32.6% Funded Ratio

This may be news to some:

New Jersey’s pension system is now funded at just over 30 percent of what workers are owed, a significant decline from last year but one that the state Department of Treasury said is largely explained by the switch to a new, more stringent accounting method.

The drop from a funded ratio of 54.2 percent to 32.6 percent was disclosed by the state Tuesday in supplemental material for a bond sale that is planned for next month. The new funded ratio was measured on June 30.

I am looking for that supplemental material so if anyone can locate it please send over a link since it would be interesting to see how they arrived at their 32.6% which, oddly enough…

is EXACTLY the funded percentage I got in my latest REAL NUMBER UPDATE.

 

 

37 responses to this post.

  1. Posted by Anonymous on November 26, 2014 at 5:16 pm

    Hey John if they claim 32.6 percent funded then you know it isnt correct! Doesnt that make you think things are even worse than you thought!

    Reply

    • Posted by Tough Love on November 26, 2014 at 5:55 pm

      A funding ratio in the low 30’s is consistent with assumptions/methodology use in Private Sector Plan valuations. Seems just about right, and based on new Gov’t Accounting Standards.

      Since there are ONLY 2 sources of pension contributions …the Taxpayers and the workers, there is a great deal of pain for the taxpayers and the workers/retirees on the horizon.

      Not to beat a dead-horse, but taxpayers should only fund UP TO a pension no more generous (as a % of cash pay) than what they get from their employers. Promises more generous to Public Sector workers are simply the result of the Union/politician trade-off of campaign contribution and election support for favorable votes on Public Sector pay, pensions, and benefits …… and should be ignored.

      Even WITH the quite modest taxpayer contributions over the years, they might indeed have been MORE THAN sufficient to fund a pension EQUAL to what PRIVATE Sector Taxpayers typically get in pension benefits from their employers.

      Reply

      • TL, why should the taxpayers be responsible for funding the retirements of public workers on any scale? I know you advocate for equal but why can’t they be responsible for funding their own retirements just like the rest of us? Why do we owe them anything at all other than a fair salary for whatever job that they perform?

        Reply

        • Posted by Tough Love on November 27, 2014 at 1:11 am

          Notwithstanding the frequent (mostly empty) challenges to my comments from the many “Anonymous” (clearly Public Sector worker) commentators, I have always advocated for EQUAL Public/Private Sector “Total Compensation” (cash pay + pension + benefits).

          If “cash pay” is lower in the Public Sector for some Public Sector workers (arguably, certain high level professionals such as doctors, lawyers, gov’t scientists, high level IT professional, etc.) there is justification for higher (and offsetting by and equal amount) Public Sector pensions and benefits for those workers. However, for the vast majority of Public Sector workers, there is little SUBSTANTIVE evidence that Public Sector cash pay is less than those of their Private Sector counterparts, and for the 25%-50% of occupations at the lower end of the pay scale, there is ample evidence that Public Sector cash pay alone EXCEEDS that of their Private Sector counterparts (sometime quite materially). And without doubt, “job security” is FAR FAR greater in the Public Sector and not without value (although I have ignored it here).

          For the purposes of discussion, let’s assume that ON AVERAGE Public/Private Sector “cash pay” is equal (acknowledging that differences occur across occupation groups). Under that assumption, to meet the reasonable (and seemingly appropriate) goal of EQUAL Private/Public Sector “Total Compensation”, ON AVERAGE, Public Sector Pensions and Benefits (in total) should be EQUAL TO that of their Private Sector counterparts.

          While long ago, many Private Sector workers (primarily in very large Corporations) had “traditional” (final-average-salary) Defined Benefit (DB) pensions similar in design to (but almost always far less generous than) those currently granted virtually all current Public Sector workers, the vast majority of these Private Sector pension Plans have been frozen (ZERO future growth) for most CURRENT, not just new workers. The VERY typical Private Sector retirement package afforded today’s Private Sector worker is the employer’s Social Security contribution on the worker’s behalf (6.2% of pay) plus a 3%-5% of pay matching employer contribution into a 401K Plan. So in total, Private Sector employers typically contribute about a level annual 10% of pay towards their workers’ retirements. As to employer-provided retiree healthcare, today, in the Private Sector, if there is ANYTHING at all, it is VERY rarely more than a modest $300-$500 annual contribution into a retiree Health Savings Account (HSA).

          In the Public Sector, the Traditional (Final Average salary) DB Pension Plan is almost universal, and while Retiree Healthcare subsidies vary quite widely from location to location, the subsidy is rarely less than 50% of annual healthcare premiums (for a generous … often “Cadillac” Plan) and sometimes 100% of the premium, as it is for retired NJ teachers and Police Officers with sufficient service years. A recent Report quantified the average “value” of Public Sector retiree healthcare subsidies as equal to a level annual 12% of pay over the worker’s entire career. (Source: http://www.publicceo.com/2014/02/resolving-one-debate-on-public-sector-pay/).

          Since the $300-$500 that a Private Sector employe MAY contribute into a retiree HSA is most often less than 1% of pay, PUBLIC Sector workers have a 12%-1%=11% of pay “advantage” over the Private Sector workers JUST FROM EMPLOYER-PROVIDED RETIREE HEALTHCARE. And notice that this “advantage” alone is greater in value (by 11%-10%=1%) than the ENTIRE 10% of pay the Private Sector worker’s employer contributes toward the worker’s retirement.

          It follows that EQUAL Public/Private Sector “Total Compensation” is just about achieved by Public Sector workers keeping their very generous retiree healthcare benefit but getting ZERO Taxpayer funding towards their pensions.

          Alternatively … and getting back to your question …… if EQUAL Public/ Private Sector “Total Compensation” is the appropriate goal, it can be achieved by Public Sector workers giving up their very rich retiree healthcare benefits in exchange for a $300-$500 annual HSA contribution, and getting a Taxpayer contribution no greater than a level annual 10% of pay towards their pensions.

          As the final element of this analysis, we must look at the true expected TOTAL level annual %-of-pay cost of Public Sector pensions, less any offset from employee contributions. Assuming that COLAS are reinstated, the following are very reasonable cost ranges to fully fund the typical Public Sector pension over their working career, separately for Misc workers & teaches, and for safety workers (with the more generous pensions).

          For misc workers & teachers, the level annual TOTAL cost falls within the range of 25-40% of pay depending on Plan generosity. For Safety workers the range is typically a level annual 40-60% of pay. If we assume that misc workers & teachers directly contribute 5% of pay, and safety workers contribute 10% of pay, and use the midpoint in each of my above Total COST ranges, then the Taxpayers are typically “responsible for*” 32.5%-5%=27.5% of pay annually for misc workers & teachers, and 50%-10%=40% of pay annually for safety workers.

          So where are we MJ, re your question?

          If Public Sector workers are unwilling to give up their current retiree healthcare benefits in exchange for a $300-$500 Taxpayer HSA contribution, then yes, you are correct. Taxpayers should NOT contribute ANYTHING towards their pensions and a “Total Compensation” Equivalence would still be maintained.

          Or ….. If Public Sector workers ARE will to move to a $300-$500 HSA for retiree healthcare benefits, then they SHOULD get a pension, but one with a level annual Taxpayer contribution of 10% of pay, not the 27.5% and 40% Taxpayer contributions that are now needed to fully fund the current extraordinarily generous pensions promised Misc workers & teachers, and safety workers respectively.

          * Note that I stated “responsible for” above (as opposed to “contribute”). In NJ as well as many other States & Cities, Taxpayer contributions are far less than the 27.5% and 40% of pay needed to fully fund Public Sector pensions. Understanding the above analysis, it is clear that there is simply ZERO justification for such extraordinarily generous pensions, and hence their absurdly high annual contribution requirements.
          —————————————————–
          The above analysis assumed that none of the Public Sector workers discussed is eligible for Social Security benefits. For those Public Sector workers eligible for SS, the Taxpayers fare even worst in a revised work-up that would reflect such SS participation.

          Reply

          • Posted by Anonymous on November 27, 2014 at 10:34 am

            Whew!!!!

          • Posted by SDouglas47 on November 28, 2014 at 1:34 pm

            “(arguably, certain high level professionals such as doctors, lawyers, gov’t scientists, high level IT professional, etc.)”

            “Arguably” as in 38 percent lower cash wages.

            ……………..
            Notwithstanding the frequent (mostly empty) challenges to my comments from the many “Anonymous” (clearly Public Sector worker) commentators,

            LOL. !!!!

            There is a name for your condition.

          • Posted by SDouglas47 on November 28, 2014 at 2:11 pm

            ” However, for the vast majority of Public Sector workers, there is little SUBSTANTIVE evidence that Public Sector cash pay is less than those of their Private Sector counterparts, and for the 25%-50% of occupations at the lower end of the pay scale, there is ample evidence that Public Sector cash pay alone EXCEEDS that of their Private Sector counterparts (sometime quite materially).”

            Unless you consider The Heritage Foundation substantive.

            TL, did you even read the study? Individuals with high school education or less are roughly equal in cash pay. Where is your ample evidence ?

            “25%-50%” is a totally fabricated number. A lie, in other words.
            “(sometime quite materially)” doubles down on the lie.

            Credibility is crucial. Yours is irretrievably destroyed. You are your own worst enemy.

          • Posted by SDouglas47 on November 28, 2014 at 2:16 pm

            “For the purposes of discussion, let’s assume that ON AVERAGE Public/Private Sector “cash pay” is equal ”

            ………….

            Let’s don’t assume any such unverifiable twaddle.

          • Posted by Tough Love on November 28, 2014 at 2:53 pm

            SDouglas47 … I See that you are continuing with more disingenuous and erroneous comments (well beyond simply reflecting “opinions” based on an understandably biased Public-Sector-retiree mentality) …

            Since you seem to imply that the Heritage Foundation supports your rather twisted view of reality, I have posted (below) 2 recent Heritage Foundation articles obtained from a quick Google search of the words “heritage foundation public sector compensation”).

            Mr. Bury’s blog’s readers can come to their own conclusions as to whether what I have stated above (and my many similar comments) is accurate, or wrong as you suggest.

            ————————————————-
            http://www.heritage.org/research/reports/2013/02/nine-fallacies-used-to-defend-public-sector-pensions

            http://www.heritage.org/research/reports/2012/05/the-real-cost-of-public-pensions

          • Posted by Tough Love on November 28, 2014 at 3:06 pm

            SDouglas47,

            No offense to Teachers, but it seemed appropriate to add the following Report to my above links (also from the Heritage Foundation) …

            http://www.aei.org/wp-content/uploads/2011/11/-assessing-the-compensation-of-publicschool-teachers_19282337242.pdf

            The following is a quote from that Report’s conclusion:

            “We conclude that public-school teacher salaries are
            comparable to those paid to similarly skilled private-
            sector workers, but that more generous fringe benefits
            for public-school teachers, including greater job security,
            make total compensation 52 percent greater than
            fair market levels, equivalent to more than $120 billion
            overcharged to taxpayers each year. Teacher compensa-
            tion could therefore be reduced with only minor effects
            on recruitment and retention. Alternatively, teachers
            who are more effective at raising student achievement
            might be hired at comparable cost.”

          • Posted by SDouglas47 on November 28, 2014 at 3:24 pm

            Tough Love…..

            I realize that this article is about pensions.

            You are the one who today, and as far back as I can recall, have continually and forcefully stated higher pensions are improper because there is no difference in cash pay.

            ” However, for the vast majority of Public Sector workers, there is little SUBSTANTIVE evidence that Public Sector cash pay is less than those of their Private Sector counterparts,”

            My post is in response to that allegation. Period.

            As per the April 2014 study by Andrew Biggs and Jason Richwine:

            “Our analysis finds that the average state pays salaries around 12 percent below those paid by large private-sector employers for similarly-skilled workers.”

            “Individuals with a high school diploma or less receive salaries that are very close to those paid in the private sector.”

            “State employees with only a high school diploma receive salaries 3 percent below private sector levels”

            “All other educational attainments, however, appear to receive lower average salaries in state government than in the private sector, with the largest salary penalty of 37 percent received by state government employees with professional degrees.”

            http://www.aei.org/wp-content/uploads/2014/04/-biggs-overpaid-or-underpaid-a-statebystate-ranking-of-public-employee-compensation_112536583046.pdf

          • Posted by SDouglas47 on November 28, 2014 at 3:38 pm

            “SDouglas47 … I See that you are continuing with more disingenuous and erroneous comments”
            ……………………………….
            On the subject of cash wages, which you introduced, again and again, to the debate, I quoted from the most conservative study available.

            Tough Love posted:

            “However, for the vast majority of Public Sector workers, there is little SUBSTANTIVE evidence that Public Sector cash pay is less than those of their Private Sector counterparts, and for the 25%-50% of occupations at the lower end of the pay scale, there is ample evidence that Public Sector cash pay alone EXCEEDS that of their Private Sector counterparts (sometime quite materially).”

            The statement in its entirety is demonstrably incorrect, and the “25%-50%” is shamelessly fabricated for sensationalist value. in other words, a lie.

            Seriously, which of us is ” continuing with more disingenuous and erroneous comments” ?

          • Posted by SDouglas47 on November 28, 2014 at 5:20 pm

            “…………disingenuous and erroneous comments (well beyond simply reflecting “opinions” based on an understandably biased Public-Sector-retiree mentality) …”

            I’m not sure what a “Public-Sector-retiree mentality” is. I was happy and proud to pursue my occupation as a California state employee. Even happier to be retired.

            I don’t think you actually know what my “opinion” is. Here is but one of my opinions:

            Tough Love quote: “I have always advocated for EQUAL Public/Private Sector “Total Compensation” (cash pay + pension + benefits).”

            SDouglas47: My “opinion” is that “Public/Private Sector “Total Compensation” (cash pay + pension + benefits).” should be equal. Since it is not humanly possible for them to be exactly equal, they should be “roughly equal” over time and over geographic area.

            Is that unreasonable?
            ………………………………
            There were several large studies published in the last two to four years. Comparing public and private salaries. I have posted links to each of these at various times. Since it came out in April, the one I have cited almost exclusively is from The American Enterprise Institute for Public Policy Research. Is this the “disingenuous and erroneous comments” you are referring to?

            My opinion is that the AEI study is slanted toward exaggerating the excess of public over private compensation. Overall, they deem public compensation about 20 percent over private. Total compensation.

            The other studies generally consider public sector worker compensation “roughly equal” or even “slightly lower” than private. Total compensation.

            My opinion is that the AEI study, consciously or subconsciously, skews the results toward higher public compensation and the CSLGE and NIRS studies skew the other way.
            ……………….
            My “opinions”

            1. The biggest difference in the AEI study is their valuation of retiree healthcare costs and pensions calculated at the risk free rate.
            2. All the studies are in general agreement on the comparison of cash wages. Public sector workers are paid less.
            3. All the studies agree that lower skilled public workers earn about the same cash pay, and have higher total compensation than their private sector counterparts.
            4. All the studies agree that the higher skilled/educated public workers have lower cash pay, and lower total compensation than their private sector peers.
            5. The “truth” is somewhere in the middle.
            6. I stress the AEI study because it does an excellent job of describing the methodology of the studies. I strongly suggest anyone serious about public pension problems read and reread this study. It has a very good description of the difference between benefits based on a percentage of salary as opposed to “flat dollar” benefits and the importance that has to genuine compensation/pension reform. It has the best data showing the difference between the highest and lowest skilled public workers and their respective total compensation as compared to the private sector.

            Specifically, which remarks are “disingenuous and erroneous” ?

          • Posted by SDouglas47 on November 28, 2014 at 5:22 pm

            To quote anonymous, “Whew!!!”

          • Posted by Tough Love on November 29, 2014 at 3:19 am

            SDouglas47,

            You just rambled off several more comments basically using the Biggs/Richwine Report to challenge what I have said.

            The Biggs/Richwine Study indicates right up front that they excluded from their study the large Public Sector group with both high cash pay and VERY high pensions/benefits, specifically all Public Sector Safety workers. In addition, their Report includes State but not Local Public Sector workers.

            Have I EVER excluded safety workers or Local workers in my comments on the cash pay of Public Sector workers as a group? I’m quite sure that you didn’t “miss” this distinction, so calling your commentary disingenuous still seems to fit quite well…. you pick & choose to fit your agenda.

            That being said, I believe that omitting safety workers from their Report (and not providing a parallel Report just for Safety workers) materially lessens it’s value. Clearly Safety workers compensation is the most egregious and burdensome especially at the LOCAL level ……… with this Report omitting all LOCAL Public Sector workers being another unfortunate shortcoming.

            I would however recommend that all persons interested in the pension reform debate read this report as there is much to learn.
            ————————————————————————
            A few observations on Biggs/Richwine report (noting that the average reported 12% “cash pay” disadvantage of Public Sector workers would certainly get smaller and perhaps disappear if State and Local Safety workers had been included):

            (1) Even though the authors’ emphasis is on State variations, overall countrywide averages are helpful as a reference. It’s a shame that the Tables and Figures with by-State splits (starting on Report page 58) do not also show the countrywide averages, although the discussion text may mention the countrywide average (e.g., the 12% lower Public Sector countrywide-average
            Salary noted on Report Page 7, is shown by-State in Figure 1).

            (2) What if “median” instead of “mean” salaries were used? Would the 12% lower “average” Public Sector salaries be lower by a smaller percentage? If so, by how much? Is including large million-dollar and multi-million-dollar
            Private Sector salaries in the Private Sector average (i.e., “mean”) salaries appropriate or does it distort the results ?

            (3) This study excludes Safety workers. Having (by FAR) the most costly compensation packages of all Public Sector workers, they should have been similarly analyzed, perhaps presenting the results separately. What would the study results have been had they be included and compared to Private Sector workers with reasonably similar, education, experience, skill sets, knowledge requirements, and in jobs with similar-level risks? Given the high “cash pay” alone of many safety workers, would their inclusion in this study have erased (or even flipped the other way) the 12% lower Public Sector salaries?

            (4) This study (and all studies that I have seen) makes no mention of a MAJOR pension advantage only Public Sector workers get. Because Public Sector workers most often belong to a State-wide “PERS”-type Plan, they can have numerous jobs in different agencies (often with completely different functions), and have the final salary from only the FINAL position used as “pensionable compensation” (applied to ALL years of service). With most Private Sector workers now having perhaps 5+ jobs over their career, even if they had the SAME pension in each job, and even if the pension formula and provisions were identical to that of their Public Sector counterpart, the SUM of their 5 pensions (each with “pensionable compensation” based only the last year IN EACH of the 5 positions) would be MUCH MUCH smaller than that of the Public Sector worker.

            (5) Being a resident of NJ, clearly my strong advocacy for material Public Sector compensation reductions (for all CURRENT workers) is justified, as average (non-safety worker) NJ Public Sector total compensation is (per Figures 6 and 13) 23% greater without including the incremental value of greater Public Sector job security, and 34% including the incremental value of greater Public Sector job security. And had safety workers (with cash pay alone averaging over $100K, and with MUCH more generous pensions) been included, the percentages would have been considerably higher.

            (6) The most important figures presented are the Total Compensation figures in Table 4 and Figure 7. Notwithstanding that these are countrywide averages (with significant underlying by-State variations) it should be noted that the only 2 educational levels with a statistically significant Private Sector Total Compensation “advantage” are Professionals and PHD, and these two categories combined represent only 10% of the Public Sector workforce and 3% of the Private Sector workforce.

          • Posted by SDouglas47 on November 29, 2014 at 5:13 am

            Since it’s late, I’ll start with number 6.

            My point has been, for several years, that TL wants to reduce pensions materially for all public sector workers because they are all overpaid. Specifically, all government workers earn as much or more in cash pay, so there is no reason they should have higher pensions and benefits than the private sector.

            You have been adamant about this. “However, for the vast majority of Public Sector workers, there is little SUBSTANTIVE evidence that Public Sector cash pay is less than those of their Private Sector counterparts, ”

            Table 4 and figure 7 show cash pay less at every level, and, from BA degree and up, state workers earn the same or less in total compensation. These people are not overpaid, but your plan is to cut their benefits anyway. Overall, depending on which source you use, 48 percent to 54 percent of Public Sector workers have a Bachelor’s degree or higher.

            They
            Are
            Not
            Overpaid

            That means over half of state workers are either “roughly equal” or UNDERPAID.

            Professional and PhD : “these two categories combined represent only 10% of the Public Sector workforce and 3% of the Private Sector workforce.” ???

            Your credibility is already shot. I suggest you find another source for that. It is much higher.
            …..
            Tomorrow we can discuss your Fireman Fallacy.

            I mentioned before that this study did not include safety or local governments. I’m sure if you’re willing to finance those studies, they will accommodate you.

          • Posted by Tough Love on November 29, 2014 at 12:02 pm

            SDouglas47,

            So I guess that your IGNORING the Report’s exclusion of Local workers and the large and highest paid Public Sector group, SAFETY WORKERS (while my comments have never omitted these groups and have never been based on the more limited employee-groups included in this Report), and REPEATING the same comments as you before, makes your comments less disingenuous ?
            —————————————

            And quoting … “Professional and PhD : “these two categories combined represent only 10% of the Public Sector workforce and 3% of the Private Sector workforce.” ???”

            Seems that you have a problem with that. The #s are taken directly from the Report’s Table 1 (6%=4%=10%) and (2%+1%=3%).

          • Posted by SDouglas47 on November 29, 2014 at 1:13 pm

            TL quote:

            “Have I EVER excluded safety workers or Local workers in my comments on the cash pay of Public Sector workers as a group? I’m quite sure that you didn’t “miss” this distinction, so calling your commentary disingenuous still seems to fit quite well…. you pick & choose to fit your agenda.”
            …………
            What you said was very clear: all public sector workers are paid more than private sector. Did you exclude non safety workers, EVER?

            I did not miss that distinction. You seem to have an obsession with safety workers. The first TL quote I found is typical:

            ” (b) If (a) above is not possible (after exploring ALL legal avenues and options to do so), then the pension accrual rate for the future service of all CURRENT Public Sector workers should be reduced by 50% for all non-safety workers and by 66% for all safety workers (with the most egregious pensions) …… and even AFTER such reductions, the resultant pensions would STILL be greater than the pensions granted 90+% of comparable Private Sector Taxpayers.”

            You propose to reduce the pensions for all non – safety employees, did you ever exclude these workers who, I hope we can all finally agree are not overpaid, in either cash wages or total compensation?

            Rhetorical question. ….you did not. You did not ever concede that any public employees are underpaid.

            You say only two educational levels have a significant advantage in the private sector. I was actually including Master’s degree holders, who have only a 3 percent public sector disadvantage, and would bring the total underpaid to 28%. My point was, you have always advocated reducing the pensions of all public sector workers, not just safety workers.

            If you do not consider MAs “significantly underpaid” at minus 3%, I hope you don’t consider the Bachelor’s significantly overpaid at plus 2%.

            Which means that roughly 60% of…………..NON-SAFETY………..publlic workers are either nearly equal or definitely underpaid. Do you still advocate reducing the pensions of ALL public sector workers?

          • Posted by Tough Love on November 29, 2014 at 1:16 pm

            I previously stated that I would recommend that all persons interested in the pension reform debate read the April 2014 study by Andrew Biggs and Jason Richwine linked above (http://www.aei.org/wp-content/uploads/2014/04/-biggs-overpaid-or-underpaid-a-statebystate-ranking-of-public-employee-compensation_112536583046.pdf) as there is much to learn.

            Notwithstanding the Report’s shortcomings associated with omission of all Safety-worker employees (with their high pay and VERY high pensions & benefits) and inclusion of State (but not Local) Public Sector workers, Biggs and Richwine appropriately point out that the overall picture of considerably higher COUNTRYWIDE Public Sector Public Sector “Total Compensation” shows great variation from State to State and that policy decisions in appropriately addressing (and eliminating) that excess must be studied and address based upon State-specific statistics.

            Report Tables 6 and 13 are the key Tables showing the %-of-pay by which non-Safety-worker State employee compensation EXCEEDS that of comparable Private Sector workers (without inclusion in Figure 6 and with inclusion in Figure 13 of the incremental value of the much greater Public Sector job security).

            Even from Figure 6 (WITHOUT the incremental value of the much greater Public Sector job security) 42 of the 50 States show greater Public Sector Total Compensation, with the 8 showing LESS compensation all showing no more than a 6% of pay Private Sector advantage. In contrast, of the 42 States in which there is a PUBLIC Sector Total Compensation advantage, it rises to as much as 42% of pay, with 12 of the 42 Starts showing a Public Sector Total Compensation advantage of at least 20% of pay, and with 3 States, Ct., NY, and Penn showing a PUBLIC Sector Total Compensation advantage of 42%, 34% and 35% respectively. Report Table 2 is a good summary of the States most in need addressing this excessive total Compensation problem quickly, as the unfairness to their State’s Taxpayers both is overwhelming and undeniable.

            My resident state of NJ, the home State of this (Mr. Bury’s) blog, shows a PUBLIC Sector Total Compensation advantage of 23% of pay (from Figure 6) without the inclusion of the incremental value of the much greater Public Sector job security, and 34% of pay (from Figure 13) with the incluson of the incremental value of greater Public Sector job security. CLEARLY NJ needs to take action promptly to reduce Public Sector compensation, and NOT for just new workers, but for the future service of all CURRENT workers. And as the Biggs/Richwine Study, Tables, and Figures show, the problem is not primarily in Public Sector workers “cash pay”, but (at least in NJ and 1/2-2/3 of the other States) GROSSLY EXCESSIVE pensions and benefits ……… just as I have been stating in commentary on this blog and elsewhere for quite some time.

          • Posted by SDouglas47 on November 29, 2014 at 1:55 pm

            TL quote:

            ” (2) What if “median” instead of “mean” salaries were used? Would the 12% lower “average” Public Sector salaries be lower by a smaller percentage? ”
            ……………..
            I stated before (Calpensions, Nov 25) that ” for my own nefarious reasons”, I have linked this study a dozen times or more. I would hope that, by carefully reading one would learn to be skeptical of any exact numbers. Biggs and Richwine explain some of the difficulties in choosing and interpreting the data. It is eye opening. Look at ALL the major studies and get a feeling for the general trend. Don’t demonize an entire study because it is associated with what you consider a “liberal” group. 12% is actually one of the largest figures I have seen. Some of the liberal studies say the cash pay is only 5% to 7% less for state workers. It sometimes depends on which years the data was taken from.

            It has been over 40 years since my last statistics class. I have trouble remembering the proper usage of ‘mean’, ‘median’, and ‘average’. Keep in mind, we are not talking about the average wage. We are talking about the average ‘difference’ in wages. Or the difference in ‘average’ wages. And they don’t just use averages, they use the logarithm of the average. At some point, we just have to trust the researchers.

            Fortunately, there is actually a lot of agreement among the major studies, whether they are considered liberal or conservative.

            EXCLUDING SAFETY WORKERS……

            All the major studies concur that Public workers earn less than private in cash pay. The average varies between 1% or 2% less, and the 12% less in the AEI study.

            They all agree that the lowest educated/skilled public and private workers earn “roughly equal” cash wages, and the highest educated public workers earn much less than the private sector.

            Statistics on local governments are all over the place. Some studies show them higher paid, on average, than state workers, and some show them lower. This is understandable because of the tremendous variety in city size, location, average income, etc. It would be too difficult to try to average all these cities, and wouldn’t serve any useful purpose. And since most safety workers are city and county workers, we don’t have much solid statistical evidence on them.

            What I have been asking, repeatedly, is not to lump all public workers in one group and advocating eliminating or reducing their pensions because in your opinion, one subdivision of that group is overpaid.

            To wit, Tough Love: “Have I EVER excluded safety workers or Local workers in my comments on the cash pay of Public Sector workers as a group? ”

            SDouglas47: No, you said they were ALL overpaid, not to mention greedy, teat sucking thugs whose whose pay AND pensions should be materially reduced.

            Please stop doing that.

          • Posted by Tough Love on November 29, 2014 at 2:12 pm

            SDouglas47,

            Why is it that you continue to try to keep the reader’s attention on “cash pay” when … by your own previous statements, the important statistic (and the one upon which compensation CHANGES should be based) … is not “cash pay” but “Total Compensation” (“cash pay” plus pensions plus benefits)? Being “disingenuous” AGAIN ?

            CLEARLY the Biggs/Richwine study (the study of your own choosing to reference and quote from) shows (in all but 8 States) a Public Sector “Total Compensation” advantage, with that “compensation advantage” being VERY material (and hence appropriate for quite correction action) in 1/2 to 2/3 of the States.

            Is your thinking ………… when the #s don’t support your misguided agenda, try to direct the readers attention elsewhere ?

            If (and that remains open question) overall cash pay is somewhat lower in the Public Sector, the small % by which it is lower is overwhelmingly reversed via FAR FAR greater pensions and benefits, resulting in MUCH greater “Total Compensation” (in almost all States) as CLEARLY demonstrated in the Biggs/Richwine.

          • Posted by SDouglas47 on November 29, 2014 at 4:40 pm

            TL……..” Why is it that you continue to try to keep the reader’s attention on “cash pay”

            SD……..Because TL continually states that there is NO DIFFERENCE in cash pay. Even in the face of overwhelming evidence.

            Example…..TL: “If (and that remains open question) overall cash pay is somewhat lower in the Public Sector”

            Open question ?? Small percentage ?? 12% average and 38% at the high end ??

            Even in your grossly excessive, union thug greedy, public trough teat sucking state, (or so I’ve heard) state, the most conservative study available says the cash pay is 4% average below the private sector. This would indicate that your highest educated would be, if not 38% underpaid, at least in the double digits.

            Where do you see an open question?

            If you can’t get past this simple fact, you are stuck on…..delusional.

          • Posted by SDouglas47 on November 29, 2014 at 6:04 pm

            LOL!!!

            CHANGES should be based……
            “disingenuous” AGAIN?
            CLEARLY….The study of your own choosing
            “compensation advantage” being VERY material…
            FAR FAR greater pensions ..
            as CLEARLY demonstrated …
            …………….
            Your PASSION is duly noted. It’s your logic that is hopeless.

            Even in our states of CA and NJ, where the study says the state worker is overpaid by an average 33-34%, (still an open question, by the way) the highest educated are still underpaid in total compensation, and the lower ranks are overpaid in total compensation by much more than the average. Yet Tough Love proposes cutting them all the same.

            Meat axe approach. …non-starter.

            When Kelly Bundy took the test for hair salon worker, she told her mom, “It’s not fair! If you don’t get the lather/rinse right, they don’t even let you TRY the “repeat”.

            Pack up your spreadsheets, Kelly. You’ll never get it right, and you’re still shooting yourself in the foot.

          • Posted by Tough Love on November 29, 2014 at 6:38 pm

            SDouglas47, Quite amazing, and disingenuous … again

            While you have clearly stated that the PROPER statistic for comparison of Public and Private Sector compensation is “TOTAL COMPENSATION” you continue to try to move the discussion from THAT (“proper” measure) to “Cash Pay” (an incomplete measure), because all of your arguments fail using YOUR-OWN-DECLARED proper measure.

            And trying to secondarily focus on the compensation (Cash only, OR Total) of just the highest educated, those with PHD’s or Professional degrees, is laughable … as those groups, representing only 10% of Public Sector workers and 3% of Private Sector workers are hardy indicative of anything for the larger group of all workers.

            It’s tough to admit that you are wrong, isn’t it?

            And I’ll bet it pisses you off that you’re not successful trying to bully me.

          • Posted by SDouglas47 on November 29, 2014 at 7:10 pm

            Not really.

            LOL !!!

          • Posted by Tough Love on November 29, 2014 at 9:08 pm

            SDouglas47,

            Well, perhaps not “pissed-off”, but certainly still disingenuous.

      • Posted by SDouglas47 on November 28, 2014 at 1:24 pm

        “Not to beat a dead-horse, but taxpayers should only fund UP TO a pension no more generous (as a % of cash pay) than what they get from their employers.”
        ………………….
        Correction: taxpayers should fund only up to total compensation roughly equal to that of equivalent private sector workers.

        Recognizing that the average state worker earns 12 percent less in cash wages.

        Reply

  2. Posted by Anonymous on November 26, 2014 at 9:36 pm

    Not to beat a dead horse BUUUT LOCAL plans are much better funded..better that double the State plans. Better than double at PERS 65.81 and PFRS at 67.6.

    Reply

    • Posted by Tough Love on November 26, 2014 at 10:28 pm

      Yup, and those mid-60’s funding ratios should be evaluated in the context than the US Gov’t considers a 60% funding ratio in a Private Sector Plan SO POOR that the Plan is barred from crediting any future service (for all CURRENT workers).

      The Local Plans aren’t far from that 60%.

      The State Plans are hopeless … it’s only a matter of how soon the checks will stop.

      Reply

  3. Posted by Eric on November 26, 2014 at 11:40 pm

    John:
    You should be congratulated. I checked your figures again, and it is amazing that you were completely accurate.
    Eric
    PS I guess this is why Mr. Grady left Dodge.

    Reply

  4. Posted by Anonymous on November 29, 2014 at 8:32 am

    Tough Love lover of rambling diatribes filled with vocabulary words she learned in 5th grade and void of any fact or merit.. She no doubt fancies herself to an unhealhy degree.

    Reply

  5. Posted by Javagold on November 29, 2014 at 6:17 pm

    Simple. Fuck the public takers. We don’t need them. They don’t produce. They take from pocket and put into the other. Finally if they don’t like it. They can quit and get a great job in the private sector. It’s still a free country.

    Reply

    • Posted by Tough Love on November 29, 2014 at 6:47 pm

      Quoting …. “Finally if they don’t like it. They can quit and get a great job in the private sector. ”

      THAT would be an amusing sight. Can you imagine in the tens of thousands of mid and large (non-Union) white collar Corporate offices, the reaction of management when, upon being refused a raise/promotion that YOU think you deserve (but management doesn’t), YOU … with a common Public Sector mentality … sues the Company because someone ELSE got the raise/promotion instead of you.

      That exact scenario plays out throughout the country ……. ONLY in the nutty and Stick-It-To-The-Taxpayers “Public” Sector.

      Reply

  6. […] before proceeding with his vivisection.  No such detour is necessary when discussing a system at a 32.6% funded ratio. There will be selected excerpts from the book in the next blog but, for now, the sub-chapter on […]

    Reply

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