Two Lessons From the Central States Pension Plan Collapse

  1. The government will not protect your pension
  2. Actuaries for these plans are not independent

The proof:

According to a website to keep Central States Pension Plan participants informed (or distracted):

Like many of our nation’s multiemployer pension funds, Central States Pension Fund has become severely underfunded and is headed toward financial failure. If action is not taken soon to address this funding problem, by 2026, Central States Pension Fund will run out of money and be unable to pay benefits to current and future retirees.

How did the Fund become so severely underfunded?

Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a result, the Fund currently has more than three times as many retirees as active members — so, far fewer contributions are coming in than benefits being paid out.

Checking out the 5500 filing for 2013* for the plan confirms that dire situation and leads to two obvious questions:

  1. What will happen to the participants?
  2. Could this not have been anticipated?

The real answers which are unlikely to ever appear on any rescue website:

  1. Some government official will eventually decide how much participants get of whatever money remains and yesterday the Central States participants got a name: Kenneth Feinberg
  2. Too often actuaries are not paid to predict for accuracy but for convenience. Most actuaries living in the real world can see baby boomers retiring and union participation declining but including those factors in liability calculations would not serve the interests of those who have to pay benefits or hire actuaries.

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* The 5500 is 424 pages though 175 of those pages are the Schedule C which is where anyone getting over $5,000 out of the trust in that year has to be reported.  The main reason that the PBGC is not directly taking over the plan and making payments is that the input from the remaining employers still in the plan would be shut off so the PBGC allows those 175 pages of payees to keep bleeding money out of it while doing much of the administration work that the PBGC would otherwise have to do.

75 responses to this post.

  1. Posted by javagold on June 18, 2015 at 5:14 pm

    Zero Hedge. The ponzi has collapsed.

    Reply

  2. John ,

    Is this not the Pension Fund that made “loans” to the Mafia in order for the boys to finance the 1950s–60s boom of a place known as Las Vegas? Jimmy is turning over in his grave.

    Reply

    • Posted by Anonymous on June 19, 2015 at 7:38 am

      Hey you might of just solved the mystery of where Jimmy’s buried. Under all of the P&B debt, that’s why his body’s never been found!

      Reply

  3. Posted by Anonymous on June 18, 2015 at 8:03 pm

    Ah yes Corporate America’s legacy to the USA, betrayal of the rank and file to benefit executive’s salary and bonus including stock options!

    On another note take a look at this grossly overpaid career State employee responsible for a $33B Budget. Wonder what their private sector counterpart earns? FYI; her current salary, available for public record, is ~$133k.
    http://www.njspotlight.com/stories/15/06/16/longtime-director-of-state-budget-office-stepping-down-after-16-years-in-post/

    Reply

    • Posted by javagold on June 18, 2015 at 8:49 pm

      Did those budgets include her salary, pension and health benefits. (And I know nothing about her, but I’m sure she has family members who are takers too…)

      Reply

      • Posted by Anonymous on June 18, 2015 at 9:59 pm

        Does not include P&B, no she doesn’t, and thanks for ignoring the question. Guess the answer was’t favorable to your position! BTW, are you telling me nepotism only exists in the public sector – come on now who you trying to fool!!

        Reply

      • Posted by Anonymous on June 18, 2015 at 10:35 pm

        Forgot to mention doesn’t include stock options or bonuses. Her health benefits State share would be 65% of the cost for NJDirect 15 single coverage.

        We’ll see how many private takers there are for her generous compensation and benefits?

        I’d like to know (conservative & liberal) what the average net worth or a private versus public sector worker is. Given the public’s generous compensation and benefits, I’d imagine they’d be significantly higher. But don’t forget to include Gates, Forbes, Buffett, and all the other rich private son of a guns as opposed to public takers!

        Reply

        • Posted by Anonymous on June 19, 2015 at 10:42 am

          Interesting let’s see how it plays out. Everyone s/b clear on who is taking from who. Let’s take a right and left perspective, then let everyone impute where the truth lies? Or they can go on believing whatever suits their version of reality!

          Reply

        • Posted by dentss dunnigan on June 19, 2015 at 1:02 pm

          How does a HS gym teacher make 700K ? it’s tough to compare to that http://php.app.com/edstaff/details2.php?recordID=108802

          Reply

          • Posted by Anonymous on June 19, 2015 at 1:26 pm

            Probably a quick thought good comparison is the ex executives from Enron? I’m sure we can go back and forth with hand picked examples that support a position!

          • Posted by Tough Love on June 19, 2015 at 2:00 pm

            Seems to be an Assistant athletic Director at the Rumson, NJ high school. Perhaps the listed $711K “salary” has an extra digit.

            If so, I wonder if anyone ever CHECKS the “reasonableness” of pension calculations so that pensions are not based on highly-erroneous salary entries.
            ——————————————–

            And to the Anonymous who respond earlier……

            Would misdeeds at Enron, justify such a salary, if accurate? Did you fall on your head a s a child ?

          • Posted by S Moderation Douglas on June 19, 2015 at 5:25 pm

            “Highly qualified. National Board Certified.”

  4. Posted by Anonymous on June 19, 2015 at 2:25 pm

    TL, all comments on this article we’re made without personal insults to the poster. Yet you feel the need to spew personal insults to make your point or distract from the discussion. Public or private, just a reflection on your lack of character.

    Reply

    • Posted by Tough Love on June 19, 2015 at 2:32 pm

      Oh I’m sure that you only post constructive comments, free of the self-interest, insatiable greed, and taxpayer-betraying arrogance we frequently see posted.

      Reply

      • Posted by Anonymous on June 19, 2015 at 3:47 pm

        Quoting you, “still the idiot” – there are you happy. Any results of NJ’s private sector millionaire takers? I notice how that’s been conveniently ignored.

        Reply

  5. Posted by PatB on June 19, 2015 at 4:33 pm

    Is there any oversight at all on the actuaries, who seem to give the final blessing to the annual reports? Is there a way to put the actuarial reports into plain language so the average reader could actually understand them? And how about suing actuaries for malpractice?

    Reply

    • Posted by Tough Love on June 19, 2015 at 5:57 pm

      The biggest problem is that in many locations, key “assumptions” that SHOULD BE exclusively the decision of the actuaries are statutorily, regulatorially, or politically set. That and the FACT that Gov’t entities are not “REQUIRED” to follow the recommendations of their own actuaries, have set us up for the mess we are in today.

      Of course, PRECEDING all of THAT, is the real “ROOT CAUSE” of the pension/benefit mess ….. grossly excessive (by any reasonable metric) pension & benefit promises.

      Reply

    • Posted by Anonymous on June 19, 2015 at 5:58 pm

      Evidently the actuaries dont have nor want strict guidelines to follow, ie GAAP. The actuaries are working for and at the direction of the State when performing their duties. There in lies the problem, same politicians calling the shots. Good luck with that.

      Reply

    • Posted by Anonymous on June 21, 2015 at 12:06 am

      A surprisingly good contribution by Java …

      Reply

      • Posted by Tough Love on June 21, 2015 at 8:06 pm

        Yup, because the Gov’t doesn’t have the GUTS to confront the insatiably GREEDY Unions and reduce the current grossly excessive pension & benefits, they just SHOOT THE MESSENGER (Moody’s) that TELL THEM that their pensions are in Deep Sh**.

        Reply

  6. Posted by Anonymous on June 20, 2015 at 10:24 am

    Millionaire PRIVATE TAKERS, far outweigh the PUBLICS in number and aggregate wealth!

    Reply

    • Posted by Tough Love on June 20, 2015 at 10:50 am

      Who pays “over-paid” Millionaires ………. shareholders, and customers who (if they don’t feel the price products and services is fair), can shop elsewhere.

      Who pays “over-paid” Public Sector Workers ………… Taxpayers, who have NO choice to shop elsewhere or to decline services, no matter how excessive the cost.

      Reply

      • Posted by S Moderation Douglas on June 20, 2015 at 1:35 pm

        Who pays “over-paid” Millionaires?

        If they are officers or high level managers of “private sector” companies with government contracts, I do. You do. Taxpayers, in other words, “who have NO choice to shop elsewhere or to decline services, no matter how excessive the cost.”

        Not just salaries and pensions, but pension *risks*:

        “As a result, DOE ultimately bears the investment risk incurred by the contractor sponsoring the plan,”

        http://www.foxbusiness.com/markets/2011/06/10/taxpayers-pay-retiree-costs-for-federal-contractors/

        Reply

        • Posted by Tough Love on June 20, 2015 at 3:09 pm

          Well, gov’t employees negotiate the contracts with Defense Contractors.

          THEREFORE, if we (the Taxpayers) “overpaying” for the products & services purchased from those contractor, it’s BECAUSE the Gov’t negotiators did a poor job for the Taxpayers.

          Reply

      • Posted by Anonymous on June 20, 2015 at 7:57 pm

        So “free market” doesn’t apply to where someone CHOOSES to live and work.

        Reply

        • Posted by Tough Love on June 21, 2015 at 7:40 pm

          In the Private Sector, where industries effectively act as “monopolies” (e.g., Utilities), there are strict laws to prevent price gouging.

          Where are the laws to prevent price gouging in the monopolistic PUBLIC Sector (for Police, Fire, DPW, etc. services), cause by the unbridled granting of grossly excessive, unnecessary, unjust, unfair, and unaffordable pensions & benefits ?

          Reply

  7. Posted by George on June 20, 2015 at 11:07 am

    “It has nothing to do with public pension plans” – : Kenneth Feinberg

    Reply

  8. Posted by Anonymous on June 20, 2015 at 6:24 pm

    Just to recap, government sucks and is the root cause of all problems. Private sector is the world’s saviour.

    Who needs government, the private sector could of brought down the global economy all on their own – GREAT RECESSION.

    Ok some will argue governmental policies allowed it to happen. Really do you believe the private sector, if left to their own GREEDY PROFIT DRIVEN ways, would impose upon themselves the necessary checks and balances.

    Reply

    • Posted by Tough Love on June 20, 2015 at 6:35 pm

      Yup…… somewhere in that comment must lie the “justification” for the GROSSLY EXCESSIVE pensions & benefits that ALL Public Sector workers now get.

      Taxpayers….. REFUSE to fund any PUBLIC Sector pensions or benefits greater than what YOU get. And don’t forget , if YOUR full pension starts at 65 and THEIRS starts at 55, theirs IS ALREADY TWICE the “value” of yours…… and if THEIRS is COLA-adjusted (as YOURES certainly isn’t), THEIRS is increased by an additional 1/3.

      STOP being the sucker in this equation !

      Reply

  9. Posted by Anonymous on June 20, 2015 at 6:41 pm

  10. Posted by Tough Love on June 20, 2015 at 8:48 pm

    The Taxpayers get ripped-off in SOOOOOO many ways by the COLLUSION between the Public Sector Unions and our Elected Officials.

    In NJ, a State Law REQUIRES those working on minor road repairs (mainly the Utility Companies) to hire police officers to be onsite preventing accidents and directing traffic.
    A local Councilman told me that the Police are paid $125/hr (volunteering for the assignments when off-duty) with a Minimum Guarantee of $500 (even if they work for less than $500/$125 = 4 hours). He also said that the town is reimbursed by the Utility for the amounts paid to the officers.

    So, while we don’t DIRECTLY pay for this in our town’s “taxes”, we indirectly pay for it in unnecessarily increased Utility “Bills”.

    Why can’t the Utility hire a $15 “flagman” instead of a $125/hr. Police Officer? Because it’s THE LAW … one of many similarly nonsensical laws passed to cater to the Union base that gets those who write the laws re-elected.

    Want “proof” that Police presence is unnecessary at these road repair jobs ?

    When it’s not a Utility Company doing the repairs, but “County” road employees (“County” employees repair “County” roads), there never is any Police presence ….. because the “COUNTY” will not pay the “TOWN” (for Police presence) where the work is being done. When it’s really necessary, one of the County road workers waves a flag.

    Police are ONLY there when there is someone who can unnecessary be FORCED (and “suckered”) into paying them.

    Isn’t it time to end ALL of this BS ?

    Reply

    • Posted by S Moderation Douglas on June 21, 2015 at 3:44 pm

      All cynicism aside, it’s not always about some union cabal.

      The reason they always use overtime is for scheduling. CHP doesn’t have enough person years to accommodate the seasonal and unpredictable maintenance and construction schedules.

      Worker and traffic safety are extraordinarily serious concerns. You are right about one thing, though. Work area safety is extremely expensive. But that officer sitting there is a very small fraction of the total.

      https://www.google.com/url?sa=t&source=web&rct=j&ei=XgOHVf2sJcrnoATn6IXYBA&url=http://www.dot.ca.gov/research/researchreports/two-page_summaries/maintenance/2249_COZ_MAZ_Results_V5.pdf&ved=0CCwQFjAF&usg=AFQjCNGL_hdPghoJM-V-Z04MKKiJ8na7_A&sig2=koSog9IF_A1dgzY5CFAqJg

      https://www.google.com/url?sa=t&source=web&rct=j&ei=oxiGVaH5FojsoAS7l4DQDQ&url=http://www.dot.ca.gov/hq/construc/manual2001/chapter2/chp2_2.pdf&ved=0CCYQFjAC&usg=AFQjCNHOt8LLuvwVzmScSnRshbiPq4UIyg&sig2=0gyirheLlyK1TU32tDcUiw

      Depending on the length and complexity of the closure, there could be three to six persons whose only job is to set up, monitor and maintain the signs and cones, and pick up at the end of the job. Cone trucks, changeable message signs, attenuator trucks, all designed exclusively for traffic control. Before the first “work truck” or work crew even shows up. I have had a six man crew with four trucks work a total of three hours closing lanes for me to do a five minute emergency repair.

      Legally required by federal regulations.

      Isn’t it time to end ALL of this BS ?

      Reply

      • Posted by Tough Love on June 21, 2015 at 8:28 pm

        Quoting… “But that officer sitting there is a very small fraction of the total. ”

        That is a “response” that reflects your refusal to address the issue. Why hire a $125/hr off-duty Police Officer when the contractor can hire a $15/ flagman ?

        In NJ is BECAUSE the law says that they must …. and I believe that this asinine law was passed simply to please the Police Unions by unnecessarily shoveling more Taxpayer money to these Officers.
        ——————————————————————–

        I’m NOT talking about MAJOR highway projects where Police presence may indeed be necessary. I talking about the few-hour to 2 day jobs repairing local roads. NOTHING beyond a $15 flagman is necessary (and quite often NOBODY …. just a few “cones” are really necessary). 50% of the time when I see such goings on, the Officer is looking at his cell-phone … and other-times, distracting those actually doing the road repairs with mindless chatter.

        Reply

        • Posted by S Moderation Douglas on June 21, 2015 at 9:33 pm

          “Why hire a $125/hr off-duty Police Officer when the contractor can hire a $15/ flagman ?”

          All taxpayers are not created equal. Some are reasonable, sociable, (you know, “moderate”) law abiding citizens who will be considerate of other drivers and respectful of the directions of the work crews.

          Then there are those “tough” taxpayers who “love” to exert their rights as a taxpayer to not be inconvenienced by those overpaid public takers. They will ignore the “SLOW…ROAD WORK AHEAD” even if it is specifically labeled as “35 MPH”. If there is a tapered cone pattern to close a lane, they will pass on the right and wait till the last minute to merge, then threaten to sue because the cone got lodged in their undercarriage and damaged their car. If their is a flagman their, they will verbally assault him and threaten him.

          They have been known to physically assault maintenance workers. One recently used the bumper of his car to “nudge” the flagman aside. All these things routinely occur when there are only maintenance vehicles and orange vests present.

          The presence of a black and white has an amazing calming affect on these particular taxpayers, as the studies have shown.

          Reply

          • Posted by Tough Love on June 21, 2015 at 10:47 pm

            Yes, there will always be some idiot who will ignore a Utility Flagman but not a Police Office ……. but quit a rare occurrence.

            Good judgement must be used in spending Taxpayer funds wisely, and passing a law to REQUIRE police Officers for EVERY local road Utility repair is an objectionable use of our money ….. and CLEARLY Legislative pandering to the Unions.

            If it were so “necessary” why is NEVER “necessary” when the COUNTY is doing the road repair ? Don’t bother to answer as I’ll answer for you …. because it really ISN’T “necessary” and there is no SUCKER (i.e., the Taxpayers) who can be forced to foot the Officer’s bill.

        • Posted by S Moderation Douglas on June 21, 2015 at 10:43 pm

          “just a few “cones” are really necessary”

          You are ever so cute. The Federal Highway Administration has very specific requirements for any right of way that receives any federal funds (even for shoulder work within a few feet of the traveled way.) States and local governments normally use the same rules for safety and uniformity.

          But, next time you drive through, tell them they only need a few cones. While you’re at it, tell them they “can’t work on a Findlay sprinkler head with a Langstrom 7″ wrench.”

          They appreciate knowledgeable taxpayers educating them on how to do their job.

          Reply

          • Posted by Tough Love on June 21, 2015 at 10:50 pm

            You sound VERY foolish working so hard to support such an unjustifiable waste of Taxpayer money.

    • Posted by Anonymous on June 21, 2015 at 6:38 pm

      Jealousy, regret and anger. You’re so obviously in need of a life.

      Reply

    • Posted by Anonymous on June 22, 2015 at 11:26 am

      Private sector muli-millionaires
      de-unionization TAKERS!

      Reply

    • Posted by Anonymous on May 12, 2016 at 6:41 am

      its the equivalent of a mafia shakedown!

      Reply

  11. Posted by S Moderation Douglas on June 20, 2015 at 9:57 pm

    Safety workers give in so many ways. It’s not just a job, it’s a way of life.

    If these first responders aren’t worth $100,000, I’ll kiss your butt on the town square and give you half an hour to gather a crowd.

    http://fireman.littlethings.com/cops-firemen-uptown-funk/?utm_source=amer&utm_medium=Facebook&utm_campaign=performances

    June Maxi Marshall says:

    “Delightful! What a wonderful job they’re doing and are doing! God Bless America’s’ Police and Fire Departments as well as all SAFETY AGENCIES. What an eye opener and great beginning to a day!”

    Reply

    • Posted by Tough Love on June 20, 2015 at 11:08 pm

      Maybe they are worth $100K … IN TOTAL ANNUAL COMPENSATION ….. but where I live:

      (1) BASE PAY = $125K
      (2) pension cost (to fully fund over their working careers … in excess of their own contributions) is a level annual 40% of pay … = 40% of 125K = $50K
      (3 )Cost of annual benefits while active (healthcare, life & disability ins, allowances, etc.) = $30K
      (4) level annual cost of retiree healthcare = 10% (per several studies) = $125K x10% = $12.5K

      Total = (in year 2015 costs) = $125K + 50K + $30K + $12.5K = $217.5
      ————————————————————————————————————–

      Now I may be $10K off (+ or -) but Police are DEFINITELY not $100K employees….. and you look like a fool even suggesting that they are.

      Reply

      • Posted by S Moderation Douglas on June 21, 2015 at 3:49 pm

        That goes without saying.

        Or should have, anyway.

        Happy Father’s Day.

        Reply

        • Posted by Anonymous on June 21, 2015 at 4:35 pm

          Walker & WI Imperfect Together!
          http://www.wpr.org/node/739456

          Reply

          • Posted by Tough Love on June 21, 2015 at 7:34 pm

            Read the article ….

            It’s De-unionization in the PRIVATE Sector, and primarily a function of Wisconsin’s greater-than-average “manufacturing” sector where most De-unionization occurs.

            This has NOTHING to do with PUBLIC Sector Unions where, given the grossly excessive level of Public Sector pensions & benefits, ANY and ALL pension & benefit “reductions” are MORE THAN necessary, just, and fair.

          • Posted by Anonymous on June 22, 2015 at 11:25 am

            So de-unionization’s not working for private sector but it’ll work for public?

          • Posted by Tough Love on June 22, 2015 at 12:00 pm

            Anon, The combination of (and “collusion” between) the PUBLIC Sector Unions and our self-interested Elected Officials (oh-so-will to TRADE Campaign contributions and election support FOR their favorable votes on pay, pensions, and benefits) is the ONLY reason PUBLIC Sector pensions are so grossly excessive.

            If it takes De-Unionization in the PUBLIC Sector to END this enormous rip-off of the Taxpayers, then THAT is what should be pursued by the Taxpayers.

          • Posted by Anonymous on June 22, 2015 at 12:37 pm

            The whole point of the article is to highlight the vanishing middle class. Your point is it pertained more to private sector but needs to be expanded to public sector.

            Based on the article, conclusion is it would only further erode the middle class. Thereby creating a true divide between the have and the have not.

            Interesting perspective for America’s future, conservatively speaking.

          • Posted by Tough Love on June 22, 2015 at 1:01 pm

            Removing the unnecessary, unjust, unfair, and unaffordable share of Public Sector “Total Compensation” which (per the AEI study that has but quoted on the Blog sever times) in NJ is 23% of pay (34% when the incremental value of the much greater Public Sector job security is included) should NOT be looked at as an “eroding of the Middle Class”, but a rightful taking-away an excess not deserved, and returning much of that excess (in the form of greater service or lower taxes) to PRIVATE Sector “Middle Class” taxpayers.

            THAT’S a “good” thing …. other than for the insatiably greedy Public Sector workers that don’t like to play fair.

          • Posted by S Moderation Douglas on June 22, 2015 at 5:53 pm

            One more time, “23%” is an average.

            One more time, read and try to understand. The whole study…

            You don’t even need math. Look at the “distribution of compensation”, page 60.
            Nationwide, the lower educated, low skilled public workers are skewing the average.
            ……………………
            One primary reason?…….health benefits. You mentioned earlier:

            “level annual cost of retiree healthcare = 10% (per several studies) = $125K x10% = $12.5K”

            Not true. Health benefits are generally a “flat-dollar-benefit”. The dollar amount is the same whether the worker earns $25,000 or $125,000, the dollar amount is still the same. In the national data, the flat dollar benefit is $12,800

            For those in the High School level employees, this represents a whopping 38% of base pay.
            For the professionals, the same $12,800 is only 13% of wages.

            In the national data, Briggs computes that the “average” wage disadvantage for public workers is about 12%, but after accounting for P&B, it becomes about a 10% public center advantage (p. 9)

            If one were to remove the lower two categories, (“HS diploma” & ” Some college”), it is immediately evident that the 10% public center advantage disappears entirely.

            The “middle class” that Anonymous refers to, in public employment, are those with a Bachelor’s degree and higher. They are not overpaid. They are not overcompensated.

            Two caveats:

            1). Yes, these are national figures. Briggs did not break down the distribution state by state. (Or, if he did, he did not include that data in the report.) But there can be little doubt that in either California or New Jersey, if those employees with less than BA were disregarded, the “23%” would be near zero. Or less.

            2) LOL, only one caveat. Rick Perry joke.

          • Posted by Tough Love on June 22, 2015 at 6:48 pm

            No matter how many TIMES and no matter how many WAYS S. Moderation Douglas tries to “twist” the truth”, the study from which he is quoting indeed shows that ON AVERAGE NJ’s Public Sector workers have a 23% “Total Compensation” (pay, pensions, and benefits) advantage, rising to 34% when the MUCH greater PUBLIC Sector job security is factored in.

            Taxpayers ….. think about how much better YOUR retirement would be if you had 23%-of-pay ADDITIONAL compensation to save and invest EVERY YEAR.

            END the madness ….. DEMAND that the current grossly excessive DB pensions granted all of NJ workers be frozen … ZERO future growth !

          • Posted by S Moderation Douglas on June 22, 2015 at 7:40 pm

            Really, brother?

            Specifically, where am I incorrect? Do the math, if you dare.

            Briggs himself said that, nationwide, those with a Bachelors degree are “roughly equal” to the private sector.

            That is total compensation. Including retiree healthcare. Including the value of pensions discounted at the risk free rate. That is data collected by and computed by one of the most conservative organizations extant.

            And every public worker above that level is either undercompensated….or grossly undercompensated.

            That is 60% of all the nation’s state workers who are either roughly equal, or paid less (often much less) than the private sector. Total compensation.

            Say it ain’t so. Then back it up.

            You should feel foolish for incessantly parroting “23% average” out of context.

            “twist” that, Suckah.

          • Posted by Tough Love on June 22, 2015 at 8:23 pm

            S. Moderation Douglas,

            When a study result says ……… ON AVERAGE NJ’s Public Sector workers have a 23% “Total Compensation” (pay, pensions, and benefits) advantage, rising to 34% when the MUCH greater PUBLIC Sector job security is factored in ………. that EXACTLY what it means.

            Of course you can pick segments contributing to that “average” and show that for just THOSE Segments the Public Sector advantage doesn’t exist, but that’s ONLY because the OTHER segments (those your are NOT picking) have an even GREATER Public Sector Total Compensation advantage …… and when your include ALL segments, voila, you get the 23% Public Sector ON AVERAGE compensation advanage.

            This isn’t rocket science

          • Posted by S Moderation Douglas on June 22, 2015 at 9:58 pm

            You’re right, it’s not brain surgery, either.

            Therefor…. Richwine’s fallacy #1″

            “The average pension payment is a good indicator of the generosity of the plan’s benefits.”

            is not a fallacy after all?

            So “the low $27,984 “average” pension of “all” CA retirees” is brought down by short career workers with smaller pensions, part time workers with lower pay and hence low pensions, retirees of long ago who retired on much smaller wages and lower pension formulas, and the 50% share survivorship pensions of beneficiaries of deceased retirees.

            That’s just hypocritical gibberish?

            “When a study result says ……… ON AVERAGE” (the average California pension is $27,984) “………. that EXACTLY what it means.”
            ……………………
            It’s a yes or no question; remove the two lowest categories on table 4, page 60. Does the average public sector advantage decrease? (Or disappear entirely?)

            When a PHD is *underpaid* by 18% (that is, $32,327) we can tell him we are going to cut his greedy butt along with everyone else, because the HS graduate is *overpaid* by 19% (that is, $10,073).

            Tough luck, man. It’s the average, don’t ya know.

            I been trying to tell you all along, TL; it’s not one size fits all. You cannot use a meat-axe approach.

            You look foolisher and foolisher.

          • Posted by Tough Love on June 22, 2015 at 10:10 pm

            The “average” is exactly what it says.

            It only becomes a “problem” or “issue” when the group citing that average EXPECTS the reader to be uninformed and misunderstand the what goes into that average (and exploits that expectation) ….. such as few readers of “average” pensions realizing that such figures will likely be FAR below what a FULL career, FULL-time RECENT-year retiree gets …. the Fallacy that Jason Richwine was CORRECTLY pointing out.

            There is no controversy what an AVERAGE “Total Compensation” compensation means … as published in the AEI study.

            It’s just that the very material (PUBLIC Sector “Total Compensation” advantage …. especially in NJ) doesn’t fit well with your self-interested agenda.

          • Posted by S Moderation Douglas on June 22, 2015 at 10:23 pm

            So you would reduce the compensation of the PhD by 23% ?

          • Posted by Tough Love on June 22, 2015 at 11:54 pm

            No, but as a NYC example, maybe the NYC Subway Token booth clerk’s “Total Compensation (pay+ pensions + benefits) needs to go down by perhaps 60% to be no Greater than that of the typical NYC Bank teller…… and the thousands of workers in manual labor jobs need geearn no more than HALF, because THAT is the “arket rate” in the Private Sector.

            Get the picture ……. ON AVERAGE NJ’s Public Sector workers have a 23% “Total Compensation” (pay, pensions, and benefits) advantage, rising to 34% when the MUCH greater PUBLIC Sector job security is factored in……… “most” should get less than they now get, (a LOT less).

          • Posted by S Moderation Douglas on June 23, 2015 at 1:08 am

            Your getting warmer.

          • Posted by Tough Love on June 23, 2015 at 11:13 am

            S. Moderation Douglas, I think the trains or busses you drove or fixed (or whatever) in Calif. dulled your mind.

          • Posted by S Moderation Douglas on June 23, 2015 at 1:19 pm

            In California, a toll collector makes about $32,000 a year.
            According to Transparent California, benefits brings that to about $62,000.

            That does not include retiree healthcare, of course, and you may argue it under-values pension cost.

            At any rate, his/her wages are $2,700 mo. He is in both CalPERS and Social Security, so his net pay will be about $2,200 mo.

            The only toll collectors we have in California are in the Bay Area, with a very high cost of living, so these folks are not walkin’ in high cotton.

            But wait! He said! The average salary for a San Francisco Teller is $26,599 , (which is 8.8% above the national average). And the teller doesn’t have nearly the benefits of a toll collector.

            Here is the nub, and I almost hate to go there. You say the toll collector compensation “needs to go down by perhaps 60%”

            I would rephrase that as the toll collector TOTAL compensation is more than twice that of a bank teller. Or janitor, clerk, or manual laborer.

            The “pension and benefits” at this level, are MORE than the wages. This, more than anything, is the reason for the infamous “23% average” public advantage. Where will you cut the toll collectors compensation? Not salary; depending on the number of dependents, much like the bank teller, many of these public workers already qualify for various types of public assistance, i. e. “taxpayer dollars”. I have personally known several over the years who received food stamps, subsidized child care, section 8 housing, etc. (everything but MedicAID.)

            So the collective “we” are subsidizing the bank teller now and in her retirement. And if we cut the retiree healthcare and pension of the state worker, we will still be paying him in retirement, just like the bank teller.

            Why? You should listen to SAWZ instead of automatically ridiculing her. We are not overpaying the less educated, unskilled public workers. We are under paying the private sector.

            The “free market”, the one that sets the “arket rate” in the Private Sector (Sorry, couldn’t help myself) is extremely efficient in allocating goods and services. It is also totally, absolutely, unconditionally, and utterly heartless. It does not care if the labor rate for the lowest skilled is high enough to survive. It does not care whether the unemployment rate is 4% or 40%.

            That’s where society steps in. Or, for better or worse, “government”.
            Just one of the ways government does this is as “model employer”.
            They encourage, and sometimes legislate, such things as minimum wage, equal opportunity employment, sick leave, and health insurance. It is only natural that government should then lead by example.

            Another manifestation that SAWZ was incorrectly ridiculed for is that government wages and benefits tend to INCREASE private sector wages. Without the competition of the toll collector, the bank teller pay might be even lower.

            Our glass is at least half full.

            Oh, “busses” ? I trust that was a typo, not Freudian.

          • Posted by Tough Love on June 23, 2015 at 1:26 pm

            So were you a “toll collector” ?

          • Posted by S Moderation Douglas on June 23, 2015 at 1:46 pm

            No, but I had several friends who were.

            By the way, I hear there are various state clerks and office workers who WISH they made as much as a toll collector.

            And guess what? They, too, are “overpaid”. Arguably, “grossly overpaid with egregious pensions and benefits”.

  12. Posted by Anonymous on June 21, 2015 at 1:12 pm

    Happy Father’s Day TO ALL!

    Reply

  13. […] I predicted last June a government official (Kenneth Feinberg) is deciding how much participants get of whatever money […]

    Reply

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