paying employees low and kicking the can down the road where later taxpayers bare the brunt of obligations that they had no say in.
Just pay government employees more so taxpayers, the government, and potential employees can all go in knowing the trade offs and let the employees manage their own retirement like everyone else.
Of course I don't have a problem with military families being provided cheap healthcare.
Just pay government employees more so taxpayers, the government, and potential employees can all go in knowing the trade offs and let the employees manage their own retirement like everyone else.
Of course I don't have a problem with military families being provided cheap healthcare.
Or pre-fund the pensions at the time the employee is working. I believe there are laws now requiring this, which is getting the US postal service upset because they suddenly have to pay a lot into pension funds now instead of later.
The US postal service pension funding requirement was made purposely onerous by Congress, and is far more conservative than necessary (by design). I would recommend against using it as an example of proper pension governance.
https://www.uspsoig.gov/blog/be-careful-what-you-assume
https://www.govexec.com/pay-benefits/2016/12/obama-administr...
https://www.uspsoig.gov/blog/be-careful-what-you-assume
https://www.govexec.com/pay-benefits/2016/12/obama-administr...
They do prefund pensions - they just prefund them using an unrealistic rate of return. Their Is nothing wrong with funding present level of liability based on the expected future value as long as it's not based on an unrealistic rate of return.
I don't think you understand why military benefits are the way they are.
And I am not up for writing an opus on it in comments here. Suffice it to say that raising your right hand and swearing to give your life for your country is a little different from your standard job.
And I am not up for writing an opus on it in comments here. Suffice it to say that raising your right hand and swearing to give your life for your country is a little different from your standard job.
I never said that we shouldn't give the military the benefits they get. All of the benefits except for pensions are benefits accounted for now and part of the current budget - they are not based on bad math.
I said you should pay government emmployees more now and let them save for their own retirements. You should want that instead of being forced to stay in for 20 years to get any retirement benefits.
And being in the military is statistically not the most dangerous job.
https://www.fool.com/investing/general/2014/03/15/dying-for-...
I said you should pay government emmployees more now and let them save for their own retirements. You should want that instead of being forced to stay in for 20 years to get any retirement benefits.
And being in the military is statistically not the most dangerous job.
https://www.fool.com/investing/general/2014/03/15/dying-for-...
Yeah, we are talking past each other.
It isn't the danger per se. I'm aware other jobs can maim or kill you. But uniquely the military can ask you to die for the cause. There is a difference there.
One of the reasons the military takes care of family is so military members can focus on the mission and not be distracted by worrying about such things.
The military medical system needs to exist to support the mission. In times of war, soldiers need medical care. Owning the facilities and having military medical personnel is essential to be able to trust that treatment.
So one of the reasons military families have access to free medical is because if you rest, you rust. Having doctors sitting around doing nothing waiting for war does not prepare them to handle the medical needs of a war time army.
Treating the families of the military members gives them a means to practice medicine so they stay sharp.
It's a very complex and elegant logic behind the decisions that have built the system we have currently. It is unlike just working for a paycheck. This is why words like duty and honor get used so much.
Maybe I will blog about it sometime. This probably just scratched the surface. And I don't think you get where I am coming from at all.
It isn't the danger per se. I'm aware other jobs can maim or kill you. But uniquely the military can ask you to die for the cause. There is a difference there.
One of the reasons the military takes care of family is so military members can focus on the mission and not be distracted by worrying about such things.
The military medical system needs to exist to support the mission. In times of war, soldiers need medical care. Owning the facilities and having military medical personnel is essential to be able to trust that treatment.
So one of the reasons military families have access to free medical is because if you rest, you rust. Having doctors sitting around doing nothing waiting for war does not prepare them to handle the medical needs of a war time army.
Treating the families of the military members gives them a means to practice medicine so they stay sharp.
It's a very complex and elegant logic behind the decisions that have built the system we have currently. It is unlike just working for a paycheck. This is why words like duty and honor get used so much.
Maybe I will blog about it sometime. This probably just scratched the surface. And I don't think you get where I am coming from at all.
I'm not arguing with you about any of the benefits that the military gives families in the present. Just that instead of pensions - pay more.
One of the reasons for the pensions is that service can chew you up and spit you out.
My father had shrapnel in his head. Because of it, he couldn't get new life insurance. It caused blind spells which caused him to quit at least one job that I know of. He was sometimes unemployed for months at a time after leaving the army.
There are lots of veterans who are disabled and never get their act together again. You see high rates of homelessness.
Anyway, I am going to stop here. I don't think you have really understood anything I have said and my comments are being downvoted.
My father had shrapnel in his head. Because of it, he couldn't get new life insurance. It caused blind spells which caused him to quit at least one job that I know of. He was sometimes unemployed for months at a time after leaving the army.
There are lots of veterans who are disabled and never get their act together again. You see high rates of homelessness.
Anyway, I am going to stop here. I don't think you have really understood anything I have said and my comments are being downvoted.
There is already a model for that - disability. If you are in the private sector and no longer able to work after you have put into social security, you are eligible for disability.
I'm also not arguing against former soldiers being eligible for additional compensation in the form of separate disability insurance if they were injured in the line of duty.
I'm also not arguing against former soldiers being eligible for additional compensation in the form of separate disability insurance if they were injured in the line of duty.
Is there a standard measure of disposable income after taxes and necessities like food, housing, education, healthcare? It seems comparing how much people have available for discretionary spending would be useful in many cases.
I'm not aware of one and your question touches on some of the hidden forms of compensation that can be hard to measure (and can vary over time for the same person -- for example, we were sometimes in housing on base and sometimes not). The below examples are off the top of my head from memory as a military spouse and may be very out of date.
The military will cover 75% of tuition for active duty members. Most states charge military members in-state tuition. When my ex took college classes at low cost community colleges in California, his books typically cost more than tuition. His tuition was practically pocket change.
When he was stationed in a designated war zone, we got a tax break for that.
When we were in on base housing, we did not get a housing allowance. We also did not get a water bill or electric bill. We only had to pay for a phone.
While stationed in Germany, I got free dental care on base even though spouses usually don't get free dental anymore. Similarly, we could have gotten free braces for my oldest son while stationed at a different remote location.
When shopping on base at a px or bx, you pay no taxes. They may or may not also have lower prices on some items.
I routinely had a Power of Attorney so I could handle my husband's affairs while he was deployed. I never paid for such. We had access to legal assistance for free for such items.
Medical coverage for the family is free, including out patient doctor's visits and most prescription medication. Further, I am alive when by all rights I should be dead in part because we got stationed at Travis AFB just as the shit was really hitting the fan. The hospital there is a teaching hospital that serves all military branches for eight western states.
Most people have no idea how well developed the military medical system is and the sorts of resources that can be made available in cases of serious medical crisis. I have a genetic disorder that was diagnosed late in life. My husband's medical benefits alone were practically like a second income for us because I was in the ER all the time at zero cost. This was true even when visiting relatives who happened to live near military bases. I just went to the nearest military medical facility, even if it was a different branch of the military.
Military personnel are sort of outcasts when deployed elsewhere in the US. We tend to not have a local bank account and military spouses have high unemployment rates because locals don't want to hire them. The military does what it can to make up for that, such as offering free check cashing on base at the bx or px.
When in on base housing, I was able to check out a lawn mower and other items for free for purposes of maintaining the yard to the standard required by the military. I didn't have to buy any of those things. They even provided grass seed for free so we could reseed our yard when the 115 degree summer heat in the High Desert killed our grass.
There are so many things you get for free in the military for just flashing your ID card that some people who leave after a single stint are shocked at how poor they are after leaving. A much higher percentage of a military check is discretionary than is the norm for most jobs. If you stay in 20 years or more, you will get retirement benefits without doing any retirement planning or savings whatsoever.
As a young military spouse, 90% of my budgeting concerns was making sure we had enough food in the house. Retirement planning, stressing about medical bills and other normal issues for most Americans was simply not a part of my life.
The military will cover 75% of tuition for active duty members. Most states charge military members in-state tuition. When my ex took college classes at low cost community colleges in California, his books typically cost more than tuition. His tuition was practically pocket change.
When he was stationed in a designated war zone, we got a tax break for that.
When we were in on base housing, we did not get a housing allowance. We also did not get a water bill or electric bill. We only had to pay for a phone.
While stationed in Germany, I got free dental care on base even though spouses usually don't get free dental anymore. Similarly, we could have gotten free braces for my oldest son while stationed at a different remote location.
When shopping on base at a px or bx, you pay no taxes. They may or may not also have lower prices on some items.
I routinely had a Power of Attorney so I could handle my husband's affairs while he was deployed. I never paid for such. We had access to legal assistance for free for such items.
Medical coverage for the family is free, including out patient doctor's visits and most prescription medication. Further, I am alive when by all rights I should be dead in part because we got stationed at Travis AFB just as the shit was really hitting the fan. The hospital there is a teaching hospital that serves all military branches for eight western states.
Most people have no idea how well developed the military medical system is and the sorts of resources that can be made available in cases of serious medical crisis. I have a genetic disorder that was diagnosed late in life. My husband's medical benefits alone were practically like a second income for us because I was in the ER all the time at zero cost. This was true even when visiting relatives who happened to live near military bases. I just went to the nearest military medical facility, even if it was a different branch of the military.
Military personnel are sort of outcasts when deployed elsewhere in the US. We tend to not have a local bank account and military spouses have high unemployment rates because locals don't want to hire them. The military does what it can to make up for that, such as offering free check cashing on base at the bx or px.
When in on base housing, I was able to check out a lawn mower and other items for free for purposes of maintaining the yard to the standard required by the military. I didn't have to buy any of those things. They even provided grass seed for free so we could reseed our yard when the 115 degree summer heat in the High Desert killed our grass.
There are so many things you get for free in the military for just flashing your ID card that some people who leave after a single stint are shocked at how poor they are after leaving. A much higher percentage of a military check is discretionary than is the norm for most jobs. If you stay in 20 years or more, you will get retirement benefits without doing any retirement planning or savings whatsoever.
As a young military spouse, 90% of my budgeting concerns was making sure we had enough food in the house. Retirement planning, stressing about medical bills and other normal issues for most Americans was simply not a part of my life.
> military spouses have high unemployment rates because locals don't want to hire them
May I ask why? Because they know you're going to move soon, or any other reasons?
May I ask why? Because they know you're going to move soon, or any other reasons?
Yes, they know you are highly likely to move again soon. But really it should say in part because... The benefits package makes living on one income viable. This contributes to spouses being less motivated to job hunt.
Another factor is that frequent moves make it nigh impossible to develop a real career. If you have a serious education and want a professional career, this is largely out of reach for most military spouses. Nursing is just about the only exception that I know of. Nursing pays fairly well and there is typically a shortage of nurses just about anywhere you go. If you want any other kind of serious career, being a military spouse is a huge obstacle to working that out.
If you are content to deliver papers or wait tables, you can probably get those kinds of jobs. But better jobs mostly don't want you (edit: and just may not have openings when you need them or may not exist at all in some locations).
Another factor is that frequent moves make it nigh impossible to develop a real career. If you have a serious education and want a professional career, this is largely out of reach for most military spouses. Nursing is just about the only exception that I know of. Nursing pays fairly well and there is typically a shortage of nurses just about anywhere you go. If you want any other kind of serious career, being a military spouse is a huge obstacle to working that out.
If you are content to deliver papers or wait tables, you can probably get those kinds of jobs. But better jobs mostly don't want you (edit: and just may not have openings when you need them or may not exist at all in some locations).
Got it, thanks. I suppose that the kinds of online jobs digital nomads do would be an interesting alternative, but those aren't for everybody.
Digital nomads were not a thing 30 years ago when I was a young military wife.
However, I do digital nomad type work currently. It fits in nicely with the kinds of expectations I have for my life that are rooted in having been a military wife.
There are also times when I wish a regular job was a viable option for me because there are certainly downsides to what I do.
However, I do digital nomad type work currently. It fits in nicely with the kinds of expectations I have for my life that are rooted in having been a military wife.
There are also times when I wish a regular job was a viable option for me because there are certainly downsides to what I do.
Yes, I remember reading about your story. I suppose it's good that there are those kinds of jobs now. Good luck!
Anecdotally, some people just don't like the people in the armed services.
Lots of military spouses have resumes that look a lot like ones for homemakers: gaps in employment, changing jobs regularly, involvement in multi-level marketing, etc. Many of those things are red flags in their own right.
Lots of military spouses have resumes that look a lot like ones for homemakers: gaps in employment, changing jobs regularly, involvement in multi-level marketing, etc. Many of those things are red flags in their own right.
From my point of view is that they are also well maintained. Imagine being a young spouse and your military spouse is earning more than enough to keep Both of you happy. Why pursue something outside of Netflix and chill? That and if a deployment comes around, you can just go back home to your parents house while saving all that money for rent.
source: was AD Marine.
source: was AD Marine.
> This means that two people arguing about it can both be right and unable to see the other point of view.
Thanks for sharing this. This is something that has been extremely important for me to realize. When it comes to holding strong and passionate view points on any topic. I have to stop and understand that there is a reason that the person with an opposing view point may also be right from the perspective of their world view and I’m simply blind to it because I may never fully be able to understand their world view and they may never understand mine.
We all go through anywhere from slightly to drastically different life experiences that inform our world view. And it’s something I force myself to be more conscious about. But thank you for bringing this up in your context and experience.
Thanks for sharing this. This is something that has been extremely important for me to realize. When it comes to holding strong and passionate view points on any topic. I have to stop and understand that there is a reason that the person with an opposing view point may also be right from the perspective of their world view and I’m simply blind to it because I may never fully be able to understand their world view and they may never understand mine.
We all go through anywhere from slightly to drastically different life experiences that inform our world view. And it’s something I force myself to be more conscious about. But thank you for bringing this up in your context and experience.
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Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated. Yes it's easy to paint an ugly picture of the privileged outliers, but I suspect the correlation between school and infrastructure cuts and money going straight into rich pensioners pockets is not quite as cut and dried as NYT would have us believe.
In California "More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived."
http://www.latimes.com/projects/la-me-pension-crisis-davis-d...
This seems like a pretty big budget item, especially since most CA government pension funds haven't achieved their expected 7.5% return consistently for years if not decades. Eventually the money to pay for these large pensions comes from money that would have been spent on other things.
This seems like a pretty big budget item, especially since most CA government pension funds haven't achieved their expected 7.5% return consistently for years if not decades. Eventually the money to pay for these large pensions comes from money that would have been spent on other things.
In addition, it's not necessarily salary of the last year - it's income from the state. Which, until a few years ago, included overtime and unused sick/vacation days. The incentives were totally crazy - cities and counties paid salaries up front, but the state generally paid pensions. So it was common practice to divert all overtime to employees who were going to retire that year, to spike their income and get them a higher pension. With sick days and overtime, it was not unheard of for the calculated pension to end up paying more than the actual salary did before retirement.
To add insult to injury, Senate Bill 400 under Gray Davis (who was later recalled in a special election) retroactively increased pension payments for people who had already retired and started drawing pensions. And CALPERS keeps two sets of books, dramatically overstating the actual performance of their investments. [1]
It's a horrible mess - nobody wants to strip the earned retirement away from retirees, but the math just doesn't work out. When the market provides better-than-predicted returns, employee contributions are reduced and benefits are increased. When all of those extra returns are wiped out by a bubble popping, everything stays the same and the difference is made up by taxpayers. And it's incredibly attractive for politicians to buy the support of unions and their membership, when the cost won't be paid until long after they're termed out of office.
[1] https://www.nytimes.com/2016/09/18/business/dealbook/a-sour-...
To add insult to injury, Senate Bill 400 under Gray Davis (who was later recalled in a special election) retroactively increased pension payments for people who had already retired and started drawing pensions. And CALPERS keeps two sets of books, dramatically overstating the actual performance of their investments. [1]
It's a horrible mess - nobody wants to strip the earned retirement away from retirees, but the math just doesn't work out. When the market provides better-than-predicted returns, employee contributions are reduced and benefits are increased. When all of those extra returns are wiped out by a bubble popping, everything stays the same and the difference is made up by taxpayers. And it's incredibly attractive for politicians to buy the support of unions and their membership, when the cost won't be paid until long after they're termed out of office.
[1] https://www.nytimes.com/2016/09/18/business/dealbook/a-sour-...
Public sector pensions should be run by a Federal Reserve-like "appointed but not elected" system.
As you've stated, actuarial calculations + short term politics don't mix.
As you've stated, actuarial calculations + short term politics don't mix.
I think the economical argument that is most fundamental is that public benefits are a promise of the states future revenue. It is like a bond with no adjustment to risk.
If people like public pensions let them have it, but let only people in their sector pay for it. It is absolutely immoral for someone to pay a tax to fulfill the promise of a decade old decision on someone else. Few things show how clearly people forget the State doesnt have money of its own than thinking that the state can fulfill an obligation without taking more from the innocent bystanders.
Defined benefit plans should have a defined tax scope, and if they fail, they go bankrupt and thats it.
If people like public pensions let them have it, but let only people in their sector pay for it. It is absolutely immoral for someone to pay a tax to fulfill the promise of a decade old decision on someone else. Few things show how clearly people forget the State doesnt have money of its own than thinking that the state can fulfill an obligation without taking more from the innocent bystanders.
Defined benefit plans should have a defined tax scope, and if they fail, they go bankrupt and thats it.
Even then, the risk of overly rosy prediction of returns by bureaucrats is high. A defined contribution system, plus a social safety net (medicare, social security, etc) is a better system.
A 7.5% return seems irrationally optimistic for something like a pension fund. Is that really what they budgeted on?
You should see how they abused the dotcom bubble to push up their bogus projections:
"Davis, who was elected in 1998 with more than $5 million in campaign contributions from public employee unions, says that if he had it to do over, he would not support the pension improvements."
http://www.latimes.com/projects/la-me-pension-crisis-davis-d...
"... how in 1999 the California Public Employees’ Retirement System orchestrated the approval of a 50 percent retroactive pension increase for state employees amounts to an autopsy of a public-policy crime. It is literally incredible that CalPERS told the Legislature that such a huge gift of money would have little or no long-term cost to state taxpayers because the dot-com boom then driving the stock market sky-high would never end."
http://www.sandiegouniontribune.com/opinion/sd-calpers-menda...
[2009] Californians questioning why their state budget is in perpetual red ink need look no further than the California Public Employees’ Retirement System’s (CalPERS) implicit forecast in 1999 that the Dow Jones Industrial Average would reach 25,000 by 2009, 595,000 by 2049 and 28 million by 2099 and that its investment earnings would rise alongside.
http://www.sandiegouniontribune.com/sdut-pensions-and-partyi...
"Davis, who was elected in 1998 with more than $5 million in campaign contributions from public employee unions, says that if he had it to do over, he would not support the pension improvements."
http://www.latimes.com/projects/la-me-pension-crisis-davis-d...
"... how in 1999 the California Public Employees’ Retirement System orchestrated the approval of a 50 percent retroactive pension increase for state employees amounts to an autopsy of a public-policy crime. It is literally incredible that CalPERS told the Legislature that such a huge gift of money would have little or no long-term cost to state taxpayers because the dot-com boom then driving the stock market sky-high would never end."
http://www.sandiegouniontribune.com/opinion/sd-calpers-menda...
[2009] Californians questioning why their state budget is in perpetual red ink need look no further than the California Public Employees’ Retirement System’s (CalPERS) implicit forecast in 1999 that the Dow Jones Industrial Average would reach 25,000 by 2009, 595,000 by 2049 and 28 million by 2099 and that its investment earnings would rise alongside.
http://www.sandiegouniontribune.com/sdut-pensions-and-partyi...
Yeah it is pretty bad. For a long time they were even projecting an 8.25% return according to the LA Times article I linked above. They used this number to justify the large benefit increases enacted when the stock market was doing well in the late 90s.
They made nowhere close to that and now state and local governments in California contribute over $50bn annually to CalPERS alone.
They made nowhere close to that and now state and local governments in California contribute over $50bn annually to CalPERS alone.
> This seems like a pretty big budget item, especially since most CA government pension funds haven't achieved their expected 7.5% return consistently for years if not decades.
That seems like the big story: making plans assuming such a high average is simply malpractice. There are employee behaviors worth changing (e.g. the common problem of juicing final salary using overtime) but most of the blame should go to the people who signed off on that plan.
That seems like the big story: making plans assuming such a high average is simply malpractice. There are employee behaviors worth changing (e.g. the common problem of juicing final salary using overtime) but most of the blame should go to the people who signed off on that plan.
They’re the same people. These policies were heavily lobbied for by public unions.
That leaves out the other side: who agreed to the deal and dishonestly pretended magic free money would pay for it? The unions didn’t force the state to make tax cuts below fiscally prudent levels.
When one party is funded by the public service unions, and they are in power, what do you think is going to happen.
> When one party is funded by the public service unions
At least in the U.S. we don't have parties which are funded by unions. The unions contribute, and get out the vote, but that's rarely uniformly going to one party which gets a veto-proof majority everywhere. You see divides — e.g. the teachers unions lean Democratic but the police, firefighters, and prison guards lean Republican — and a lot of local politics showing counterexamples for any of those trends.
It's also not really the point I was interested in, namely that several generations of officials choose to cook the books so they could make politically popular moves without raising taxes or even cutting them. This is not a problem specific to pensions and it's definitely not limited to a single party as e.g. three decades of Republican magical thinking about tax cuts paying for themselves should demonstrate.
At least in the U.S. we don't have parties which are funded by unions. The unions contribute, and get out the vote, but that's rarely uniformly going to one party which gets a veto-proof majority everywhere. You see divides — e.g. the teachers unions lean Democratic but the police, firefighters, and prison guards lean Republican — and a lot of local politics showing counterexamples for any of those trends.
It's also not really the point I was interested in, namely that several generations of officials choose to cook the books so they could make politically popular moves without raising taxes or even cutting them. This is not a problem specific to pensions and it's definitely not limited to a single party as e.g. three decades of Republican magical thinking about tax cuts paying for themselves should demonstrate.
How is it possible that they can retire on 90% of their peak pay? It seems that it's based off of years of service instead of quality of service... Since the longer you work I assume the higher you get paid.
Even worse, it includes overtime comp, so they can do a year of crazy OT, earn a lot extra that year, then retire with that year as a basis.
Holy crap! Who thought this was a good idea? Didn't no one object or at least raise questions when this was floated? I get paid hourly, and I can't charge a single hour more than 40 a week, without having to justify it.
How is this not a scam?
Public benefits in general are a scam. They are not funded by the workers tax, its funded by everyones taxes.
> How is it possible that they can retire on 90% of their peak pay?
Because the pension formula is an age-based benefit factor times years of service; for the “2% at 55” plan, the benefit factor ranges from 1.426% at age 50 to 2% at 55 (hence the name) to 2.418% at 63+.
So someone retiring at 63+ with 37¼ years of service will get just over 90%.
But that's a plan that is common to run of the mill civil service. Public safety pensions tend to have higher benefit factors at the same age (but top out, in benefit factor terms, sooner), so that level can be reached earlier.
> It seems that it's based off of years of service instead of quality of service...
Job type will effect which plan you are in.
Because the pension formula is an age-based benefit factor times years of service; for the “2% at 55” plan, the benefit factor ranges from 1.426% at age 50 to 2% at 55 (hence the name) to 2.418% at 63+.
So someone retiring at 63+ with 37¼ years of service will get just over 90%.
But that's a plan that is common to run of the mill civil service. Public safety pensions tend to have higher benefit factors at the same age (but top out, in benefit factor terms, sooner), so that level can be reached earlier.
> It seems that it's based off of years of service instead of quality of service...
Job type will effect which plan you are in.
I don't get this entitlement to retire at 55 or even 50. The retirement age should be 65.
You can't do most blue collar jobs at 50, much less 65. Shoveling asphalt, laying track, climbing on top or under heavy machinery, or chasing criminals is backbreaking work. The bodies of these people are permanently worn out by the time they hit 55.
Some are promoted into management, but most org charts are naturally pyramids, so there aren't enough of those jobs for everyone. So what to do with someone who is now too disabled for another blue collar job and is not a "competitive candidate" for a white collar job?
Some are promoted into management, but most org charts are naturally pyramids, so there aren't enough of those jobs for everyone. So what to do with someone who is now too disabled for another blue collar job and is not a "competitive candidate" for a white collar job?
They just get thrown in the unemployed pool and their income average drops dramatically with severe ripercussion on the final pension calculations
I know because in europe we have an unrealistic retirement age and my father like many other lost his job in the 2008-2012 crisis. Been unemployed ever since.
What happens is that in the 50-65 braket you’re a huge liability with severe productivity drops and companies tries to fire you at the first chance they get.
The european system at least has some protections against unreasonable terminations, so we aren’t fully appreciating the maddnes it would be a free job market, but company closing or figuring out how to fire the old employees in masse drops huge chunks of unemployed for life into the society.
This is becoming a serious issue and it is going to peak in 20 years when all the people like me that don’t enjoy full time national contracts and their protection will get past their productivity prime.
I know because in europe we have an unrealistic retirement age and my father like many other lost his job in the 2008-2012 crisis. Been unemployed ever since.
What happens is that in the 50-65 braket you’re a huge liability with severe productivity drops and companies tries to fire you at the first chance they get.
The european system at least has some protections against unreasonable terminations, so we aren’t fully appreciating the maddnes it would be a free job market, but company closing or figuring out how to fire the old employees in masse drops huge chunks of unemployed for life into the society.
This is becoming a serious issue and it is going to peak in 20 years when all the people like me that don’t enjoy full time national contracts and their protection will get past their productivity prime.
>"so we aren’t fully appreciating the maddnes it would be a free job market"
Of course not, as you probably wouldn't have this weird "retirement age" thing in the free-market absent government intervention. It's almost unheard of, and I'm not surprised. Reading through this thread of all the little "abuses" and "loopholes" that people are figuring out to game the Government-decreed system of retirement is very worrying and eye-opening.
Of course not, as you probably wouldn't have this weird "retirement age" thing in the free-market absent government intervention. It's almost unheard of, and I'm not surprised. Reading through this thread of all the little "abuses" and "loopholes" that people are figuring out to game the Government-decreed system of retirement is very worrying and eye-opening.
It is illegal to discriminate against anyone for being over 40 years old. That goes for hiring, firing, or promotion decisions. But, yes, it's hard to prove. Enforcement tends to be through civil lawsuits, too, which can be hard to fund and win.
I am just a casual observer of American politics and I don’t have an opinion on it. But here in Denmark the retirement age for a police officer is 65. That these people should be particular worn out is not something that is in public discussion.
Meh, I've known cops retiring at 55 they are in better shape than your typical 55 year old programmer, same with other blue collar workers. They may not be able to run down a 25 year old perp but physically they are above average.
With regular activity, your strength doesn't really start to decline until you're over 60.
Most government jobs are not blue collar jobs. They're bureaucrats. Half of the jobs in the public school system are administrative, not teaching.
I doubt much of cop work is chasing anyone. It's paperwork, sitting in the patrol car, investigating, following up, running license plates, sitting in court, canvassing the neighborhood, collecting evidence, guarding, routine sweeps, etc.
>...You can't do most blue collar jobs at 50, much less 65.
The vast majority of blue collar jobs are in the private sector and they don't get pensions with COLA and free medical when they turn 50 or 55. It doesn't seem fair that government workers are treated differently.
If someone is disabled there are government programs to help them, but I see little evidence that the many of those government workers retiring at 50 are actually disabled or incapable of work since many go on to have another career.
The vast majority of blue collar jobs are in the private sector and they don't get pensions with COLA and free medical when they turn 50 or 55. It doesn't seem fair that government workers are treated differently.
If someone is disabled there are government programs to help them, but I see little evidence that the many of those government workers retiring at 50 are actually disabled or incapable of work since many go on to have another career.
I agree, private sector workers should also get free healthcare.
I don't know how long that will take to actually pass. We can at least stop tying insurance to particular employers. Even in public sector jobs, it can be risky to switch jobs to live in a better neighborhood or work for a better boss (maybe one that doesn't discriminate based on age, for example).
I don't get how in a world where about 10% of the work goes into actually producing nescessities, and all the rest goes into 'make work' or even worse producing things that are health hazards or nearly straight to landfill junk, we still think we need to 'work more/longer/harder'!
Our 'productivity' has gone up by at least 2% per year. If you understand compounding you realize how significant that impact is. We're in front of a next generation work automation tsunami. The notion that 'working longer' is 'needed' as a consequence of anything besides a completely failed and derailed socio-economic model is absurd.
Our 'productivity' has gone up by at least 2% per year. If you understand compounding you realize how significant that impact is. We're in front of a next generation work automation tsunami. The notion that 'working longer' is 'needed' as a consequence of anything besides a completely failed and derailed socio-economic model is absurd.
The point of the article is there isn't enough surplus in the economy to pay these people for 40 years of retirement doing nothing.
It's funny. When people ask "where are the jobs?" the 1% respond "there's no work to do any more. robots are doing it all. automation means we're just too damn productive".
So, presumably there is a surplus.
Except no.
When people ask "where is the money?" the 1% respond "not enough money. Not enough surplus. You need to work until you are 68 now".
This contradiction is, oddly enough, rarely addressed.
Perhaps the problem isn't not enough work or not enough money. Perhaps they are both scapegoats for the real problem: wealth inequality driven by (among other things), tax evasion.
So, presumably there is a surplus.
Except no.
When people ask "where is the money?" the 1% respond "not enough money. Not enough surplus. You need to work until you are 68 now".
This contradiction is, oddly enough, rarely addressed.
Perhaps the problem isn't not enough work or not enough money. Perhaps they are both scapegoats for the real problem: wealth inequality driven by (among other things), tax evasion.
My point was there is masses of surplus, even too much, and it is just a distribution/allocation problem.
Yes, too much of it is going to pensions, for example.
> The notion that 'working longer' is 'needed' as a consequence of anything besides a completely failed and derailed socio-economic model is absurd.
Yes and no. I used to have this same intuition but think that people today, even on the low bracket, have a better life than the previous generations mid-wealthy had. Think how much an iphone would be worth in 1950, and think how many people have it today. It is definitely a great measure of wealth. Look at the internet that has made entertainment virtually free: if you have an internet connection there is no shortage of content ever. And we still produce more content! Who works to produce more content if you could not watch all of youtube right now!
We will turn to idleness only when the benefits we get by further work are less than the value of it. When auto-piloted airplanes with auto-drilled oil and auto-cooks and auto-hotels will make everyone travel a lot more and work less, but maybe at that point we will want to work to get our seat to go to Mars, or the latest art exhibition, or the greatest meal, or better life for your kids.
Yes and no. I used to have this same intuition but think that people today, even on the low bracket, have a better life than the previous generations mid-wealthy had. Think how much an iphone would be worth in 1950, and think how many people have it today. It is definitely a great measure of wealth. Look at the internet that has made entertainment virtually free: if you have an internet connection there is no shortage of content ever. And we still produce more content! Who works to produce more content if you could not watch all of youtube right now!
We will turn to idleness only when the benefits we get by further work are less than the value of it. When auto-piloted airplanes with auto-drilled oil and auto-cooks and auto-hotels will make everyone travel a lot more and work less, but maybe at that point we will want to work to get our seat to go to Mars, or the latest art exhibition, or the greatest meal, or better life for your kids.
the argument is that police work is more physically demanding and stressful, there's not too many desk jobs.
that said the benefits in some states are ludicrous, cops spike their payout the last few years and retire with $200k pensions and healthcare for life at 50, then move on to your 2nd careers. In the private sector even if you max out your 401k you'd never come close to that sort of retirement.
that said the benefits in some states are ludicrous, cops spike their payout the last few years and retire with $200k pensions and healthcare for life at 50, then move on to your 2nd careers. In the private sector even if you max out your 401k you'd never come close to that sort of retirement.
> In the private sector even if you max out your 401k you'd never come close to that sort of retirement.
Folks that could and would provide for their future selves like this via 401k programs cannot, as you point out, on account of contribution limits. Saving outside tax-advantaged accounts is certainly doable but hardly seems fair vs the pensioner's tax treatment mentioned in the article.
Folks that could and would provide for their future selves like this via 401k programs cannot, as you point out, on account of contribution limits. Saving outside tax-advantaged accounts is certainly doable but hardly seems fair vs the pensioner's tax treatment mentioned in the article.
Police work is not that dangerous....
https://fee.org/articles/by-the-numbers-how-dangerous-is-it-...
https://fee.org/articles/by-the-numbers-how-dangerous-is-it-...
I'm sure there are some jobs that are too physically demanding to do at 65. My dad retired from a manufacturing job at 55 because it was putting too much of a strain on his body. Luckily, my parents have always been frugal and my mom could retire at 55 with a teachers pension. But teachers pensions are a lot more reasonable 2% of final salary x years worked up to 30 years.
What's physically demanding about a teaching job?
From the post....
My dad retired from a manufacturing job at 55 because it was putting too much of a strain on his body
My mom retired because she could and they wanted to enjoy their life together while they were still relatively young.
My dad retired from a manufacturing job at 55 because it was putting too much of a strain on his body
My mom retired because she could and they wanted to enjoy their life together while they were still relatively young.
It should be plain unconstitutional to raise a tax on someone to pay a benefit to another. Whatever the court rules on the state not defaulting on its debts, pending that cost to someone that does not get, or want, the same benefit, should be equally pernicious for the law.
That can't work of course and will just lead to endless lawsuits that everything is a "benefit". Need more funds for education? Can't do it because you need to raise taxes on the people who aren't in middle school. Need funds for a new roads and their maintenance? Can't raise taxes because some people might never drive on that road or heck, don't even have a drivers license.
The impracticality of house the state mismanages its afairs should take a second seat to the fundamental rights of poeple. The people that pay a tax today to fund benefits are being robbed of money today, and of benefits in the future.
The way most pensions work, you collect a percentage of your 3-5 highest salaries ever, assuming you've been there long enough.
A good reason department heads in education shuffle every three years
A good reason department heads in education shuffle every three years
> The way most pensions work
Most pensions historically.
People entering the job market today (or even most of the millennial generation) were never offered these final salary pensions. Instead we get defined contribution plans, 401Ks, or nothing at all.
The key difference being that defined contribution plans (and 401Ks) are always only worth what was contributed (and investment performance profits). Things like your final salary, final position, or year of retirement (except for IRS rules that give significant tax advantages) don't mean very much except contributing more to these funds.
It is a better system from a larger society perspective (nothing is "loaned") but may result in few actually being able to afford retirement.
Most pensions historically.
People entering the job market today (or even most of the millennial generation) were never offered these final salary pensions. Instead we get defined contribution plans, 401Ks, or nothing at all.
The key difference being that defined contribution plans (and 401Ks) are always only worth what was contributed (and investment performance profits). Things like your final salary, final position, or year of retirement (except for IRS rules that give significant tax advantages) don't mean very much except contributing more to these funds.
It is a better system from a larger society perspective (nothing is "loaned") but may result in few actually being able to afford retirement.
>It is a better system from a larger society perspective (nothing is "loaned") but may result in few actually being able to afford retirement.
We'll see how this plays out with baby boomers retiring to give some indication as to what the younger generations may be up against.
We'll see how this plays out with baby boomers retiring to give some indication as to what the younger generations may be up against.
Arguably, historical birth rates affect a larger affect on the budget than retirement account shenanigans.
Plus those 3-5 highest years include overtime.
Bust your ass with overtime for 3 years and you can reap the benefit for the rest of your life.
I also recall the NYCFD had a problem with that and with people claiming disability right before retirement. The rate was something like 90%.
As a result a fireman who made a base of $100K per year (just a guess), might end up with a full pension at 50 that pays him/her $150k per year until death.
Bust your ass with overtime for 3 years and you can reap the benefit for the rest of your life.
I also recall the NYCFD had a problem with that and with people claiming disability right before retirement. The rate was something like 90%.
As a result a fireman who made a base of $100K per year (just a guess), might end up with a full pension at 50 that pays him/her $150k per year until death.
> As a result a fireman who made a base of $100K per year (just a guess)
I know that was a guess, but sounds crazy high for a fireman. In my rather well-off Western European country a fireman makes about $45k per year before European taxes and deductions.
I know that was a guess, but sounds crazy high for a fireman. In my rather well-off Western European country a fireman makes about $45k per year before European taxes and deductions.
$50K is more typical in the US for small cities and more rural firefighters.
In big cities, $100k is actually pretty typical. I found a link from 2014 suggesting you reach $100k after 5 years.[1]
[1]https://www.villagevoice.com/2014/02/12/the-fdny-is-a-force-...
In big cities, $100k is actually pretty typical. I found a link from 2014 suggesting you reach $100k after 5 years.[1]
[1]https://www.villagevoice.com/2014/02/12/the-fdny-is-a-force-...
If you click around on the author's publications, a theme is government pensions and government spending in general.
The numbers I found:
Oregon population: 4,000,000
Pension deficit 2017: $25,000,000,000
Per-capita share: $6,250
Assuming a large portion of the pensions will get spent on goods, services, and donations in state, it doesn't seem like a huge disaster, depending on how it grows.
Oregon population: 4,000,000
Pension deficit 2017: $25,000,000,000
Per-capita share: $6,250
Assuming a large portion of the pensions will get spent on goods, services, and donations in state, it doesn't seem like a huge disaster, depending on how it grows.
4 million people. How many working people with enough income to pay tax? Half? Less?
So maybe ~13K per tax paying person in outstanding pension obligations alone?
That is a big deal.
So maybe ~13K per tax paying person in outstanding pension obligations alone?
That is a big deal.
> So maybe ~13K per tax paying person in outstanding pension obligations alone?
Then that would be an obligation of about $300 per tax paying worker per year over their working lifetime. The average yearly salary in Oregon is $50,000. The article makes it out through anecdote that this is why they didn't have gas to send trucks out for a road repair.
In the last 20 years Oregon has had near 1% per year population growth as well.
The article is focused on outlier pensions for a collegiate athletic director paid partly out of sports merchandising and a medical school head who was an eye surgeon.
Then that would be an obligation of about $300 per tax paying worker per year over their working lifetime. The average yearly salary in Oregon is $50,000. The article makes it out through anecdote that this is why they didn't have gas to send trucks out for a road repair.
In the last 20 years Oregon has had near 1% per year population growth as well.
The article is focused on outlier pensions for a collegiate athletic director paid partly out of sports merchandising and a medical school head who was an eye surgeon.
If the average person makes 50K a year then the average person in Oregon takes home about 35K per year. So you say it's "only" 300 extra dollars a year they have to pay.
In other words, this person now owes nearly 1% of their disposable income for life to cover _currently_ unfunded pensions with no corresponding increase in goods or service levels.
To put it another way, this person will work ~1/3 of a year out of their career to pay for unfunded pensions.
In other words, this person now owes nearly 1% of their disposable income for life to cover _currently_ unfunded pensions with no corresponding increase in goods or service levels.
To put it another way, this person will work ~1/3 of a year out of their career to pay for unfunded pensions.
Why would you look at their after tax income when this comes out of their taxes? (But I can't remember the deductibility rules under the new tax code, maybe they can't deduct state tax payments from federal now).
(Also, I made a mistake, that number was household income)
(Also, I made a mistake, that number was household income)
Because unless you can figure out how to get the government to count tax twice that's where the money is going to come from... disposable income now going to tax.
Otherwise now the government now has less money to spend. Aka the "no fuel for trucks" you mention.
Otherwise now the government now has less money to spend. Aka the "no fuel for trucks" you mention.
>Because unless you can figure out how to get the government to count tax twice that's where the money is going to come from... disposable income now going to tax.
State tax is deductible from federal taxes up to $10,000. So you can pay that $300 without it all coming out of after tax income.
Most people may not go over standard deduction, but dollar wise state tax is probably paid by high earners who will, since there is a graduated income tax in Oregon.
State tax is deductible from federal taxes up to $10,000. So you can pay that $300 without it all coming out of after tax income.
Most people may not go over standard deduction, but dollar wise state tax is probably paid by high earners who will, since there is a graduated income tax in Oregon.
Won't that require the federal government to raise the income tax rate to make up for the revenue lost from the deduction?
I don't see how the extra expense won't ultimately result in additional taxes.
I don't see how the extra expense won't ultimately result in additional taxes.
There would be some, but not the full amount because pensioners will pay federal tax on the pensions.
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> Why would you look at their after tax income when this comes out of their taxes?
Every new expense comes out of your savings rate (or your rate in paying off principal if you're in debt). To understand "kitchen table economics", you're always better looking at the wealth growth rates (or lack thereof) when trying to weigh how much of a burden something is.
Every new expense comes out of your savings rate (or your rate in paying off principal if you're in debt). To understand "kitchen table economics", you're always better looking at the wealth growth rates (or lack thereof) when trying to weigh how much of a burden something is.
[deleted]
[deleted]
A dollar can only change hands so many times before it's worthless unless it's going towards actual value-adding goods/services. Considering how deprived the general population is for funds to spend on value-added goods, I don't think taking $6,250 from every person in the state just to support a tiny, tiny fraction of the population is doing much good.
That and a large portion of pensioners flee to states without an income tax or at least states with a better climate and lower cost of living. The statistics of state employees leaving my home state for such states alone are shocking.
That and a large portion of pensioners flee to states without an income tax or at least states with a better climate and lower cost of living. The statistics of state employees leaving my home state for such states alone are shocking.
>I don't think taking $6,250 from every person in the state just to support a tiny, tiny fraction of the population is doing much good.
The government paying its debts and not committing wage theft is a public good. It's a pivotal decision point in whether we are a functioning civilization with a rule of law or a third-world regime on its way down. It may be convenient in this one isolated instance to renege, but the knock-on effects of the message it sends - that public servants will be paid only when convenient - will be huge. Although that may be just as well, if you hope to minimize the role of government going forward.
The government paying its debts and not committing wage theft is a public good. It's a pivotal decision point in whether we are a functioning civilization with a rule of law or a third-world regime on its way down. It may be convenient in this one isolated instance to renege, but the knock-on effects of the message it sends - that public servants will be paid only when convenient - will be huge. Although that may be just as well, if you hope to minimize the role of government going forward.
> It may be convenient in this one isolated instance to renege, but the knock-on effects of the message it sends - that public servants will be paid only when convenient - will be huge. Although that may be just as well, if you hope to minimize the role of government going forward.
If you want to reduce the role of government to only a narrow core of tasks for which there is no alternative, you probably still don't want to send the message that workers in government will be arbitrarily deprived of the compensation for which they've agreed to labor, since presumably in that case it's even more essential that the set of tasks to which government is reduced is done by people who are competent and motivated.
If you want to reduce the role of government to only a narrow core of tasks for which there is no alternative, you probably still don't want to send the message that workers in government will be arbitrarily deprived of the compensation for which they've agreed to labor, since presumably in that case it's even more essential that the set of tasks to which government is reduced is done by people who are competent and motivated.
> The government paying its debts and not committing wage theft is a public good.
Raising a tax on someone to pay the public benefit of another is also wage theft. Please remember the State doesnt have assets of its own, everything it has it takes from someone else. So if you find it reasonable to pay a special tax on minimum wage jobs to pay a 55-old retired man 70 grand a month of a benefit, you can volunteer your wage and your salary to achieve such a nice ideal.
Raising a tax on someone to pay the public benefit of another is also wage theft. Please remember the State doesnt have assets of its own, everything it has it takes from someone else. So if you find it reasonable to pay a special tax on minimum wage jobs to pay a 55-old retired man 70 grand a month of a benefit, you can volunteer your wage and your salary to achieve such a nice ideal.
The rule of law should also have something to say about making promises on other people's backs. Why should my generation have to pay just because some previous generation made a promise against my generation's earnings without my generation's consent?
I assume that's over many years of the pension payment. Assuming average of 20 years of pension payment, that's about $300 per year per person.
You are going to charge babies 6 grand to pay public pensions?
Assuming the pensioners stay. Why stay completely when you can spend change your domicile to a zero-tax sunshine state or WA?
Family and friend networks.
> Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated.
The article links the lack of public services to high pensions. It´s painted as if there were no other options but to cut on pensions.
"In the meantime, mounting pension costs mean that a generation of schoolchildren is growing up in the area with no theater program, no orchestra, no wood shop and minimal sports, chorus and art."
Because pensions are the only reason. Maybe increased inequality, the lack of taxing of the top 1%, money wasted on lobbying, are also causes. But we are not offered any data.
The article links the lack of public services to high pensions. It´s painted as if there were no other options but to cut on pensions.
"In the meantime, mounting pension costs mean that a generation of schoolchildren is growing up in the area with no theater program, no orchestra, no wood shop and minimal sports, chorus and art."
Because pensions are the only reason. Maybe increased inequality, the lack of taxing of the top 1%, money wasted on lobbying, are also causes. But we are not offered any data.
To generalize, all news is anecdotes and never data and its all manipulating scare mongering (except fivethrityeight and perhaps the economist).
Problem is with the human wetware. People want to read a story.
Problem is with the human wetware. People want to read a story.
Yeah, the focus on a few outliers is strange.
The bigger issue, from what I've read, is that governments agreed to huge pensions in contracts with public employee unions. In exchange for lower salaries. Because pensions were deferred costs.
The bigger issue, from what I've read, is that governments agreed to huge pensions in contracts with public employee unions. In exchange for lower salaries. Because pensions were deferred costs.
My mom is a PERS retiree. Not one of the rich ones, though she did retire at the perfect moment and she has a livable retirement income.
One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So while I think PERS made some stupid decisions, let's not all heap blame on the workers and demand they suffer now. Gov't work pays crap and part of the benefit is supposed to be a little more long-term security.
One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So while I think PERS made some stupid decisions, let's not all heap blame on the workers and demand they suffer now. Gov't work pays crap and part of the benefit is supposed to be a little more long-term security.
This is absolutely true. I have several members of my family who work in the gov, and I have witnessed years of inadequate inflation raises - nothing else. The "trade" was a nicer retirement and better health benefits.
> "nicer"
That does not even start to describe it fairly. "Extremely sweet" would be more accurate since civil servants and the like get to retire with almost their best pay ever, while the rest of us get something averaged over dozens of years.
> and I have witnessed years of inadequate inflation raises
So you think the private sector gets "adequate" inflation raises? Not everyone works in tech.
That does not even start to describe it fairly. "Extremely sweet" would be more accurate since civil servants and the like get to retire with almost their best pay ever, while the rest of us get something averaged over dozens of years.
> and I have witnessed years of inadequate inflation raises
So you think the private sector gets "adequate" inflation raises? Not everyone works in tech.
civil servants and the like get to retire with almost their best pay ever
That system changed in 1984. Now the FERS annuity is (for most people) about half of their highest pay. https://en.wikipedia.org/wiki/Federal_Employees_Retirement_S...
(It's still a decent deal, but it's not a defined benefit plan based on your highest pay)
That system changed in 1984. Now the FERS annuity is (for most people) about half of their highest pay. https://en.wikipedia.org/wiki/Federal_Employees_Retirement_S...
(It's still a decent deal, but it's not a defined benefit plan based on your highest pay)
> the average annual rate of basic pay of the employee's highest-paid consecutive three years of service (commonly referred to as the "high-3" period).[3] The "high-3" period normally is, but does not have to be, the final three years of service
??
??
They may have changed jobs to a lower paying position for some reason, but one that still qualifies them for the government pension plan.
To add to Doreen Michele’s comment. A friend of mine went from a GS-11 to a GS-7 to change career paths. This meant a reduction in pay for several years. Supposing he retires today (he has enough years to be vested for the pension but can’t collect for another 12 or so) his retirement pay would be based on those years he was a GS-11. Now the period 6-3 years in the past. He’s a GS-12 now (or soon) but the prior pay still works out to a higher average for him.
Additionally, locality pay is included for the calculation. It’s not just base pay. This means if he moves to DC for a few years and then later to “rest of US” (unspecified, lowest paid parts of the country) his time in DC may be what they use to calculate his pension and not his last few years.
Additionally, locality pay is included for the calculation. It’s not just base pay. This means if he moves to DC for a few years and then later to “rest of US” (unspecified, lowest paid parts of the country) his time in DC may be what they use to calculate his pension and not his last few years.
> Not everyone works in tech.
Even in tech, it's pretty common to have to switch specialties, fire your boss, move, etc., to ensure you're getting market rates.
Honestly, if public sector employees think they're paid unfairly, they should talk to their union reps about decoupling seniority from particular districts, departments, etc.
Even in tech, it's pretty common to have to switch specialties, fire your boss, move, etc., to ensure you're getting market rates.
Honestly, if public sector employees think they're paid unfairly, they should talk to their union reps about decoupling seniority from particular districts, departments, etc.
I think it's different when you're told you will not get a raise for 5 years.
Non government employees have had inadequate inflation raises but without nicer retirements nor better health benefits.
Borrowing from the future is not a good strategy.
Borrowing from the future is an excellent strategy in a lot of cases, you just need to explicit that you're doing so and make sure it makes sense.
It's an excellent strategy (when executed correctly) in times of unparalleled stability and economic predictability like those of 1948 to ~1976 and ~1982-2008 but it's a terrible strategy when returns on pension fund investments are virtually guaranteed. Even in those times it didn't make logical sense to assume everything over the next 30 years would play out exactly how everyone assumed it would. That and the "stickiness" problem of new pensions being based off the terms of old pensions (negotiated when retirees didn't live into their mid 80's on average) is what will doom most state governments over the next 10-15 years,
Yeah, in the case of pensions I agree having disproportionately high pension comp vs. current comp makes no sense -- particularly bad when a city declines in size.
There are plenty of non-pension cases where debt is an effective tool, i.e. borrowing to make efficiency/productivity improvements which exceed the cost of servicing and repaying the debt. Imbalanced pensions are more like borrowing to pay for operational expenses.
There are plenty of non-pension cases where debt is an effective tool, i.e. borrowing to make efficiency/productivity improvements which exceed the cost of servicing and repaying the debt. Imbalanced pensions are more like borrowing to pay for operational expenses.
No, it's never a good strategy when the person paying the bill isn't even close to the same generation of the person receiving the benefit. That's a recipe for disaster, for every party involved.
You always borrow from the future.
This is a profound comment, even if off the cuff. Consider tens of trillions of fiat in worldwide liabilities, and how the entire world is relying on people yet to be born to carry the torch through taxes to pay for the debts we’ve amassed.
A fascinating digression. I conceptualize borrowing oppositely.
When you borrow, you borrow from someone else's past/present labor and obligate your future labor. (Where 'you' can be an individual, organization, or society.)
In my view, borrowing is always from the past. You cannot borrow that which has not yet been created.
When you borrow, you borrow from someone else's past/present labor and obligate your future labor. (Where 'you' can be an individual, organization, or society.)
In my view, borrowing is always from the past. You cannot borrow that which has not yet been created.
Actually most of the money that is borrowed (approx 90% AFAIK) is invented and injected into the economy. You borrow against the future because this new creation of currency must later be paid by labor or investments.
In my conceptualization, money is not the thing that is borrowed. Money is just the measuring stick. What's actually borrowed is the stuff bought with the money. And that stuff is made in the past or present, not the future.
For example, imagine I take a loan to buy a house. The people who built the house invested their labor with the expectation of future payment. Or if they spent their wages, then the firm that fronted their wages invested labor into building the firm with the expectation of future payment.
Generally, if one borrows, someone else must loan. This means that if you are consuming before producing, then at some point in the economic chain, there is someone who has produced but not yet consumed.
It is in this sense that I conceptualize borrowing as coming from the past.
This notion is reflected in the GDP equation of a closed economy: GDP = C + I. Any consumption over production must be balanced by investment, which is itself past production.
Of course, if we are to conceptualize literally, then borrowers do not borrow from either the future or the past. They borrow from banks.
For example, imagine I take a loan to buy a house. The people who built the house invested their labor with the expectation of future payment. Or if they spent their wages, then the firm that fronted their wages invested labor into building the firm with the expectation of future payment.
Generally, if one borrows, someone else must loan. This means that if you are consuming before producing, then at some point in the economic chain, there is someone who has produced but not yet consumed.
It is in this sense that I conceptualize borrowing as coming from the past.
This notion is reflected in the GDP equation of a closed economy: GDP = C + I. Any consumption over production must be balanced by investment, which is itself past production.
Of course, if we are to conceptualize literally, then borrowers do not borrow from either the future or the past. They borrow from banks.
The entire economy is a system designed to encourage human activity, and is not based in truth of value. That builder borrowed the funds to build. It actually is turtles all the way down to the Central Bank, which dictates that money exists.
Controlling assets is not the same thing as consuming, and money is designed to designate control rather than consumption. I can borrow money to buy stocks, which are nothing more than a promise of a corporate future. etc. People and entities do not have control because they have produced, but because they have controlled, or are part of the system that magnifies control to create more of it (through the banking system).
We elect to accept this system of the government determining who can control assets based on a vision of human society, or simply because we cannot object in a meaningful way. We borrow almost exclusively from money created by the government. In the end we borrow from nobody, but borrow by means of a de facto authority. The mutual agreement of human wills is more powerful than any sort of temporal precedence.
In that sense we borrow from neither the past nor the future. Of course you are correct that a large portion of borrowed funds are used to control tings that have already been produced. But the money is created at the same instant the loan is made. And it must be repaid by future labor or returns. Since it is not necessary for the money to be used to purchase something that already exists (and another large portion of borrowed funds are used for futures of myriad kinds), but it is always true that future results must be used for repayment, I think it is more accurate to say we borrow from the future.
Controlling assets is not the same thing as consuming, and money is designed to designate control rather than consumption. I can borrow money to buy stocks, which are nothing more than a promise of a corporate future. etc. People and entities do not have control because they have produced, but because they have controlled, or are part of the system that magnifies control to create more of it (through the banking system).
We elect to accept this system of the government determining who can control assets based on a vision of human society, or simply because we cannot object in a meaningful way. We borrow almost exclusively from money created by the government. In the end we borrow from nobody, but borrow by means of a de facto authority. The mutual agreement of human wills is more powerful than any sort of temporal precedence.
In that sense we borrow from neither the past nor the future. Of course you are correct that a large portion of borrowed funds are used to control tings that have already been produced. But the money is created at the same instant the loan is made. And it must be repaid by future labor or returns. Since it is not necessary for the money to be used to purchase something that already exists (and another large portion of borrowed funds are used for futures of myriad kinds), but it is always true that future results must be used for repayment, I think it is more accurate to say we borrow from the future.
Sadly that’s not how money actually works at the macro level. The fed magics the money into existence in return for a promise for the treasury to repay with taxpayer money 10 tears down the line.
It's rather delayed bankruptcy in our case. The idea that these trillions are going to be paid back one day is preposterous and we all know it.
> The idea that these trillions are going to be paid back one day is preposterous
Our debt is around 1x GDP and 1/5th American households' and non-profits nominal wealth [1]. (This excludes public sector assets, corporate assets, and foreigners' assets in the United States.) All of that is subject to future taxation.
I don't like big deficits. (They imply future taxation, service cuts or inflation.) But our debt burden is easily manageable, particularly considering our suboptimal inflation attainment.
[1] https://en.wikipedia.org/wiki/Wealth_in_the_United_States
Our debt is around 1x GDP and 1/5th American households' and non-profits nominal wealth [1]. (This excludes public sector assets, corporate assets, and foreigners' assets in the United States.) All of that is subject to future taxation.
I don't like big deficits. (They imply future taxation, service cuts or inflation.) But our debt burden is easily manageable, particularly considering our suboptimal inflation attainment.
[1] https://en.wikipedia.org/wiki/Wealth_in_the_United_States
Why? Debt is paid back over time. New debit is also acquired so the balance is never zero. But are you saying you expect T-bills to be in default? That’s a rather big statement.
Thankfully, those who are yet to be born will be many more numerous and possess better technology with which to pay the debt we charge up.
"Thankfully, those who are yet to be born will be many more numerous"
The 3rd world will be more numerous, the current citizens of the first world will not. We're already seeing societal strains rising from the introduction of 3rd world peoples intended to make up for the missing offspring of existing 1st world peoples so I highly doubt things will work out as easily (and peacefully) as you assume they will.
The 3rd world will be more numerous, the current citizens of the first world will not. We're already seeing societal strains rising from the introduction of 3rd world peoples intended to make up for the missing offspring of existing 1st world peoples so I highly doubt things will work out as easily (and peacefully) as you assume they will.
It had better be a lot better technology, since we have permanently reduced Earth's carrying capacity and ruined the climate.
And now you know why the big push for open boarders.
For the most part, government work does not pay poorly.[1] For example federal employees without advanced degrees earn a lot more in government than in the private sector: https://www.google.com/amp/s/www.washingtonpost.com/amphtml/...
[1] I’m willing to entertain the idea our economic system as a whole undercompensates secretaries and overcompensates executives. That’s a different issue.
[1] I’m willing to entertain the idea our economic system as a whole undercompensates secretaries and overcompensates executives. That’s a different issue.
The federal government isn’t state and local. Also note that the Feds no longer have generous pension plans and rely on 457 plans similar to 401k.
Someone in my family ran a fire department in the 80s and 90s. They had no money and in this state arbitration made negotiations difficult for management to win. So they gave away pension and health concessions that were cheap then.
The number one issue with these systems are public safety pensions, because of the amount of overtime earned by these employees. Administrative staff and professionals are mostly exempt and not that big of a deal.
Someone in my family ran a fire department in the 80s and 90s. They had no money and in this state arbitration made negotiations difficult for management to win. So they gave away pension and health concessions that were cheap then.
The number one issue with these systems are public safety pensions, because of the amount of overtime earned by these employees. Administrative staff and professionals are mostly exempt and not that big of a deal.
The pension and health concessions were never cheap to give away. Someone just had the brilliant idea that since voters aren't able to spend time analyzing and verifying the numbers, and there are no laws regarding how to calculate them, that you can just understate the costs and let the future deal with it.
That’s not really accurate either — it’s a complex issue.
Nobody in 1990 would have predicted the decade of double digit cost increases that came in the 2000s and 2010s.
Pension contributions did have fiscal impacts, at least in states that require that pensions actually be funded.
Nobody in 1990 would have predicted the decade of double digit cost increases that came in the 2000s and 2010s.
Pension contributions did have fiscal impacts, at least in states that require that pensions actually be funded.
Funny, the bottom of the article recommends this[1], a more recent article saying the opposite. (I don't bring this up to discredit your post, I just find it funny. Your article actually says, "Various studies, using different methods and different sets of data, have reached widely varying conclusions.")
[1] https://www.washingtonpost.com/news/powerpost/wp/2018/04/11/...
[1] https://www.washingtonpost.com/news/powerpost/wp/2018/04/11/...
In California many/most public employees earn over 6-figures in total compensation. This includes government employees, teachers, police, Fire, etc.
Yea, it’s insane.
Don’t believe me? Look it up - https://transparentcalifornia.com/salaries/2017
Yea, it’s insane.
Don’t believe me? Look it up - https://transparentcalifornia.com/salaries/2017
That source has obvious serious data quality issues, which are dramatically evident if you filter by “University System”; the three highest paid entries with that filter, which are the same person [0], three times with the same job title and slightly different total comp figures. The same person appears twice more on the first page, too, with significantly different pay (but the same title, etc.)
[0] https://en.m.wikipedia.org/wiki/Jim_L._Mora
[0] https://en.m.wikipedia.org/wiki/Jim_L._Mora
If you want good people, you need to compensate them, and you need to compensate them relative to the high cost of living in California. Otherwise, the good people will stay in the private sector and government jobs will be filled by people who couldn't succeed in the private sector.
That's happening to some extent already, but there are a lot of people who would do very well in the private sector who choose public service. For society's sake, we don't want that to be such a big sacrifice that nobody smart would do it.
That's happening to some extent already, but there are a lot of people who would do very well in the private sector who choose public service. For society's sake, we don't want that to be such a big sacrifice that nobody smart would do it.
So compensate them by paying them more now instead of taking the easy way out through pensions and bad math.
I'm all in favor of that, but good luck raising taxes enough to make that possible.
So it's either raise taxes now or raise taxes later.
Police and fire fighters are doing very hazardous work. Teachers tend to have postgraduate degrees. All can be living in high cost-of-living areas where $100k doesn't go as far as people think.
"Government employees" could be running departments or administering budgets that would be director-level positions in a private corporation.
But, yeah, it seems like too much to pay $600k per year for checking that applicants correctly filled in the phone number on their 124-J forms. But I'm not sure it's always that clear cut.
"Government employees" could be running departments or administering budgets that would be director-level positions in a private corporation.
But, yeah, it seems like too much to pay $600k per year for checking that applicants correctly filled in the phone number on their 124-J forms. But I'm not sure it's always that clear cut.
I posted this earlier, but police work statistically isn't that dangerous.
There are about 421,000 police officers in the US.
https://www.statista.com/statistics/191694/number-of-law-enf...
If you look past Fox News sensationalist headlines, they said 146 were killed in the line of duty last year. http://www.foxnews.com/opinion/2017/06/11/americas-police-of...
There are about 421,000 police officers in the US.
https://www.statista.com/statistics/191694/number-of-law-enf...
If you look past Fox News sensationalist headlines, they said 146 were killed in the line of duty last year. http://www.foxnews.com/opinion/2017/06/11/americas-police-of...
Those numbers might seem low to you, but that easily puts police officer in the top 25 most dangerous jobs according to this source:
https://www.usatoday.com/story/money/careers/2018/01/09/work...
https://www.usatoday.com/story/money/careers/2018/01/09/work...
From the article:
The most common cause of death on the job were intentional shootings, which claimed the lives of 46 officers last year. Almost as many officers died in car accidents.
Only 46 actually died from intentional shootings.
The most common cause of death on the job were intentional shootings, which claimed the lives of 46 officers last year. Almost as many officers died in car accidents.
Only 46 actually died from intentional shootings.
So some officers are murdered and others die from traffic accidents. I'm not sure why that makes the job less dangerous.
How is a police officer getting killed in a car accident any different than anyone else getting killed on the roads?
It's not. But local governments don't hire a lot of deep sea fishermen, so they don't get hazard pay that affects local budgets.
Police spend more time driving than the average person, due to the nature of the job. Writing tickets on the side of the road is also hazardous. The job increases their risk of dying in a car accident.
Pointing to teachers’ education levels is highly misleading. Teachers overwhelmingly have post-secondary have degrees that have little value in the market (often even negative value). That’s not a reason to pay them more.
Mentioning federal employees in a discussion of state/local employees is an apples-to-oranges comparison.
Please provide sources to counter the assertion that state/local employees often get large pensions in lieu of salary.
Please provide sources to counter the assertion that state/local employees often get large pensions in lieu of salary.
The median annual cash compensation for a teacher in my kid's public high school district in Illinois is six figures.
I know that's not true of teachers in other states; Oklahoma teachers look like they're getting shafted.
But in Illinois, where we have a public pension crisis, I don't have trouble coming up with evidence that public sector employees did not make cash comp sacrifices for their defined-benefit pensions.
I know that's not true of teachers in other states; Oklahoma teachers look like they're getting shafted.
But in Illinois, where we have a public pension crisis, I don't have trouble coming up with evidence that public sector employees did not make cash comp sacrifices for their defined-benefit pensions.
What were the teachers in Illinois making a couple decades ago?
I’ll ask my mom. I’m much much more concerned with current comp than comp 2 decades ago.
Here are the top government earners in SF county:
https://transparentcalifornia.com/salaries/2017/san-francisc...
I don't immediately see examples of 'pensions in lieu of salary', but those are some pretty substantial total packages, with benefits alone reaching ~$60k+/yr for many public officials.
https://transparentcalifornia.com/salaries/2017/san-francisc...
I don't immediately see examples of 'pensions in lieu of salary', but those are some pretty substantial total packages, with benefits alone reaching ~$60k+/yr for many public officials.
So, of San Francisco county employees listed there, 3% have a total pay > $200k.
Given the cost of living in the area, it sounds like they might actually be paying competitive salary, though it also looks like a lot of the people in that 3% are actually firefighters or sheriff's officers who pull in a lot of overtime.
"Benefits" also isn't a great category to look at, because I'd be willing to bet that if you're a software developer your benefits package is pretty expensive too and you just don't realize it. Going by their definition of "benefits", and looking up some of my own records, it looks like $60k is not that hard to hit. Insurance and 401(k) matching (or pension contributions, for a government employee) are more expensive than you probably think they are.
Given the cost of living in the area, it sounds like they might actually be paying competitive salary, though it also looks like a lot of the people in that 3% are actually firefighters or sheriff's officers who pull in a lot of overtime.
"Benefits" also isn't a great category to look at, because I'd be willing to bet that if you're a software developer your benefits package is pretty expensive too and you just don't realize it. Going by their definition of "benefits", and looking up some of my own records, it looks like $60k is not that hard to hit. Insurance and 401(k) matching (or pension contributions, for a government employee) are more expensive than you probably think they are.
My wife picked her state job in large because of the retirement options and it being a 9-5 job.
Her degree is at a higher level, she's a civil engineer and with a professional license on top; as a tech person,I make about 50% more.
If she went to a private company, that actually paid women the same as men, we would make almost the same. Her choice was to bet on the state after having been exploited in the private sector and with no recourse.
Her degree is at a higher level, she's a civil engineer and with a professional license on top; as a tech person,I make about 50% more.
If she went to a private company, that actually paid women the same as men, we would make almost the same. Her choice was to bet on the state after having been exploited in the private sector and with no recourse.
That assertion makes sense if quality of candidates drops when pension is removed. We don't know exactly why ppl are choosing govt jobs. My wife choose it because it offers 9-5, no overtime.
If your wife was a sole earner without a spouse's income to supplement her household, would she be as willing to accept low wages now in exchange for a high pension later?
Or would she look for a job that pays enough to cover her cost of living today, since that's a prerequisite to reaching the pension age?
Or would she look for a job that pays enough to cover her cost of living today, since that's a prerequisite to reaching the pension age?
yes ofcourse I was merely suggesting that there are other reasons why ppl choose govt jobs and the quality of candidates might not drop if we removed pension.
I think that it depends on the industry.
For example, I doubt that software engineers are competively paid, when compared to industry. But that is more of a function of how ridiculously high industry pay is.
For example, I doubt that software engineers are competively paid, when compared to industry. But that is more of a function of how ridiculously high industry pay is.
False. Government employees are paid poorly. (edit: and that's bad for the country: govt does a lot of important things - FDA, science support, health stuff - and good people are essential.)
First, any senior skilled tech employee takes a big pay cut to work in government. Programmers, doctors, scientists, engineers.
Second, the bulk of the federal workforce has been squeezed down on pay over the past 15 years. https://www.washingtonpost.com/news/powerpost/wp/2018/01/05/...
federal unions and their Democratic supporters point to data released by the Federal Salary Council. In 2016, the council, using Labor Department surveys, determined that federal employees are paid 34 percent less on average than private-sector counterparts — a finding in line with previous annual reports.
Note that Republicans argue with the above quote, of course -- we know that Republicans argue in bad faith (aka they lie) on any issue relating to their main goal - tax cuts for the rich. See (amongst many stories)
http://theweek.com/articles/766632/liar-paul-ryan
Paul Ryan cruised to national prominence on the realization that there was no longer any immediate penalty for a Republican lying constantly, about everything. (Donald Trump would later take advantage of this fact.)
First, any senior skilled tech employee takes a big pay cut to work in government. Programmers, doctors, scientists, engineers.
Second, the bulk of the federal workforce has been squeezed down on pay over the past 15 years. https://www.washingtonpost.com/news/powerpost/wp/2018/01/05/...
federal unions and their Democratic supporters point to data released by the Federal Salary Council. In 2016, the council, using Labor Department surveys, determined that federal employees are paid 34 percent less on average than private-sector counterparts — a finding in line with previous annual reports.
Note that Republicans argue with the above quote, of course -- we know that Republicans argue in bad faith (aka they lie) on any issue relating to their main goal - tax cuts for the rich. See (amongst many stories)
http://theweek.com/articles/766632/liar-paul-ryan
Paul Ryan cruised to national prominence on the realization that there was no longer any immediate penalty for a Republican lying constantly, about everything. (Donald Trump would later take advantage of this fact.)
Yes, professionals take big pay cuts to work for the federal government. The exact opposite is true for less skilled employees (the ones most likely to be lifers who draw a pension).
No, that's not right. Less skilled employees often get paid peanuts, and so it's hard for govt to retain people. Title 5 (GS) employees have gotten squeezed over past 15 years, so much so that agencies have tried to push people up the pay scale. But that is at best an incomplete solution; it distorts the GS levels and it cannot completely compensate for low pay.
If you said that there are problems with federal recruitment, retention, and removal of poor employees, that would be a largely true statement. But a large number of fed employees are underpaid.
If you said that there are problems with federal recruitment, retention, and removal of poor employees, that would be a largely true statement. But a large number of fed employees are underpaid.
Besides the fact that the CBO disagrees. Take an entry level job requiring a bachelors degree. That’ll be GS5 or 7. That’s $35-43k in Atlanta (a city right at the median cost of living index). That’s also right around the average starting salary for all majors (41,000). https://www.usnews.com/news/articles/2016-10-05/hiring-start...
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Yes, this is an absolutely backwards way to pay people. When times are tough we end up tightening our belts on a whole host of services, but cannot adjust pensions because we have promised them. We should just pay people market rates and avoid saddling ourselves with a bunch of debt when times are good.
When is the government ever not tightening its belt? It's ridiculous that we can pay for bombs but not pensions. Just tax the rich some more. The debt never matters when it comes to killing but always matters when it comes to salving.
I quite agree with the comments about not spending so much on the military, but as a fraction of GDP, federal taxes have been pretty stable over the last 60 years https://fivethirtyeight.com/features/u-s-tax-rates-the-big-p... with increases and decreases in a constrained range.
This whole it or the defecit thing seems like a common talking point for progressives now that Republicans have shown their true colors, but if your goal is to actually govern a country, it does matter.
At the very least you should be able to see how increasing our debt increases the payments we need to make to service that debt. 7.4% of our latest budget was just paying for the debt we've already racked up. That's tens of billions of dollars that could have been spent on something worthwhile, but instead we're just paying for the past.
This whole it or the defecit thing seems like a common talking point for progressives now that Republicans have shown their true colors, but if your goal is to actually govern a country, it does matter.
At the very least you should be able to see how increasing our debt increases the payments we need to make to service that debt. 7.4% of our latest budget was just paying for the debt we've already racked up. That's tens of billions of dollars that could have been spent on something worthwhile, but instead we're just paying for the past.
With the median household income being $65000, when the average voter talks about "taxing the rich", they won't have any problem going after tech workers making in the low six figures. You may come to find that you may be one of the "rich".
>>Just tax the rich some more.
The rich can leave. You can't, especially at the state level.
The rich can leave. You can't, especially at the state level.
Think about the implications of that statement. We're headed towards (actually already in) a world in which the very few are fabulously wealthy and the rest suffer needlessly.
You can't raise taxes, the rich leave. You lower taxes, the rich suck money out of the local population until they get a better deal. All states are in competition to lower taxes. A much more comprehensive solution is necessary.
You can't raise taxes, the rich leave. You lower taxes, the rich suck money out of the local population until they get a better deal. All states are in competition to lower taxes. A much more comprehensive solution is necessary.
Are you suggesting we create a world government to ensure there's nowhere on Earth people can flee to to escape high taxes?
So what do you do when the rich leave for Mars? Chase them there to make sure you get your pound of flesh?
Is this really the kind of world we should strive to create?
>>You lower taxes, the rich suck money out of the local population until they get a better deal.
Maybe you're looking at it wrong. The rich aren't cows to be milked. The relationship between an individual and a jurisdiction should be mutually beneficial.
If the jurisdiction has something the wealthy individual wants, they will invest there.
If the jurisdiction is losing wealth as a result of the activity of the wealthy individual, then clearly there are negative externalities that it is not punishing with penalties, or subsidies that it is providing without a proportionate benefit, that wealthy people are taking advantage of.
The solution there is to change the way government programs are structured to make business models that suck wealth out unviable.
If the programs that the taxes the rich pay for provide a greater benefit to the rich than the cost of the taxes, the rich will move/invest in that jurisdiction. The stable equilibrium is not zero taxes with no government.
As for growing income inequality, the solution is not forcibly redistributing income with a totalitarian world government that destroys/sanctions independent jurisdictions until they fall in line.
The solution is to find out what structural forces allow those with greater capital to accumulate wealth at a faster rate than those with less capital.
Perhaps the government is introducing structural barriers to full economic participation.
One example would be transaction taxes, like the sales tax. These advantage larger organizations that can avoid financial transactions by keeping their activity in-house, something smaller businesses can't do by virtue of being more specialized.
Another example would be securities laws, which necessitate use of highly paid professionals to get approval from the centralized regulatory gatekeeper to offer stock to the public.
It now costs $6 million to do an IPO, and many elite in the government and securities sector are looking to shut down unregulated cryptocurrency token sales that offer people who can't afford those sums a more affordable means of raising capital.
Maybe those concerned with wealth inequality are not concerned enough about these things, and are inadvertently contributing to the very centralization that is behind these problems by calling for more power to be given to centralized governing institutions in their pursuit of tax collection.
Something like 12 out of 20 of the wealthiest counties in the US are suburbs of Washington D.C. Maybe you're not looking in the right place for the source of the problem.
So what do you do when the rich leave for Mars? Chase them there to make sure you get your pound of flesh?
Is this really the kind of world we should strive to create?
>>You lower taxes, the rich suck money out of the local population until they get a better deal.
Maybe you're looking at it wrong. The rich aren't cows to be milked. The relationship between an individual and a jurisdiction should be mutually beneficial.
If the jurisdiction has something the wealthy individual wants, they will invest there.
If the jurisdiction is losing wealth as a result of the activity of the wealthy individual, then clearly there are negative externalities that it is not punishing with penalties, or subsidies that it is providing without a proportionate benefit, that wealthy people are taking advantage of.
The solution there is to change the way government programs are structured to make business models that suck wealth out unviable.
If the programs that the taxes the rich pay for provide a greater benefit to the rich than the cost of the taxes, the rich will move/invest in that jurisdiction. The stable equilibrium is not zero taxes with no government.
As for growing income inequality, the solution is not forcibly redistributing income with a totalitarian world government that destroys/sanctions independent jurisdictions until they fall in line.
The solution is to find out what structural forces allow those with greater capital to accumulate wealth at a faster rate than those with less capital.
Perhaps the government is introducing structural barriers to full economic participation.
One example would be transaction taxes, like the sales tax. These advantage larger organizations that can avoid financial transactions by keeping their activity in-house, something smaller businesses can't do by virtue of being more specialized.
Another example would be securities laws, which necessitate use of highly paid professionals to get approval from the centralized regulatory gatekeeper to offer stock to the public.
It now costs $6 million to do an IPO, and many elite in the government and securities sector are looking to shut down unregulated cryptocurrency token sales that offer people who can't afford those sums a more affordable means of raising capital.
Maybe those concerned with wealth inequality are not concerned enough about these things, and are inadvertently contributing to the very centralization that is behind these problems by calling for more power to be given to centralized governing institutions in their pursuit of tax collection.
Something like 12 out of 20 of the wealthiest counties in the US are suburbs of Washington D.C. Maybe you're not looking in the right place for the source of the problem.
> Are you suggesting we create a world government to ensure there's nowhere on Earth people can flee to to escape high taxes?
This doesn't require a world government.
The US already has tax laws on the books for when people renounce their citizenship for tax purposes. Some states like CA are pretty aggressive in suing people who attempt to leave their jurisdiction before realizing capital gains to avoid taxation.
The ability to hide wealth/earnings in general is a bigger deal, and that can be dealt with through treaties without requiring world government.
I think people at once need to be realists and understand that capital flight and over-reliance on a few individuals is a real thing, but also not go too far and assume government institutions are powerless and can only exert their power by bending over backwards.
This doesn't require a world government.
The US already has tax laws on the books for when people renounce their citizenship for tax purposes. Some states like CA are pretty aggressive in suing people who attempt to leave their jurisdiction before realizing capital gains to avoid taxation.
The ability to hide wealth/earnings in general is a bigger deal, and that can be dealt with through treaties without requiring world government.
I think people at once need to be realists and understand that capital flight and over-reliance on a few individuals is a real thing, but also not go too far and assume government institutions are powerless and can only exert their power by bending over backwards.
>Some states like CA are pretty aggressive in suing people who attempt to leave their jurisdiction before realizing capital gains to avoid taxation.
And that just lengthens the timeline on when the state starts suffering from its high tax policy. Now on top of high taxes, enterprising individuals also have to worry about financial penalties for leaving the state. The wealthy already in the state will be less inclined to leave, while the wealthy outside the state will be less inclined to come.
The delayed effect of hikes to national taxes on the residency of the wealthy is actually a disadvantage, because it results in people not taking it into account when voting on policies.
On the other hand, when the effect of something is immediate, voters take it into consideration.
So I view the high mobility between states as an advantage, because it results in state policies being better structured to avoid economic harm.
>The ability to hide wealth/earnings in general is a bigger deal, and that can be dealt with through treaties without requiring world government.
There's no solution to the wealthy simply getting up and leaving the high tax jurisdiction for good, in order to avoid incurring future tax debts. What's collected on an exit tax is nothing compared to what that individual would have contributed had they stayed.
Tax treaties and the like will not prevent this, because when you live in a country with a lower income tax rate, your tax obligations are lower. This makes it financially advantageous for any highly productive individual to leave a high tax jurisdiction.
And that just lengthens the timeline on when the state starts suffering from its high tax policy. Now on top of high taxes, enterprising individuals also have to worry about financial penalties for leaving the state. The wealthy already in the state will be less inclined to leave, while the wealthy outside the state will be less inclined to come.
The delayed effect of hikes to national taxes on the residency of the wealthy is actually a disadvantage, because it results in people not taking it into account when voting on policies.
On the other hand, when the effect of something is immediate, voters take it into consideration.
So I view the high mobility between states as an advantage, because it results in state policies being better structured to avoid economic harm.
>The ability to hide wealth/earnings in general is a bigger deal, and that can be dealt with through treaties without requiring world government.
There's no solution to the wealthy simply getting up and leaving the high tax jurisdiction for good, in order to avoid incurring future tax debts. What's collected on an exit tax is nothing compared to what that individual would have contributed had they stayed.
Tax treaties and the like will not prevent this, because when you live in a country with a lower income tax rate, your tax obligations are lower. This makes it financially advantageous for any highly productive individual to leave a high tax jurisdiction.
Part of the blame lies with GASB (Governmental Accounting Standards Board).
Prior to around 2006, GASB allowed governments to avoid reporting pension liabilities on the balance sheet. Instead, pension liabilities were reported in the footnotes.
From 2006 onward, GASB started to tighten-up requirements, and eventually brought governmental accounting in-line with private sector accounting (aka liabilities are reported in full).
Once the new regs took effect...news reports about cities declaring bankruptcy started increasing.
Prior to around 2006, GASB allowed governments to avoid reporting pension liabilities on the balance sheet. Instead, pension liabilities were reported in the footnotes.
From 2006 onward, GASB started to tighten-up requirements, and eventually brought governmental accounting in-line with private sector accounting (aka liabilities are reported in full).
Once the new regs took effect...news reports about cities declaring bankruptcy started increasing.
How would not reporting the liabilities but still being obligated to honor them be sustainable? I don't see how the GASB can be blamed for requiring disclosure.
To compensate for the lower pay, aren't government jobs much lower stress? And have good job security? Hard to get fired even if you do very little?
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> One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment.
So don't work there.
So don't work there.
A luxury we have in the IT field today that seems so obvious, but did (and does) not seem as simple to everyone else.
Pensions are going to become a hot political issue as they become more and more unsustainable. Even Illinois, one of the most liberal states in the US, elected a republican governor four years ago in large part because he promised to tackle the state's pension crisis.
It should be noted that Illinois’ republican govenor ran on pension reform, then to everyone’s shagrin, attempted to break unions. He made no headway on either issue, and is now running against a billionaire Democratic challenger who is expected to win.
It’s impossible to reform pensions without reducing government union power in states like California and Illinois.
It's impossible to reform pensions without paying private-sector market rate to state and local employees.
"Unsustainable" pensions are a politician's way of punting the issue -- rather than hit the budget today by paying market rate, they promise far above market rate later on when some other sucker is in office. And everybody -- including the people whose taxes will end up paying for it -- falls for this over and over and over.
"Unsustainable" pensions are a politician's way of punting the issue -- rather than hit the budget today by paying market rate, they promise far above market rate later on when some other sucker is in office. And everybody -- including the people whose taxes will end up paying for it -- falls for this over and over and over.
Compensation is a vector. Government employees are much more difficult to terminate than their counterparts in the private sector. That is, government employees are compensated in part in strong job security.
That's a problem with at-will employment law though, not government jobs. Government job security should not be considered compensation.
> And everybody... falls for this over and over and over.
I don't know about everybody. Lots of people benefited from lower-than-possible taxes over the years, sold their houses for large piles of cash, then move to Arizona or Florida or something where taxes are lower, houses are cheap, and there's no snow.
I don't know about everybody. Lots of people benefited from lower-than-possible taxes over the years, sold their houses for large piles of cash, then move to Arizona or Florida or something where taxes are lower, houses are cheap, and there's no snow.
Illinois is also a special case in that pensions are written into the state Constitution. Pension reform requires changing the Constitution.
Changing the Constituion...or Bankruptcy.
A state can’t go bankrupt. The pensions will end up being paid by the federal government.
If you define bankruptcy as the literal inability to pay employees, vendors, and creditors, then states certainly can go bankrupt.
A Federal bailout of state pension obligations becomes a political (not financial) problem. Why would states that are 80%+ funded agree to bail out states that are only 50% funded? Do the states that are 100% funded receive a credit to use in other ways? There's also substantial moral hazard; if the Feds backstop state pensions as-is, they would be rewarding numerous instances of local self-dealing. This would be an order of magnitude more expensive and more contentious than TARP, which barely passed even as the economy was (supposedly) near death.
I think it's more likely that we see what happened in Greece: significant property tax hikes. You can siphon a huge amount of value out of the real estate markets through gradual but steady increases in taxes and fees, if you're willing to sacrifice appreciation (see Chicago). Ironically this may be a great way to promote affordable housing too, as residential real estate becomes a less attractive investment.
A Federal bailout of state pension obligations becomes a political (not financial) problem. Why would states that are 80%+ funded agree to bail out states that are only 50% funded? Do the states that are 100% funded receive a credit to use in other ways? There's also substantial moral hazard; if the Feds backstop state pensions as-is, they would be rewarding numerous instances of local self-dealing. This would be an order of magnitude more expensive and more contentious than TARP, which barely passed even as the economy was (supposedly) near death.
I think it's more likely that we see what happened in Greece: significant property tax hikes. You can siphon a huge amount of value out of the real estate markets through gradual but steady increases in taxes and fees, if you're willing to sacrifice appreciation (see Chicago). Ironically this may be a great way to promote affordable housing too, as residential real estate becomes a less attractive investment.
A somewhat ironic outcome given that his boosters in the 2014 were extremely cocky and thought his deal making skills and business acumen would have him making quick work of the dopey machine politicians in the state house.
He was going to be the next Chris Christie/Scott Walker and then would be a presidential contender for 2020-2024.
Fast forward 4 years and he's achieved none of his goals, further entrenched his opposition, almost lost the Republican primary to a far-right flank, and is now ranked the 2nd least popular governor in America.
Oh and he left the state without a budget for half of his first term because of a failed grudge match with the speaker of the house, which increased our cost of debt and messed up the financials for many colleges in the state... among other things.
He was going to be the next Chris Christie/Scott Walker and then would be a presidential contender for 2020-2024.
Fast forward 4 years and he's achieved none of his goals, further entrenched his opposition, almost lost the Republican primary to a far-right flank, and is now ranked the 2nd least popular governor in America.
Oh and he left the state without a budget for half of his first term because of a failed grudge match with the speaker of the house, which increased our cost of debt and messed up the financials for many colleges in the state... among other things.
The only way to reform pensions is to deal with the unions. The Wisconsin model works.
Illinois is liberal because of Chicago. Downstate is mostly conservative, excluding a few university towns.
At the root of this is a nexus of bad incentives, bad accounting, and bad predictions about the future.
- You have politicians who are in charge of everyone's budget, wanting to show results before the next election. You don't want taxes to go up immediately, so you do a deal with the workers to pay them later. On the worker side, if you have a final salary scheme (or max salary), and you've had colleagues you've worked with for decades, well why wouldn't you promote them?
- The "pay them later" will require you to pay them more, because we all discount a dollar tomorrow over a dollar today. We might not be around, money might not buy the same, and we generally find it hard to put off anything pleasurable. So we need more tomorrow if we're gonna do that deal. A lot more.
- Bad predictions also come from bad incentives, not just bad accounting. It makes it a lot easier to suppose your investment will make 2% more each year, and this internet bubble is the perfect "evidence" that it might happen. Bad predictions will feed back into bad accounting.
But as for the article itself, aren't football coaches the highest paid staff of any organisations that have them? Even the military? I understand the NYT wants people to read their articles, and thus has humans in the pictures instead of pie charts, but it's the pie charts that tell you there's a problem, not the people.
- You have politicians who are in charge of everyone's budget, wanting to show results before the next election. You don't want taxes to go up immediately, so you do a deal with the workers to pay them later. On the worker side, if you have a final salary scheme (or max salary), and you've had colleagues you've worked with for decades, well why wouldn't you promote them?
- The "pay them later" will require you to pay them more, because we all discount a dollar tomorrow over a dollar today. We might not be around, money might not buy the same, and we generally find it hard to put off anything pleasurable. So we need more tomorrow if we're gonna do that deal. A lot more.
- Bad predictions also come from bad incentives, not just bad accounting. It makes it a lot easier to suppose your investment will make 2% more each year, and this internet bubble is the perfect "evidence" that it might happen. Bad predictions will feed back into bad accounting.
But as for the article itself, aren't football coaches the highest paid staff of any organisations that have them? Even the military? I understand the NYT wants people to read their articles, and thus has humans in the pictures instead of pie charts, but it's the pie charts that tell you there's a problem, not the people.
I mean, the obvious solution is to move to purely defined-contribution plans and haircut the existing people down to actual returns on invested balance for them.
But I have to imagine in a lot of cases that would lead to people being impoverished later in life, which is not especially humane.
But I have to imagine in a lot of cases that would lead to people being impoverished later in life, which is not especially humane.
is it humane or an entitlement?
most people in the private sector work their whole life never get anything remotely close to a pension
secondly, its just an intergenerational wealth transfer. another excess of the selfishness of the boomer generation. Who will pay the price ... the school kids getting a crap education in 35 student classrooms in crumbling buildings in a towns who's infrastructure is going to literally fall apart in 2 decades time from zero maintenance. Ah well at least we kept the promises some corrupt politicians made in the 90s to well-off gov workers.
secondly, its just an intergenerational wealth transfer. another excess of the selfishness of the boomer generation. Who will pay the price ... the school kids getting a crap education in 35 student classrooms in crumbling buildings in a towns who's infrastructure is going to literally fall apart in 2 decades time from zero maintenance. Ah well at least we kept the promises some corrupt politicians made in the 90s to well-off gov workers.
>an entitlement
It's compensation earned in exchange for labor under a negotiated agreement. The fact that the check is separated from the labor by years rather than days doesn't suddenly make it "an entitlement."
The time to complain about entitlement, selfishness, and intergenerational wealth transfer was when we were promising those pensions, not now that the bills are due.
It's compensation earned in exchange for labor under a negotiated agreement. The fact that the check is separated from the labor by years rather than days doesn't suddenly make it "an entitlement."
The time to complain about entitlement, selfishness, and intergenerational wealth transfer was when we were promising those pensions, not now that the bills are due.
True, but one approach that might help is paying generous pensions come after basic services, education, and pay for active workers. Versus them coming first then saying "gee no money for pencils at school" is just wrong.
the entitlement and whats unsustainable is the employer guaranteeing ALL of the downsides of market returns not being high enough, management risk (underfunding), rising cost of healthcare, and longer life times.
If I live twice as long my 401k doesn't magically double.
If I live twice as long my 401k doesn't magically double.
I think the real answer is increased taxation and haircuts, call it a "reverse cost of living" scheme. I do know the current benefits are significantly less generous than the old system used to be, so it's primarily a problem with a certain generation rather than PERS as a whole.
>most people in the private sector work their whole life never get anything remotely close to a pension
How do you feel about annuities? They can function very much like a pension. Why do you think most people choose not to buy them?
How do you feel about annuities? They can function very much like a pension. Why do you think most people choose not to buy them?
I don't really know that market but assume theyre not more popular because the companies that sell them charge high embedded fees, and also a very high risk premium? Similar to whole life insurance.
Anyway, the crux of the problem its very difficult walk the line of having institutions that safely guarantee massive financial payouts 50+ years into the future. From the perspective of the seller its an asymmetric risk. We can't even accurately predict the yield on government bonds 5 years from now.
The logical thing would be to phase in mandatory 401k contribution and healthcare savings accounts with fixed amount in high-rated bonds. But that might put a dent in the ability of Coca-Cola/Disney/Comcast Co. to suck the American consumer dry so its probably a no-go in our political environment.
Anyway, the crux of the problem its very difficult walk the line of having institutions that safely guarantee massive financial payouts 50+ years into the future. From the perspective of the seller its an asymmetric risk. We can't even accurately predict the yield on government bonds 5 years from now.
The logical thing would be to phase in mandatory 401k contribution and healthcare savings accounts with fixed amount in high-rated bonds. But that might put a dent in the ability of Coca-Cola/Disney/Comcast Co. to suck the American consumer dry so its probably a no-go in our political environment.
Lots of people are in tough financial circumstances. Preserving public pensions means keeping formerly middle class people from facing hardship at the expense of the people who were always impoverished.
"So, when lawmakers required government retirees to pay Oregon’s 9 percent income tax, as everybody else did, they also increased pensions by 9.89 percent, giving retirees extra money to pay the tax with."
Government workers are certainly in a special privileged class.
Government workers are certainly in a special privileged class.
This article doesn't tell the whole story. Yes, PERS is a problem in Oregon. However, some of the anecdotes of counties cutting services are not related to PERS. For example, Josephine County, next door county to mine, has the lowest property tax rates in the state. Property owners in the county have repeatedly rejected tax increases to pay for basic services like the Sheriff's Department, and as a result have experienced some of the cut backs described in the article. This is not a result of PERS contributions.
As a 20 something reading articles like these it is incredible to even imagine having enough trust in institutions to basically turn over my future. I wouldn't trust anyone but myself to control my savings and retirement. This is obviously part of a larger trend that we've seen playing out over the last 50 years, and I'll be interested to see how it continues to play out [0]. It seems difficult to imagine a society that can function cohesively when individuals can't trust the institutions we spend such a huge portion of our lives supporting (through time and tax dollars).
I hope to have the chance to reverse this trend in my career, but I have no illusions that gaining this lost trust will come easily.
[0] http://www.people-press.org/2017/05/03/public-trust-in-gover...
I hope to have the chance to reverse this trend in my career, but I have no illusions that gaining this lost trust will come easily.
[0] http://www.people-press.org/2017/05/03/public-trust-in-gover...
Pension spiking should be prohibited and all existing instances of same should be rolled back.
Defined benefits plans, ie pensions, should be outlawed, as long as they have any component that must be paid by taxpayers. For the most part, pensions are Ponzi schemes and require more and more employees to enter the system to pay for those on the pension. If you're talking about a private pension system that can collapse, then that's okay, but if it's a government pension that can keep taxing people because their benefits are too lucrative, those should definitely be outlawed, especially the ones for Congress.
The PERS systems are adapting to greater longevity. As actuaries learn that people will live longer in the future, they are getting systems to dial back their pensions. In Washington State, the most expensive started working before 1972, and some state employees are now offered only a 401K. That said, there is also a challenge that when the market booms, "surpluses" are drawn out. When the market crashes, it's hard to make up for the missing investment.
Seems like pensions should be based on base salaries rather than overtime or clinic pay or licensing deals. I’d hope that the medical center and the university bear most of the burden. The police and fire fighters are a different issue in that the county, city or state governments bear the burden. Without raising taxes it’s difficult to solve these issues. Single payer would help though.. it would reduce the medical costs.
If you want to see pension data from California, it is available here. https://transparentcalifornia.com/pensions/all/
There is a bunch of one time payments near the top but some below that are some making quite a bit in retirement.
What's the chances of retroactively lowering pensions?
1. Progressively lower pensions. Skim off the top earners.
2. Create projects for the community and declare that the saved money will be used for those projects for better optics.
This won't lower trust in government pensions by that much because this is just correcting what is seen as "unfairly high" pensions.
1. Progressively lower pensions. Skim off the top earners.
2. Create projects for the community and declare that the saved money will be used for those projects for better optics.
This won't lower trust in government pensions by that much because this is just correcting what is seen as "unfairly high" pensions.
The same chances as retroactively renegotiating on other deferred obligations. We call it 'defaulting on a loan.'
Wouldn't it be a great idea if the government just stopped making payments on its loans that, in hindsight, were a bad idea?
Wouldn't it be a great idea if the government just stopped making payments on its loans that, in hindsight, were a bad idea?
Here's the other option. Pay the promised pensions and inflate them away. Since this is a growing national problem, I'm guessing that solution has at least been considered.
Not politically feasible. Older citizens tend to both have a lot of savings, and vote. They would not allow this to happen.
Inflation isn't something you can vote on, no?
It's seems like there should be a cap on state pensions of $20,000 a month. $20k a month should be plenty to support a family even in ridiculous California and New York.
I think a cap on private sector workers income would save more money, there are many more of them and many of them have unimportant jobs. If the government just capped their incomes at 100K a month we could pay off all national debt in months.
>If the government just capped their incomes at 100K a month we could pay off all national debt in months.
The government would be quickly replaced with one who would undo this change. Nobody would support it. This is so ridiculous I think you're trolling.
The government would be quickly replaced with one who would undo this change. Nobody would support it. This is so ridiculous I think you're trolling.
That may be true, but if the .1% of households making more than $1m/year can obviously and unquestionably overthrow the government, we may as well dispense with any pretense of democracy.
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What a pathetic ploy to divide the working class against each other. The reason states are short on cash is the race to the bottom we’ve all been participating in since the 1980s when government policy and general economic policy moved from focusing on keeping the middle class healthy to massive tax breaks and cuts for corporations and the wealthy.
For the last nearly 40 years every state has been playing the game of trying to attract corporations with massive tax breaks against the promise of jobs. Then a lot of the time the promised jobs never appear. Meanwhile the state is still out millions or billions of dollars in revenue.
Corporations and the wealthy can afford to hire lobbyists to write favorable policies. Working class people cannot and have been eating the brunt of all the tax breaks the rich and powerful and connected have received.
Maybe a handful of people in some states have abnormally high pensions. That’s not the source of the problem. Those pensions were solvent until they were treated like a piggy bank by corrupt and bought politicians.
For the last nearly 40 years every state has been playing the game of trying to attract corporations with massive tax breaks against the promise of jobs. Then a lot of the time the promised jobs never appear. Meanwhile the state is still out millions or billions of dollars in revenue.
Corporations and the wealthy can afford to hire lobbyists to write favorable policies. Working class people cannot and have been eating the brunt of all the tax breaks the rich and powerful and connected have received.
Maybe a handful of people in some states have abnormally high pensions. That’s not the source of the problem. Those pensions were solvent until they were treated like a piggy bank by corrupt and bought politicians.
I'm not sure why this is so heavily down-voted. Pensions are surely a problem, but they are clearly a drop in the bucket compared to the revenue that states miss out on when they let corporations pit them against each other in race to the bottom behavior.
Not sure why it was downvoted, but my bet is this that you insist in: Pensions are surely a problem, but they are clearly a drop in the bucket
Pensions are NOT a drop in the bucket by any measure. Maybe for the USA they're less important. But for the rest, safety net is most of a country expenses. Then you add that population in the first world tends to shrink and the model in most countries where current workers pay for retired ones... and you have a very serious problem.
Pensions are NOT a drop in the bucket by any measure. Maybe for the USA they're less important. But for the rest, safety net is most of a country expenses. Then you add that population in the first world tends to shrink and the model in most countries where current workers pay for retired ones... and you have a very serious problem.
That was my fault as well. Pensions are almost a form of a Ponzi scheme. They all will eventually collapse. Corruption in pension administration is also rampant.
If pensions are a ponzi scheme, so is the expectation that our economy will, on average, grow YoY.
Yet, every single part of our society, from pensions, to investments, to government planning, to retirement advice for people working in the private sector is based on the insane notion that 3% GDP growth is perpetually sustainable.
Yet, every single part of our society, from pensions, to investments, to government planning, to retirement advice for people working in the private sector is based on the insane notion that 3% GDP growth is perpetually sustainable.
Pensions are not a pyramid scheme any more than any other form of retirement fund is. Give me a break.
There is one retirement fund that isn’t a pyramid scheme: the kind where the retiree saves in his own account and faces investment risks like everyone else. Forcing taxpayers to shelter you from risk is slimy, even if you have a “negotiated agreement” signed by some politician.
You realize 401k programs at most companies are treated as a pool just like pension funds right?
The difference is politicians had domain over the pension funds and decided to "borrow" from them and make them insolvent. The workers are not the ones to blame, the politicians who thought using the pension funds as a piggy bank are. Stop blaming the workers. They didn't cause this problem, and they paid into those retirement funds.
The politicians who caused the problem are the ones who want you to blame the workers, stop being their patsy.
The difference is politicians had domain over the pension funds and decided to "borrow" from them and make them insolvent. The workers are not the ones to blame, the politicians who thought using the pension funds as a piggy bank are. Stop blaming the workers. They didn't cause this problem, and they paid into those retirement funds.
The politicians who caused the problem are the ones who want you to blame the workers, stop being their patsy.
>You realize 401k programs at most companies are treated as a pool just like pension funds right?
That's false. One of the requirements of a qualified plan under section 401 is that the employee has a nonforfeitable right to plan benefits: https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-...
The corporations who tell workers that the corporation can take money out of employer 401k plans without authorization are trying to scare the workers, stop being their patsy.
>The politicians who caused the problem are the ones who want you to blame the workers, stop being their patsy.
The workers should have known that future promises to pay which would drive the government into insolvency were promises made in bad faith. This doesn't absolve the politicians of their sins, but the workers are not innocent lambs either.
That's false. One of the requirements of a qualified plan under section 401 is that the employee has a nonforfeitable right to plan benefits: https://www.irs.gov/retirement-plans/plan-sponsor/401k-plan-...
The corporations who tell workers that the corporation can take money out of employer 401k plans without authorization are trying to scare the workers, stop being their patsy.
>The politicians who caused the problem are the ones who want you to blame the workers, stop being their patsy.
The workers should have known that future promises to pay which would drive the government into insolvency were promises made in bad faith. This doesn't absolve the politicians of their sins, but the workers are not innocent lambs either.
Again you keep talking like insolvency was inevitable. It wasn’t. It happened because politicians misused the funds.
I’m bored of arguing with you though. It serves no purpose because you are just regurgitating right wing talking points.
I’m bored of arguing with you though. It serves no purpose because you are just regurgitating right wing talking points.
Anyone who could count new hires and had access to an actuarial death table would be able to determine the size of the problem, even 30 years ago. I apologize if that kind of thinking is probably boring.
Calstrs, which is only for teachers, has over 900,000 members, with a bit less than half currently working. The average pension payout is $50,000 and the average retired person under Calstrs worked for under 25 years. And this is only for teachers.
https://siepr.stanford.edu/sites/default/files/publications/...
The many tens of billions of dollars spent on pensions annually in California alone dwarf any tax breaks given to companies. And California is very stingy with those anyway. For comparison California's annual budget is just about $270bn according to Ballotpedia.
The many tens of billions of dollars spent on pensions annually in California alone dwarf any tax breaks given to companies. And California is very stingy with those anyway. For comparison California's annual budget is just about $270bn according to Ballotpedia.
I don’t even know where to begin your comment is so full of deliberate half truths. The people work under 25 years because you only need to work 20 to qualify. Why’s that? Because you only need to work that long to have paid enough into the pension fund to earn that retirement.
Oh yeah that’s the detail everybody loves to skip over; these workers PAID into their pensions. They earned that money.
Again, if the pensions aren’t solvent it’s because of corrupt politicians and nothing else.
Stop trying to blame workers for receiving a benefit they worked for and deserve.
And as far as the pension eclipsing tax breaks; another red herring. The pensions should be getting paid out of a relevant fund. AND while any one tax break may not match the payout of the overall fund there are many many corporate tax breaks written into the laws that collectively cut state budgets to shreds.
Oh yeah that’s the detail everybody loves to skip over; these workers PAID into their pensions. They earned that money.
Again, if the pensions aren’t solvent it’s because of corrupt politicians and nothing else.
Stop trying to blame workers for receiving a benefit they worked for and deserve.
And as far as the pension eclipsing tax breaks; another red herring. The pensions should be getting paid out of a relevant fund. AND while any one tax break may not match the payout of the overall fund there are many many corporate tax breaks written into the laws that collectively cut state budgets to shreds.
HN tends to react negatively to inflammatory language, such as What a pathetic ploy.
I sometimes have mixed feelings about that, but generally agree that inflammatory language does not foster reasoned, meaty discussion.
I sometimes have mixed feelings about that, but generally agree that inflammatory language does not foster reasoned, meaty discussion.
How much money would you consider to be a reasonable pension? LA's payment of pension obligations is 31% of their city budget. Many other cities see significantly more, and it's going to keep getting worse as more workers retire.
https://calmatters.org/articles/commentary-surging-pension-c...
https://calmatters.org/articles/commentary-surging-pension-c...
My guess is that the opening line is pure political rhetoric: "What a pathetic ploy to divide the working class against each other."
While I agree with the overall point of the comment. I down voted it because of the tone with which it was made and it's lack of attempt to brings any facts or references to bear in reinforcing its claims.
A prime example of states spending their money poorly to the benefit of big businesses is another HN topic. The headline is about eminent domain, but the article talks about the 3 billion "investment" that was given to Foxconn that seems unlikely to pay for itself even in an optimistically estimated 25 years.
Edit: Also, several of the "factual" claims made were... hard to believe without any numbers to back them up.
While I agree with the overall point of the comment. I down voted it because of the tone with which it was made and it's lack of attempt to brings any facts or references to bear in reinforcing its claims.
A prime example of states spending their money poorly to the benefit of big businesses is another HN topic. The headline is about eminent domain, but the article talks about the 3 billion "investment" that was given to Foxconn that seems unlikely to pay for itself even in an optimistically estimated 25 years.
Edit: Also, several of the "factual" claims made were... hard to believe without any numbers to back them up.
There's such a double standard, but no one is ever called to back up a claim like "small government is better for the economy" which I believe is just empirically false. You can plainly see states/countries that spend more on pensions and social safety nets have wildly better outcomes for their citizens. Yet don't see conservative making any reasonable arguments just well wore platitudes about "fiscal responsibly," but they never are forced to elaborate on what they mean by that or flagged or down-voted because this is a highly conservative that serves to reinforce the beliefs as opposed to challenge them.
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A state that lets a potentially large employer go elsewhere also misses out on the revenue. So there's no reason not to compete for them, since most states will get income tax revenue from the employees if nothing else, along with general economic benefits of lower unemployment.
That and practically every economist agrees that taxes on businesses are pointless. Tax the people working for said business and then you won't have the cost of taxation merely passed on to the consumer. You'd also likely be able to pass par higher tax rates on the highest levels of executives that way.
The worst part is citing the clearly outrageous pensions of a handful of well-connected elites, knowing they'll be used as stand-ins for the pensions of teachers and DMV clerks.
We ought not to focus on others whom were promised / earned a certain level of pension only to have it cut because other factions are jealous. Pensions are what many retirees need to survive. Reducing pensions in any way degrades the planned and promised standard of living of people often unable to go out again into the workforce.
We gotta strengthen organized labor and fight for living wages and pensions for all persons. The 1% have way too much and keep getting richer, while the rest fall behind and the middle-class languishes.
We gotta strengthen organized labor and fight for living wages and pensions for all persons. The 1% have way too much and keep getting richer, while the rest fall behind and the middle-class languishes.
Well, cutting the top out of this seems like the obvious solution. Pants-on-head to give an Oregon coach who's been funded by Nike to collect a multimillion pension.
It does seem reasonable that there would be a cap, but I wonder how much cutting the pensions of a few thousand highly paid retirees will impact the budget.
If we assume that the average pension of those with a pension over $100,000/year is $200,000 a year, and cut those down to a cap of $100,000/year it would be $200,000,000/year in pension reduction. With a $2.5 billion/year spend on PERS [0], that is not an insignificant amount on the entire burden of the pension system, even if it is off by an order of magnitude.
[0] http://www.pers.ms.gov/Content/Supplemental/persfacts_figure...
[0] http://www.pers.ms.gov/Content/Supplemental/persfacts_figure...
If you assume the average for those over $100k is $17 billion, capping it at $100k would save the entire budget many times over!
$200k is a completely arbitrary assumption. And if your cost savings are off by an order of magnitude, it is basically insignificant, at <1% of the budget.
If you can wave a wand and reduce benefits, targeting only the top 2000 is probably not the most effective use of your magic.
$200k is a completely arbitrary assumption. And if your cost savings are off by an order of magnitude, it is basically insignificant, at <1% of the budget.
If you can wave a wand and reduce benefits, targeting only the top 2000 is probably not the most effective use of your magic.
There is another key point to fixing the absurd top N% of pensions that are receiving large payouts: maybe it won't save the budget, however those funds can go toward paying for more pensions (eg in the bottom 50%) with the same capital outlay. The $100,000 you shave off a spiked pension at the top, might pay for four lower level pensions. In these types of scenarios, 5% and 10% optimizations are a big deal over the long-haul.
At the very least, someone should crunch the numbers and find out. It's anyone's guess how the ratios will skew until you measure them.
How to approach this fairly is a whole other can of worms; there will almost inevitably be some unjust outcomes.
How to approach this fairly is a whole other can of worms; there will almost inevitably be some unjust outcomes.
The data is here: https://gov.oregonlive.com/pers/ (you can download a CSV).
There are 2,032 people making over $100,000 per year. The sum of their pensions is $252,144,041.04 per year. If each were capped at $100,000 per year that would be $203,200,000 per year, so a potential savings of $48,944,041.04
There are 2,032 people making over $100,000 per year. The sum of their pensions is $252,144,041.04 per year. If each were capped at $100,000 per year that would be $203,200,000 per year, so a potential savings of $48,944,041.04
I guess I'm one of those .04%.
Sorry, commented on the wrong article...
.04% of what?
The .04% of people who announce they are in the .04%. It's a very select group with an unusual hobby.
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I'm not super familiar with city and state government jobs, but I do know something about military and federal compensation. They frequently pay less in salary, but have better benefits. This makes it an apples to oranges comparison when trying to talk about what they pay in comparison to non government jobs.
I was a military wife for a lot of years and I have spent a lot of time trying to figure out how to convey this. At one time, my army spouse was nominally making about half the income of someone else close to me, but take home pay for my spouse and this other person was nearly identical and I never spent a dime on doctor's visits or prescription medication. The primary difference in our quality of life was that my husband's income supported a family of four and this other individual was single and childless at the time.
So it gets really confusing because sometimes the take home pay for government jobs is less, but the total compensation package can be better. This means that two people arguing about it can both be right and unable to see the other point of view.