Valuing Christie’s Time

Chris Christie carved out some time today to visit with yet another group unlikely to formulate intelligent follow-up questions to inanities that he cloaks as insights – this time it was the New Jersey press corps after a ceremonial budget signing – where he paraded his ignorance of the time value of money and concluded with a warped syllogism that would befuddle Escher:

.

“I will continue to put in as much money as we can afford into the pension system but not a nickel more.”

What went unsaid must now be obvious, even if it does not get spelled out to the masses:

  1. A good chunk of that $1.5 million that New Jersey spends on health care premiums for a typical employee goes to connected insurance agents who funnel it back into the political system
  2. There are about 750,000 people in the pension system counting retirees and active participants but Christie mentioned 625,000 as the number he does not want to benefit disproportionately by making pension payments which could mean that those are the New Jersey residents in the system.  If he knows that number then there is likely something in the works to tax pensions of those living in other states.
  3. A nickel is about what New Jersey will afford without any external discipline to put in more.

98 responses to this post.

  1. Posted by Anonymous on June 26, 2015 at 2:38 pm

    On Jan. 10, 1996, P.L. 104-95 took effect. This federal law prohibits any state from taxing pension income of non-residents, even if the pension was earned within the state. Before the passage of this law, California, New York and several other states maintained a source tax on pension earned within the state. For example, a California teacher who retired to Nevada would have to continue paying the source tax on her California pension. Thanks to this law, people who earn a pension in California then move out of the state no longer have to pay taxes on these funds to California.

    Reply

  2. Posted by Anonymous on June 26, 2015 at 2:56 pm

    Hey John, can Christie afford not to put more money into the pension system. Meaning that the further is drives it into debt , NJ gets it credit rating downgraded even more.

    Reply

  3. Posted by Tough Love on June 26, 2015 at 2:57 pm

    Yes, Christe was not accounting for the time value of money, so the $2.66MM/$195K = 13.33 multiple (of contributions to benefits received) is not a proper financial refection of what they pay vs what they get out.

    Readers of this blog have read many of my comments stating that the Public Sector worker’s own contributions (including the investment returns on those contributions) rarely pay for more than 10%-20% of their pension (with Police, with far greater pensions/benefits with only modestly higher contributions closer to the 10%).

    So the 13.33 multyiple is indeed an overstatement of the ratio of benefits received to contributions made, but it WOULD be accurate to state (WITH the proper adjustment for the time value of money) that they do get back somewhere between 5 and 10 TIMES what they pay in.

    Reply

    • Posted by Tough Love on June 26, 2015 at 5:14 pm

      I should have taken my above comment a step further……

      Because (for the few lucky) Private Sector workers with DB pensions of the type universal to the Public Sector rarely “contribute” to these Plans, the Public Sector workers could respond by saying …. well, Private Sector employers pay an INFINITE multiple of what the workers pay.

      True, but we need to ALSO compare the $$$ paid by the Taxpayers toward Public Sector Plans vs the $$$ paid by the Private Sector employers toward their worker’s Plans…. both expressed as a level % of pay sufficient to FULLY fund the pensions over the workers career (under realistic, not “stretch” assumptions)

      Because the “generosity” of PUBLIC Sector Plans is SO MUCH GREATER that the pensions granted Private Sector workers (typically 3x-4x greater….. and 4x-5x for safety workers) the Private Sector employer’s 100%-share of the contributions (as a level % of pay) is typically about ONE-THIRD as great as the Taxpayer’s 80%-90%-share of PUBLIC Sector pension contributions.

      THAT’s the problem, and as I have pointed out many times, the ROOT CAUSE of the problem is the grossly excessive “generosity” of Public Sector pensions & benefits.

      There are NO effective “solutions” that do not call for VERY (50+%) reductions in the pensions accrual rate for the future service of all Public Sector workers. The FREEZE proposed by the NJ pension Commission is (by FAR) the best proposal to date.

      Reply

      • Posted by Anonymous on June 26, 2015 at 5:23 pm

        Then we need a coalition of taxpayers pushing the Gov, Senate, Assembly, Unions, and publics forward on this issue so we resolve it expeditiously and cost effectively for all concerned!

        Reply

        • Posted by Tough Love on June 26, 2015 at 5:37 pm

          Indeed we do !

          Although I do not know what you mean by “cost-effectively”. The current level of PENSION “BENEFITS” needs to be reduced., as there are NO “cost effective” ways to pay for the current structure….. it’s simply to costly (BECAUSE the promised pensions are too generous).

          Reply

          • Posted by Anonymous on June 26, 2015 at 6:00 pm

            What I meant by “cost effective” is time is money. The sooner we put the necessary reforms in place the better.

      • Posted by Anonymous on June 26, 2015 at 5:26 pm

        Let me add that honest discussion will foster trust and solutions. For instance you cited a 50% reduction but the DBP freeze was best. Sounds like a possible option to consider putting forward.

        Reply

        • Posted by Tough Love on June 26, 2015 at 6:02 pm

          Getting a “Taxpayer-cost-reduction” of 50% within the current Plan structure would be very difficult (beyond just the legal issues).

          The high “cost” of the current Plans is a function of not just higher-than-Private-Sector Plan “formula-factors”, but ALSO (in a major way) due to the MUCH younger full/unreduced Public Sector Plan retirement ages, and (should they be restored) the provision for COLA increases (never included in Private Sector Plans)

          To achieve an overall 50% cost reduction WITHOUT changing the young retirement age or COLA provisions (and assuming COLAs are restored) would require a much LARGE Formula-factor reduction…. in the 65-70% range.

          And, raising the full retirement age is pointless unless retiring EARLIER means full actuarial reductions of about 5% PER YEAR OF AGE, something NJ doesn’t do now. And do you tell a 54 year old expecting to retire with a full/unreduced pension in one year at age 55, that they now need to work until age 60 …. or take a (60-55)x5% = a 25% pension reduction ?

          Sure you can “grandfather” say those within 5 to 10 years of their current full/unreduced retirement age, but THEN (by this action) the 50% total cost reduction goal is only achievable if you raise it to say 60% on those not-grandfathered.

          Get the picture?

          That’s why I said that the Pension Commission’s FREEZE proposal is the BEST option. Should things work out (INCLUDING implementation of the healthcare reductions as proposed) PAST service pension accruals will be honored, and for FUTURE Service the workers would get a new Cash Balance pension (still) likely richer than what Private Sector workers typically get.

          Reply

          • Posted by Anonymous on June 26, 2015 at 6:40 pm

            I follow you.

            At this time we have to assume COLA will not be reinstated. If it were there are ways to reinstate it at no cost to taxpayers (optional retiree funded by benefit reduction) that might satisfy a potential court ruling or prolong the case.

            I understand offering options get complicated for various reasons. Maybe a little altruistic, by allowing realistically sustainable options the unions and publics might buy into the necessary reforms. Just a thought.

          • Sorry, no sympathy for those “expecting” to retire at age 55. No such thing should have ever been possible. That is one of the main reasons the pension fund(s) are in such bad shape – that and the years of underfunding by the State. Benefits should be received along the same lines as SS (66) with absolutely no benefits received before age 62 and then only with an 8% per year haircut. Teachers should teach until those ages and uniformed services should be shunted into some admin role (at a lower annual salary due to no combat pay differential) until they can begin to collect. Too bad if they do not like the brave new world of fiscal reality.

          • Posted by Tough Love on June 26, 2015 at 7:08 pm

            Options of EQUAL actuarial value …. such as a COLA-style “annually increasing” pension, but starting at a lower first-year payout would be fine, but let’s be realistic, while YOU seem to have a much greater understanding of the issues and are willing to be responsive to the needed changes (meaning LESS than they get now), MOST don’t want to trade something they get now for something of EQUAL actuarial value.

            They simply want the COLAs back (no matter how unaffordable, or how they were “negotiated” with nobody at that negotiating table looking out for Taxpayer interests) because ………….. “they were “promised”.

          • Posted by Tough Love on June 26, 2015 at 7:11 pm

            PSDrone,

            Simply for the sake of correctness, the annual reductions from 66 to 62 are about 6% annually. There is an 8% annual INCREASE in SS payouts for delayed retirements from 66 to 70.

          • Posted by Anonymous on June 26, 2015 at 7:50 pm

            All due respect, extreme positions on either side of this issue will not provide the necessary change. Let’s move forward from this point and create an environment that fosters the necessary change.

          • Posted by Tough Love on June 26, 2015 at 9:04 pm

            Anon, I’m not sure if you are implying that what I have been saying (in my above comments) represents an “extreme” position and/or if you feel that the Pension Commission’s proposals constitutes an “extreme” position.

            Clearly “extreme” means different things to different people …… with more than a few Public Sector workers of the mindset that giving back ANYTHING is “extreme” and unacceptable.

            But honestly, the financial position of ALL of NJ’s pension Plans are DIRE (BOTH both, but with the STATE Plans in a MORE dire position than the Local Plans) and “extreme” measures are indeed need to savage these plans.

            NJ’s Taxpayers have wised up to the gross unfairness (to THEM) of the current Public Sector Pension/benefit structure, and anyone who believes that they will be able to extract (from the Taxpayers) the $166 Billion asset shortfall (per Mr. Bury’s calculations) just for PAST Service accruals, is being awfully foolish and unrealistic.

          • Posted by Anonymous on June 26, 2015 at 9:49 pm

            No not at all Tough Love, I should have clearly stated my comment was in response to PSDrone.

      • Posted by Anonymous on June 26, 2015 at 8:52 pm

        I got paid 5.25 per hour while my private sector counterparts were getting $12 per hour. Even when I retired and was getting 16.50 per hour, my private sector counterparts were getting $26 per hour. The state saved tons of money over the 30 years I worked. I saved them money that is why they offered me a pension and benefits If they state wants to pay me the private sector pay that I didnt get for those 30 years right now I will give up my pension and benefits, I dont know about other state workers but that was my experience. TL will tell you that my experience isnt true even though I lived it.

        Reply

        • Posted by Tough Love on June 26, 2015 at 9:24 pm

          What you are describing was true (but I question if as wide a difference as you indicate) 20 years ago and farther back, but the gap of considerably lower AVERAGE Public Sector vs Private Sector “wages” has been quite narrow for the past 20 years…… now only showing a 4% differential in NJ (per one study that has been discussed on this Blog before).

          If a considerable portion of your years of service was during the (long-ago) years of lower wages, then you SHOULD get a higher pension, increased to the point of making up that difference. That being said, unless you actually retired 20+ years ago, the MUCH greater value of your Public Sector pension and benefits likely MORE than made up for any lower wages.

          That being said, it seems academic, as barring real financial calamity in NJ, few are now suggesting a reduction in retiree’s accrued pensions (or for reductions in the PAST service accruals of those still active). Yes, there are proposals to reduce the healthcare subsidies of those already retired, but honestly, you’re not going to find much sympathy on that front given that Private Sector workers rarely get ANY employer-sponsored retiree healthcare benefit any longer.

          Reply

          • Posted by S Moderation Douglas on June 26, 2015 at 11:22 pm

            TL quote:

            “What you are describing was true (but I question if as wide a difference as you indicate) 20 years ago and farther back, but the gap of considerably lower AVERAGE Public Sector vs Private Sector “wages” has been quite narrow for the past 20 years……”

            That’s a blanket statement we’ve seen time and again with no substantiation.

            https://www.google.com/url?sa=t&source=web&rct=j&ei=OvGNVeInhvKgBJf9g3A&url=http://www.mnpera.org/vertical/Sites/%257BCB6D4845-437C-4F52-969E-51305385F40B%257D/uploads/%257BDBA0E14A-9DD0-49C3-8B6B-B1C3F756F1A2%257D.PDF&ved=0CDcQFjAG&usg=AFQjCNHycsZdgJ4r_NWi0ezbL_SpfdWSIw&sig2=ePq0QXLarnM7eqndIsPtGQ

            Two problems; note in the link above that there is a great variability from state to state. And the difference in public and private pay tends to sometimes change radically from year to year. There is no one size fits all “public workers were once underpaid, but now make as much or more than the private sector.”

            In the year of our savior 1979, California miscellaneous workers received a 14.5% general pay increase. (It was vetoed by Brown version one, but overridden by the legislature) The general increase followed several years of near double digit inflation with no increases.

            Likely many states, as California, don’t have automatic COLAs, and contrary to popular opinion, the “Powerful Public Employee Unions” don’t have nearly the influence they are reputed to.

            There is a lag in public salary increases vis-à-vis the private sector because private raises (and cuts) are an average of thousands of businesses that can react more quickly to market forces. In the meantime, the state may be stuck in a three year contract with little or no increases even in the face of radical inflation. And, in spite of the reputation of the “cancerous” unions, there is often little hope that the “catch-up” will actually catch up with inflation.

            In the following link, figure 2 is an example of the typical pattern of public raises.

            http://www.lao.ca.gov/analysis_2007/general_govt/gen_21_9800_anl07.aspx

            *note: for most California workers, the 3.3% raise listed in 2007 was the last raise until 2012-2013.

            Which all adds up to two conclusions; “a 4% differential in NJ” based on data from up to six years ago ( and does not include the changes in chapter 78) is useless data in 2015. And, as we discussed before, the AVERAGE may have some limited validity in comparing the relative difference between states, but doesn’t recognize the huge under compensation of the higher educated state workers vs the over compensation at the lower end.

          • Posted by Tough Love on June 26, 2015 at 11:41 pm

            Quoting …”There is a lag in public salary increases vis-à-vis the private sector because private raises (and cuts) are an average of thousands of businesses that can react more quickly to market forces.”

            And there is a lag in the PUBLIC Sector layoffs when appropriate …… While the Private Sector was devastated after the financial crisis of 2008, the impact on Public Sector was minor thanks to the Democratically controlled Federal Gov’t shoveling Taxpayers money to State & Local Gov’ts to keep their voter base happy and employed.

          • Posted by S Moderation Douglas on June 27, 2015 at 12:30 am

            Public-Sector Cuts Drag Down State and Local Economies …www.epi.org/publication/

            Government Layoffs Have Been Undermining The Recovery…….thinkprogress.org

            A Record Decline in Government Jobs: Implications for the …www.brookings.edu/.

            Public Sector Job Cuts Threaten Recovery – US News ……money.usnews.com/

            Impact of government job losses on rest of economy – LA Biz …www.laobserved.com/biz/..

            The public sector has cut 680000 jobs over the last four years….www.epi.org/..

            ———————————
            What does this have to do with “What you are describing was true …….20 years ago and farther back, but the gap of considerably lower AVERAGE Public Sector vs Private Sector “wages” has been quite narrow for the past 20 years……” ?

        • Wow, you worked a whole 30 years? Let me see – from age 25 to age 55 and then you go on the taxpayer tab while they continue to work until age 70? Sounds fair to me. In a rational financial environment, people work 40 or 50 years and then retire (hopefully) for about 20. Not the other way around.

          Reply

          • Posted by S Moderation Douglas on June 27, 2015 at 2:01 am

            30 years in the public sector. The average length of service for public retirees is 20 years. The other 20 plus years is usually private sector.

            I spent 4 years in the Navy, 4 private sector, and 37 state. About half of “public” workers don’t even stay long enough to vest; they are private sector workers temporarily employed by the government. The “official” full SS retirement age is irrelevant. Private sector workers on average actually retire at about age 62. Just like public sector workers, with the exception of safety workers.

            Then there are the military retirees who spend 20 years in service, retire with half pay, then work another 20 plus in public jobs.

            The line between “public” and “private” is very permeable. They move back and forth all the time.

            “I have met the enemy and he is us.”

          • Posted by Anonymous on June 27, 2015 at 3:39 pm

            I lost my job due to chronic pain and retired with a reduced pension and no disability. I did not apply for disability, I just took my reduced pension which is approximately 1400 per month. Sorry that you do not approve. I wish I did not become ill and lose my job, I wish I could have kept working. I still have chronic pain everyday that prevents me from working, yet I dont collect disability.

          • Posted by BH on June 27, 2015 at 5:25 pm

            So you’re all for destroying people’s lives even after they earned a pension…..but it’s ok for us in the private sector to reap all the benefits of subsidies to the point that these private sector corporate up tax breaks allow corporations to virtually operate tax free??? Why aren’t you screaming about that? Oh that’s right, people like you are simply jealous and want to bring everyone DOWN to your level….. You people need to get a life and point the fingers at the correct party. It’s certainly not the hard working public workers!!!!
            Bunch of hypocrites!!!!

          • Posted by Tough Love on June 27, 2015 at 5:56 pm

            The standard for “disability” approval in the Private Sector is meeting Social Security’s requirements. That SAME standard should apply to Public Sector workers.

            If you meet it, you should get DI benefits…. and if not, you’d should not.

            A good part of the underfunding of Safety worker pensions is due to the absurdly high percentage of all workers that get approved for a “Disability” pension. Why should those who do the “approving” really care …. it’s only “taxpayer” money.

          • Posted by Tough Love on June 27, 2015 at 6:11 pm

            Quoting BH … “So you’re all for destroying people’s lives even after they earned a pension”

            Oh, so advocating for reducing Public Sector worker healthcare subsidies and FUTURE Service pension accruals to a level EQUAL TO what “PRIVATE” Sector taxpayers typically get from their employers is ….. “destroying people’s lives” ?

            I think you need to get your head out of your ass.

          • Posted by S Moderation Douglas on June 27, 2015 at 6:55 pm

            LLOL!!

            Ever the gentleman.

          • Posted by BH on June 27, 2015 at 9:31 pm

            TL cannot be a man…..

          • Posted by Tough Love on June 27, 2015 at 11:44 pm

            BH, You are a man, a VERY VERY greedy man…… but at least you put right out there …. stating right out that you’re “special”, and deserving of MORE and a BETTER DEAL…. on the Taxpayer’s dime.

            Sorry buddy, but with your attitude, you’re LONG on the SHORT side of anything that could be called “special”.

      • Posted by S Moderation Douglas on June 26, 2015 at 9:28 pm

        ” (typically 3x-4x greater….. and 4x-5x for safety workers)”

        “Private Sector employer’s 100%-share of the contributions (as a level % of pay)”

        “ONE-THIRD as great as the Taxpayer’s 80%-90%-share of PUBLIC Sector pension contributions.”
        …………………………
        Absolutely, totally, unconditionally, irrelevant. Still.

        A hypothetical police officer has the same pension value at retirement as a mythical brain surgeon (really!)

        “THAT’s the problem”

        Reply

        • Posted by Tough Love on June 26, 2015 at 9:35 pm

          If you say so …………

          Reply

          • Posted by S Moderation Douglas on June 27, 2015 at 12:38 am

            A helicopter was flying around above Seattle when an electrical malfunction disabled all of the aircraft’s electronic navigation and communications equipment. Due to the clouds and haze, the pilot could not determine the helicopter’s position and course to fly to the airport. The pilot saw a tall building, flew toward it, circled, drew a handwritten sign, and held it in the helicopter’s window. The pilot’s sign said “WHERE AM I?” in large letters. People in the tall building quickly responded to the aircraft, drew a large sign and held it in a building window. Their sign read: “YOU ARE IN A HELICOPTER.” The pilot smiled, waved, looked at her map, determined the course to steer to SEATAC airport, and landed safely. After they were on the ground, the co-pilot asked the pilot how the “YOU ARE IN A HELICOPTER” sign helped determine their position. The pilot responded “I knew that had to be the Microsoft building because, like their technical support, online help and product documentation, the response they gave me was technically correct, but completely useless.”

            Your hypothetical examples may be technically correct, but…….

            (“may” be)

          • Posted by Tough Love on June 27, 2015 at 1:51 am

            S. Moderation Douglas,

            I have no big “dog” in this fight beyond being a NJ taxpayer, and while I feel a good portion of the taxes I pay is wasted on excessive Public Sector worker compensation and other things, my taxes are not really a “burden”.

            I comment because my formal training and experience puts me in a unique position to understand (likely better than 99+% of others) the HUGE cost of the extraordinarily generous pension & benefit promises that have been made to NJ’s State and Local workers, and how that has and will continue to (in an accelerating way) worsen the financial well-being of all New Jersey residents EXCEPT it’s Public Sector workers (who are on the receiving end of these grossly excessive pension & benefit promises). If it’s not fixed soon, many of NJ’s cities and perhaps the entire State will become “insolvent” (even if not via a formal “bankruptcy” proceedings), or taxes will rise to a point that drives us in the direction of Detroit …. with rapidly deteriorating infrastructure and services, and an exodus of productive tax-paying residents and businesses.

            I happen to like living in NJ and don’t want to see that happen. It’s mostly quite, has great parks, has easy access to NYC, has fine dining, has shopping galore, and I feel it would be a shame to let it deteriorate just so that a smallish segment of it’s population (Public Sector workers) can, via insatiable greed and Union influence and vote-buying, CONTINUE the debilitating taxpayer-funded compensation advantage that is neither necessary, just, fair, or affordable.

            I know you are a retired Public Sector worker from California, and as I do comment on articles focusing on California’s pension/benefit problems, I suppose it’s fair for you to comment on NJ’s FAR GREATER and MORE IMMEDIATE pension/benefit problems.

            We have gone back and forth with point vs counterpoint and study vs study, perhaps each of us being a bit guilty of bringing up the points that best support the change (or in your case, no-changes) that we would like to see take place.

            More than once, readers have noted how dreary our exchanges have become….. and certainly, there is little left that we haven’t stated before.

            Have a good night.

          • Posted by S Moderation Douglas on June 27, 2015 at 3:14 am

            I have no objection to reasonable changes.

            PEPRA was a good start. There will be more; although not that Chuck Reed 2016 farce.

            New Jersey and California seem to have similar pension systems; and similar problems. The biggest difference I see is California has more of the uber pensions, like lightning rods, in the $200,000 and higher category (now eliminated by PEPRA), while New Jersey seems to have a much larger health care cost.

            Yeah, I comment when I see absurd statements like the average health care cost is over $30,000 a year. I don’t know why Gov Christie makes such asinine claims and you try to support that fallacy.

            Credibility is crucial, and your wild exaggerations destroy it. Like the Fireman fallacy. I’m sorry, but the logic just isn’t there.

            If New Jersy has “FAR GREATER and MORE IMMEDIATE pension/benefit problems.” than California, it is for one reason…..nobody paid the bill. CalPERS has problems, and (perhaps) the ARC is too low, but for the most part it has kept up with minimum payments.

            I comment out here frequently when I see gross exaggerations of salaries, pensions, and benefits. Many of which come from the East coast. And I will continue.

            I usually attempt to remain calm and civil and logical in my discussions. It just may be that I become more passionate …….and stubborn when someone calls me a greedy crook. With butkus for proof.

            That’s my opinion, anyway

          • Posted by Tough Love on June 27, 2015 at 3:30 am

            S. Moderation Douglas,

            Well, I guess we have to just agree to disagree.

          • Posted by BH on June 27, 2015 at 5:06 pm

            It is right here quoting you–” (likely better than 99+% of others)” that you lose any credibility. Lol. If you think your constant barrage of attacks on these hard workers is “best”, then, good for you. But now that our governor will be entirely out of state and away from any and all NJ issues trying to run for POTUS, you’re venom will fall, once again, on deaf ears!!

          • Posted by Tough Love on June 27, 2015 at 6:20 pm

            BH

            What I said was ….. “I comment because my formal training and experience puts me in a unique position to understand (likely better than 99+% of others)”

            Yea…. that about right.
            —————————————————————
            Take you Blood Pressure lately ….. you seem stressed ?

  4. Posted by Anonymous on June 26, 2015 at 3:01 pm

    If the state would have made its contributions on time and not raided the pension system , it would be solvent regardless of how christie wants to spin things. He says he has put more money in than any other governor, Corzine put in more considering he was governor for ony 4 years and he also paid a larger percentage of what was due.

    Reply

    • Posted by Tough Love on June 26, 2015 at 5:20 pm

      Yes, and if we MADE the required ARCs to a pension 10 times greater, those too would be well funded.

      The calculated ARCs are a function-of (and proportional to) the Plan’s “generosity”. A VERY VERY generous Plan will have VERY VERY high ARCs. That would not justify foisting them upon the Taxpayers.

      The DRIVER is the Plan “generosity”.

      Reply

      • Posted by BH on June 27, 2015 at 5:08 pm

        And there your jealous seeps through!!! It’s not a matter of affordability, it’s a matter of what you call fair!!! I call BS!!! Lower the bar because your a tax payer?? Then leave!!!!!! Nobobody is forcing you to stay. In the mean time’ hold your jealousy in and pay these people their earned pensions!!!!!

        Reply

        • Posted by Tough Love on June 27, 2015 at 6:24 pm

          Quoting …..”Lower the bar because your a tax payer?”

          Don’t you mean ……. keep the bar higher for Public Sector workers …. because they’re “special” and deserving of MORE.

          You know you DID say that in an earlier comment to another of Mr. Bury’s posts.

          Reply

  5. Posted by Anonymous on June 26, 2015 at 3:34 pm

    Never happen but why doesn’t Christie appoint Lt. Governor to spearhead P&B reform. Citing its importance and not wanting to be a perceived or real stumbling block.

    Reply

  6. Posted by PatB on June 26, 2015 at 9:54 pm

    “We reiterate that there is no question that individual members of the public pension systems are entitled to this delayed part of their compensation upon retirement…;
    That said, the State repeatedly asserted at oral argument that it is not walking away from its obligations to the pension systems and to pay benefits due to retirees.”

    The judges should listened to Christie instead of his lying lackey lawyers.

    Footnote 11. http://www.judiciary.state.nj.us/opinions/supreme/A-55-14BurgosvState%29.pdf

    Reply

  7. Posted by Tough Love for Tough Love on June 27, 2015 at 12:22 am

    Hey TL,
    How could anyone tire of your one line of thinking? LOL, I laugh so much reading pretty much the same thing over and over. For everyone on this site, TLs single line of diatribe is truly truly barren. Barren from where it springs and barren for how much it lacks some of the fundamental ideas that form the basis of the republic. Help be thy brothers keeper…or TLs version, sc4ew everyone else. See, TL gets on here talks about forcing a minority of workers into abject poverty, at the same time as a self employed business person sucks tax revenues from the state through the largess of the tax code that allow s/e business owners to write off air. Yeah, you took a risk and deserve the goods, but you and I both know how much is skimmed from the coffers by those deductions that stretch off into the endless sunset. Empty. Immoral. About taking from someone else but not me. Just to quiet your paranoia, I’m private. I’m sure I’ll get paragraphs of the same. Barren they are and barren at the core is what drives them out.

    Reply

    • Posted by Tough Love on June 27, 2015 at 2:11 am

      Will you be laughing when (in about 5 years) NJ’s pension Plan assets start hitting zero and find that even Democratic Legislators won’t raise taxes sufficiently (by about $8-10 Billion) to continue payouts to those ALREADY retired? Of course, long BEFORE that, anything that might have been available to pay the pensions of FUTURE retirees would have been long gone.

      You really should reconsider the efficacy of “denial” as a rational postilion ………………
      ——————————————————————

      Quoting …”TL gets on here talks about forcing a minority of workers into abject poverty”

      I have ALWAYS advocated for Public Sector workers to get “Total Compensation” (pay + pensions + benefits) EQUAL to their Private Sector counterparts. Are those Private Sector counterparts really in ….”abject poverty” ?

      Reply

      • Posted by Anonymous on June 27, 2015 at 8:02 am

        TL & SModeration:

        Seems like you both have valid oppossing points. This, I believe, is a starting point to getting the masses on board. Once that, quickly, happens then we can get consensus agreement on a fix and move on.

        Reply

      • Posted by BH on June 27, 2015 at 5:32 pm

        Why do you think we shouldn’t see a tax increase??? Doesn’t the corporate world charge more for their products?? So do the services you receive from the municipality. You think fair is lowering everyone to what think is equal!!! But I think you’re 100% wrong and as a tax payer won’t complain when my taxes go up to pay not only for pensions, but for every other service I receive. Again, move out if you can’t stand it anymore!!! Surprise, surprise…. More people support public workers than you think TL. Why do you think there is no surge to push reforms??? Politicians live for votes!!! They know most residents support the workers….. Thus no push!!!! But keep spewing the same old venom. We are alllllllll slowly getting immune to it!!! Mrs. Better than 99% of the people on this blog!!! Lol. Blog!!!!!!

        Reply

        • Posted by Tough Love on June 27, 2015 at 6:31 pm

          Quoting …. “You think fair is lowering everyone to what think is equal!”.

          Considering I define EQUAL as being what Private Sector Taxpayers typically get in pensions & benefits, YES.

          ——————————————-

          You’ve stated that several family members are Gov’t workers. While it understandable that you want the best for them, you’ve got a serious “greed” problem. I suggest counseling.

          Reply

  8. Posted by Eric on June 27, 2015 at 12:54 pm

    John:
    Why did Sweeney state that the governor failed to live up to his obligations by not making the required pension payment pursuant to the 2010 law? Everyone knows that the governor signed the law known as Ch. 78 on June 28, 2011 not 2010. Why did not the press question Sweeney on the wrong year? Why do you think he misrepresented the year? The legislation is far too important that this could have been a mistake or an oversight. What is really going on here John?
    What is your answer John?
    Thanks,
    Eric

    Reply

  9. Posted by Tough Love for Tough Love on June 27, 2015 at 1:20 pm

    The other side of TL’s coin is that while the middle has been gutted over the last 25 years, it’s a race to the bottom. Don’t you know? TL believes you should be grateful to be a (wage) slave and pay your employer for the right of giving up you wages for free. Serf. Those publics should to be brought down to everyone else’s level…spoken like a s/e owner siphoning off funds from the middle through the largess of the (tax) code. Haven’t you read (TL)? They’re coming with pitchforks for the likes of you and me.

    Not sure if you read the NJScotus position, they won’t insert themselves into the legislative process, the language of the majority position stated the pubs have ALREADY earned their wages that are to be paid. Where oh where will the money come from indeed. As I have said over and over, the fed will not bail the state. The state chooses politically to ignore a funding item until it’s a crises. It’s a shame for ALL of us they turn their backs on all of us. (Calm down TL, I’m private) In order to cover the pensions the state will shift pubs onto the exchanges. Pubs will most likely need to face reductions of 30% in order to keep the funds realistically solvent. Folks on here inflate numbers which are actuarial low, into a place where no solutions exist, while larger numbers make them feel better about walking away from responsibility. Taxes will be raised and/ or assets (like the TP or GS Pkwy) will be sold or shifted as dedicated funding. Corzine’s idea of securitizing flows from the roads either for the Trans. Trust fund or towards pensions was ahead of its time even though it still remains unpalatable politically.

    A solution that is fair to the existing pubs who have earned their wages and is generationally fair to those behind is a moral way forward. TL can crow all she wants that pubs should get less, but as I said above, she thinks we should all accept this slide we are on to the bottom. The pitchforks are coming if those who know continue to want to pretend not to see and listen to the echo chamber as the footsteps only get closer.

    Reply

    • Posted by Tough Love on June 27, 2015 at 1:39 pm

      I’m guessing that you have family who are (or will be) getting a Public Sector pension.

      They’re gonna be in deep trouble if NJ’s decision-makers (who will ultimately decide this issue ……. more taxes, less benefits, a combination ???) are of your mindset.

      Reply

    • Posted by Anonymous on June 27, 2015 at 2:11 pm

      I hear you but we (private, publics, taxpayers, etc.) have to be realistic. I’m a registered independent, leaning liberal, public worker and understand the need for P&B Commission type reform including a dedicated funding source. I don’t consider myself a traitor to the unions or fellow public workers, just a realist. We need an all inclusive very specific constitutional amendment that addresses everyone’s concerns. This will allow all stakeholders a say in the matter and take it out of the executive, legislative, and hopefully judicial process going forward.

      Reply

  10. Posted by Tough Love for Tough Love on June 27, 2015 at 2:14 pm

    TL
    Doesn’t matter if I do or don’t. What matters is what I wrote above, whether you want to keep preaching the same old tired message of brother vs. brother or not. The tax code is what’s been changed over the 40-50 years to bring us where we are now and you know it. NJ made a choice politically to stop paying into the funds. We’re here with the problem now. Hard choices are ahead. We need solutions which aren’t barren like the ones which brought us to the present.

    Reply

    • Posted by Anonymous on June 27, 2015 at 2:43 pm

      I don’t disagree with your points.

      But at a time when benefits calculations were increased by 9% (TPAF & PERS, ~1987-8) when the denominator was decreased from 60 to 55 we should have been decreasing benefits by a graduated increase in the denominator. Additionally the COLA should have been significantly scaled back and health benefits coverage should have been scaled back as well. Health benefits cost containment and premium savings measures should have been implemented to.

      Bootom line, no way of knowing what the numbers are, the compounded savings over the past 25+ years would have been significant.

      All that’s history and now we have to fix the mess the best we can. P&B Commission type reforms with a dedicated funding source, no more politics.

      Reply

    • Posted by Tough Love on June 27, 2015 at 6:38 pm

      Quoting …. “The tax code is what’s been changed over the 40-50 years to bring us where we are now…”

      Oh, so you believe it’s the “tax code”, not grossly excessive Public Sector pension & benefit promises that has caused the mess we are now in.

      Really ?

      Reply

  11. Posted by Michael S Polish on June 27, 2015 at 6:05 pm

    It looks like all the lazy private sector pigs who contribute zero to society are getting antsy as Tuesday comes near. No more protection and you can line the bird cage with
    The Christie commission reform plan. All you douche bags need to know is your taxes
    Are going up in Nov. with the new Democrat gov. that will be winning in a landslide.
    The only questions at this point are who the republican sacrificial lamb will be and how
    much are your taxes going up. John should close the blog down unless he wants to hear a bunch crying day in and day out from the lazy privates. ” It’s not fair,I work real hard at my office job” Why just the other day I spilled hot coffee on myself and got a nasty paper cut” waaaaaa,waaaaaa.

    Reply

    • Posted by Tough Love on June 27, 2015 at 6:49 pm

      Aren’t you that “classy” NJ Police Officer that said …..

      “In all honesty most private sector positions are not needed.” and

      “As for my pension you will take it in the a$$ before I do in the form of tax hike.”

      in your comments here:… https://burypensions.wordpress.com/2015/05/10/new-jersey-pension-payment-njpp-case-1-the-obvious-question-if-the-state-prevails/
      ———————————————————–

      And now, the Private Sector Taxpayers that pay your wages, your pension, and your benefits, are ….. “lazy private sector pigs who contribute zero to society ” and “douche bags ”
      ———————————————————–

      Yup, still a classy guy, and no doubt one of NJ “best and brightest” that taxpayers are told they must pay so much for.
      ===============================

      God help us all if it’s your ilk that we depend on for protection.

      Reply

      • Posted by Michael S Polish on June 27, 2015 at 7:26 pm

        Cheer up. At least the Supreme Court said you get married now and you get to keep your Obama Care. It was a great week for you and your ilk. I had a great week as well. I towed three douche bags this week and one even reminded me that he pays my salary. I of course responded yes sir you do and that’s why I always follow the law to a T and you are in violation of the law. I think I could have fried an egg on his head he was so angry. Priceless.

        Reply

        • Posted by Tough Love on June 27, 2015 at 9:01 pm

          Quoting …”It was a great week for you and your ilk”

          Yea, unlike your ilk that gets “Platinum+” healthcare, HEAVILY subsidized while working (and often FREE once retired), the Private Sector active pays handsomely for “Bronze” or Silver” level coverage …… and rarely get ANY employer-sponsored retiree healthcare coverage AT ALL.

          Your days of continued sucking at the pockets of the Taxpayers are numbered.

          Reply

        • Wow. Based on your rhetoric (if you are not familiar with that word with your lame HS education it means what you state in your assorted inflammatory posts) I get a very small taste of what some in the AA community think of you and YOUR ilk. No wonder we have some uniformed personnel shooting unarmed people. Attitudes and power trips like yours have no place on LE anywhere. We have enough social issues without sociopaths on the police force. BTW, enjoy the boat check – hope yours sinks.

          Reply

          • Posted by Michael S Polish on June 28, 2015 at 8:40 am

            Another of TL’s sock accounts. Posted 6 minutes from the last one from a douche bag that never posts. Wow such a coincidence. Pathetic. You should be ashamed. You contribute zero to society as evidence by all the time you spend on this useless blog. Get a job you lazy private sector turd.

      • Posted by Anonymous on June 28, 2015 at 11:17 am

        Well on thing is for certain, TL taxes will go up sharply years before the pension system collapses. There is no way she can deny that!!!

        Reply

        • Posted by Michael S Polish on June 28, 2015 at 1:23 pm

          Bingo. Why do you think he is so desperate in his rhetoric ?

          Reply

          • Posted by Tough Love on June 28, 2015 at 1:38 pm

            “Desperate” (and CLEARLY one who should NOT be in such an occupation) is a Police Officer who says ……..

            “In all honesty most private sector positions are not needed.”

            AND

            “As for my pension you will take it in the a$$ before I do in the form of tax hike.”

            AND

            “lazy private sector pigs who contribute zero to society ”

  12. Posted by Anonymous on June 27, 2015 at 6:58 pm

    Once again we’re provoking communication on extreme positions.

    Let’s focus on what’s needs to be done to fix this mess created by a combination of underfunding and over extended promises.

    No reduction of benefits earned to date and scaling back on health care coverage including premium sharing for retirees are all reasonable. Am I jumping for joy over it of course not but that’s not the point.

    Significant reduction of future accruals and/or implement a DCP going forward is an unfortunately necessary tough pill to swallow.

    Of course disability standards should be tightened and all of the political double dipping excesses should cease.

    Any additional reforms MUST include a dedicated revenue stream for ARC funding.

    Reply

    • Posted by Anonymous on June 27, 2015 at 7:12 pm

      I should have added taxes will need to go up as well but not as much because of the additional reform savings.

      Reply

    • I just saw that and it’s the next blog to try and set these people right.

      Reply

      • Posted by Anonymous on June 27, 2015 at 8:27 pm

        John,
        Hopefully, but not likely, calmer heads will prevail. The necessary P&B reforms and tax increases to support a dedicated ARC funding source need to de done now.

        Reply

        • Posted by Anonymous on June 27, 2015 at 8:47 pm

          Forgot to mention, after the P&B debate is over, the only things for sure is death (question of when) and taxes (question of how much). Some things never change.

          Reply

          • Posted by BH on June 27, 2015 at 9:39 pm

            The nj pension reforms will all lose steam Tuesday when Christie declares. You think he’s been out of state 1/3 of the time now?? We will be at a ship with no captain. Who’s gonna lead the charge? TL? And her jealous, “let’s bring everyone down to me crew”?? The desire is not there. Taxes will go up. It’s inevitable. Corporate greed needs to end……

          • Posted by Anonymous on June 27, 2015 at 10:20 pm

            Understood but what makes sense in the long run for the next generation of public workers?

            P&B issue aside a major problem with governmental rules, regulations, and statutes is they’re static. Going forward we need a legislative menality that incorporates, if applicable, language flexibility.

          • Posted by Tough Love on June 27, 2015 at 11:16 pm

            BH, It’s a constant fight to control “Corporate greed” …. certainly no less than the insatiable greed of Public Sector workers and their arrogance and taxpayer-be-damned attitude.

            The difficulty in controlling Corporate Greed will never justify the continued Public Sector greed. In your twisted mind the inability to adequately control Corporate greed justifies continued Public Sector greed.

            Twisted, really twisted thinking.

          • Posted by BH on June 28, 2015 at 7:07 am

            TL, you say those things only because you know I’m right and it flies against your reasoning. You want equal and fair but only attack the publics without ever a mention of corporate greed, subsidies and government scandals.

          • Posted by Tough Love on June 28, 2015 at 12:32 pm

            Quoting BH …… “TL, you say those things only because you know I’m right”

            BH, You really need to either dust-off your brain, or admit you are driven simply by insatiable greed and a to-hell-with-the-taxpayers attitude …..

            While there is on occasion spillover that impacts taxpayers, “Corporate” greed in the form of excessive pay, bonuses and stock options is paid-for by the firm’s shareholders, shareholders who can freely choose to invest in other companies if they feel that they are being abused. Similarly, if a Corporation prices it’s products or services too high, its customers can freely choose to shop with other companies. These FREEDOMS TO CHOOSE are the controls which keep corporate greed and corporate prices reasonably in check …… not always, but reasonably well in most cases.

            No such FREEDOMS TO CHOOSE exist when dealing with the Public Sector. A Local taxpayer cannot choose different Police or Fire or DPW services …. no matter how excessive and unreasonable the price of those services (via local taxation) is, and no matter how available OTHER options may be. The money Local governments DEMAND (again, no matter how excessive and unreasonable) via taxation is accompanied by threats of criminal prosecution or property confiscation if you don’t pay. And unlike shareholders who have many avenues (i.e. the SEC, RICO statutes, Sarbanes Oxley compliance) to punish Corporate management when self-dealing, few such EFFECTIVE controls exist to curtail self-interest* by Local Elected Officials.

            —————————————————————————————-
            * The very obvious Public Sector Union / Elected Official collusion …. specifically the trading of Public Sector Union Campaign contributions and election support for the Elected Official’s favorable votes on Public Sector pay, pensions, and benefits.

  13. Posted by S Moderation Douglas on June 28, 2015 at 2:59 pm

    ToughLove says:

    “* The very obvious Public Sector Union / Elected Official collusion …. specifically the trading of Public Sector Union Campaign contributions and election support for the Elected Official’s favorable votes on Public Sector pay, pensions, and benefits.”

    Moderation says:

    Corpus delicti;

    “a crime must have been proven to have occurred before a person can be convicted of committing that crime.”

    Despite all your repeated passionate allegations, you have offered no proof of any illegal or immoral quid pro quo between the Public Sector Unions and Elected Officials.

    In fact, you have no convincing argument (mindless repetition and CAPS LOCK don’t count) that the “grossly excessive “generosity” of Public Sector pensions & benefits.” even exists, as a whole.

    No body, no crime.

    We have dozens of studies which all concur that some public workers earn more in total compensation than their private sector counterparts, some public workers earn less (much less), and some are “roughly equal”.

    Sounds more like a Goldilocks parable than a crime, or even a minor misconduct.
    ______________________________________

    If it’s true (and it is) that some public workers earn more, and some less, than the private sector, why would the solution be the “VERY (50+%) reductions in the pensions accrual rate for the future service of all Public Sector workers.”??

    Even …….if……. it were true that the “average” state worker had a total compensation differential of 23%, the logical solution would not be to reduce the compensation of …..all….. Public Sector workers.

    Reply

  14. Posted by Tough Love on June 28, 2015 at 3:25 pm

    Quoting S.Moderation Douglas …. “Even …….if……. it were true that the “average” state worker had a total compensation differential of 23%, the logical solution would not be to reduce the compensation of …..all….. Public Sector workers. ”

    I’m quite willing to partition AN OVERALL 23%* pay/pension/benefit reduction in any way that seems fair and appropriate …. as long as we get back IN TOTAL to 23%*.

    But I’m sure that’s NOT a solution you would agree to ….. you just want to stop (or materially delay) doing ANYTHING because there are segments within the entire Public Sector population that should not get any decreases (while for others, decreases far greater than 23% are justified).

    ——————————————————————

    The MUCH greater job security (i.e., little change of PUBLIC Sector workers simply being fired for no reason at all …. a risk virtually all Private Sector workers live with) in the Public Selector is real and with REAL (not imaginary) value. The AEI study found that NJ’s Public Sector workers have a “Total Compensation” advantage of 23% WITHOUT factoring in the Greater Public Sector “Job Security”. When they included the FAR Greater NJ Public Sector job security, the 23% advantage rose to 34%.

    THAT’s the proper (overall average) compensation-reduction bogie that Taxpayers should seek …… 34%.

    Reply

    • Posted by S Moderation Douglas on June 28, 2015 at 4:06 pm

      ……..If……. AEI were totally unbiased and accurate, and if none of the values had changed since 2009.

      Still, need I repeat?, read the report. It matters not just how much you reform, but where you reform.

      No meat-axes allowed.

      (notice I said “reform”, not “reduce”.)

      There is so much in that study more important than fig. 6 and fig. 13.

      Moderation- it’s only logical.

      Reply

      • Posted by Tough Love on June 28, 2015 at 4:37 pm

        Yes, there is lots in that study ….. all of which backs up the sources and methodology that CONCLUDES that in NJ there is indeed a 23% PUBLIC Sector “Total Compensation” advantage …. rising to 34% when the incremental of much greater Public Sector job security is included.

        SO THAT’s what we should aim for …. as an OVERALL AVERAGE reduction in current Public Sector Total Compensation in NJ.
        —————————————————————————-

        Taxpayers, think about just how much greater your retirement would be if YOU had an additional 23% (or 34%) of pay EVERY YEAR to save and invest over your entire career.

        Then, DEMAND an end to the decades-long financial “mugging” being perpetrated upon us by the insatiably greedy Public Sector Union & workers.

        Reply

        • Posted by S Moderation Douglas on June 28, 2015 at 5:54 pm

          You’ll never get “equal”, and if you ever did, you might soon find the meaning of “Be careful what you wish for.”

          Pick your parable: Gordian knot, or pound of flesh??

          Or, if you prefer:

          “Novit enim Dominus qui sunt eius.”

          (Kill them all, let God sort them out.)

          And, my personal favorite:

          Reply

          • Posted by Tough Love on June 28, 2015 at 7:24 pm

            Quoting …”You’ll never get “equal””

            Ah, finally we get there …… that’s what your goal has been all along ……. to keep the current status of FAR MORE for the “Public” Sector ….. fighting every rightful effort to bring the compensation now granted the insatiably greedy Public Sector down to “EQUAL” the compensation granted comparable Private Sector workers.

  15. Posted by S Moderation Douglas on June 28, 2015 at 8:42 pm

    My condolences. It must be physically painful to be so cynical.

    “Roughly equal” is the best you can reasonably expect. In the link I posted previously (Comparing Public
    and Private Sector
    Compensation over
    20 Years),

    California state workers showed a 2% ave. wage advantage in 1996, then an 11% disadvantage in 97, and a partial catch up to only a 6% disadvantage in 98. (And generally downhill from there.)

    The Legislative Analyst report shows why, on the state level; three years with no raises, then an anemic attempt to “catch up” in ’98. This pattern of going from several successive years with no raises, to another few years with inadequate raises results in a sawtooth pattern in the comparison of public to private. The private sector aggregate average wage moves in a fairly smooth curve, because it is an average of thousands of contracts and/or employer decisions. Whereas the state is very sporadic, as the 14.5% general raise I mentioned in ’79. According to the Department of Personnel Administration, in one swell foop, in one day, many of us went from grossly underpaid, to only slightly underpaid.

    With those occasional huge swings bracketed by years of no raises, you will never get “equal”, and that may give you, or it would give a normal person, an idea of the reliability of the ” 23%” advantage figure.

    Reply

    • Posted by Tough Love on June 28, 2015 at 9:24 pm

      My condolences. It must be emotionally draining to be so greedy.

      Nice try …. when your arguments fall flat re NJ’s pension Plans (the focus of THIS blog), you try again, shifting the discussion to California. What, will it be Kentucky or Illinois tomorrow ?

      Reply

      • Posted by S Moderation Douglas on June 28, 2015 at 10:19 pm

        I get it, little brother. You’re pulling my leg. Nobody could be that dense unintentionally.

        I was discussing a general principal common to New Jersey, California, and most other states. I happened to have CA data handy. If…..New Jersey state wages were 4% below private, in 2012, that could be plus/minus 10% or more by 2015.

        Boom or bust.

        There is a partial solution, though. I’ve suggested many times over the years that California should have automatic annual COLAs. It would probably work well for NJ also. No more playing politics with our wages. No more being the red headed step child when tax receipts come in lower than predicted.

        Reply

        • Posted by Tough Love on June 28, 2015 at 10:47 pm

          Well nice try again, but I’m not buying it, and neither should the readers.

          If the LAST NJ study-results available shows a 23% (34% including the MUCH greater Public Sector job security) PUBLIC Sector compensation “advantage”…. THAT’s what we should use to formulate our decisions. Sure it “might” be lower or higher (and the earth also “might” be hit by an asteroid tomorrow), but THAT is the BEST estimate available right now.
          —————————————————–
          Oh, so NJ’s “PUBLIC” Sector workers should have “automatic” annual COLAs……. gee, did I miss that such doesn’t exist for Private Sector workers.

          Which takes us back to …….. no, you’re NOT “special” and deserving of a better deal.

          Reply

          • Posted by S Moderation Douglas on June 29, 2015 at 12:26 am

            ” did I miss that such doesn’t exist for Private Sector workers.”

            doesn’t exist?

            at all?

            How long before you try to weasel out of that statement?

          • Posted by Tough Love on June 29, 2015 at 2:09 am

            Ok, Well maybe I’ve led a sheltered life, but tell me where Private Sector workers get automatic annual COLAs

          • Posted by S Moderation Douglas on June 29, 2015 at 2:46 am

            Here is but one example. COLA + general raise. I understand COLAs have been common for years in many major union contracts. And, as I recall, even outside these contracts, the average US wage has increased at about the same rate as inflation.

            http://www.ueunion.org/unity2011_summary.html

            It has, sort of, kept up in the public sector also, but is more sporadic there.

          • Posted by Tough Love on June 29, 2015 at 3:05 am

            Mea culpa, you are correct . I was not considering Unionized Private sector workers (who sometimes do get annual COLAs). I was speaking of the more typical non-Union office worker in the Private sector who (in my experience) gets no such COLAs.

          • Posted by S Moderation Douglas on June 29, 2015 at 3:38 am

            My wife worked for a non union small company.(100+ employees) She had no automatic COLA. Every year she worked there, in the spring, each worker met with his/her supervisor to discuss performance and pay. The usual result was an increase approximately equal to CPI. Those who did not get a raise usually were let go soon thereafter. Those that management deemed superior usually got the same raise as everyone else, but we’re put on the short list for promotions. It’s just common sense. You are paying your employees with dollars that are worth less than last year. You need more of them.

            While searching, I found one document (Princeton University) which said that just under 60% of US workers in large union contracts were covered by some form of indexation clause.

            That was 1986.

            But.

            Also saw several references to companies now trying to move away from automatic COLAs, although they are sometimes replaced by inflation “bonuses”

          • Posted by Tough Love on June 29, 2015 at 12:34 pm

            S. Moderation Douglas,

            The description of “how it works” at your wife’s employer is exactly how I’ve seen it work in the many companies (mostly larger one, with more employees) with which I am familiar. The key is that some (usually 10-20% get nothing) and the deadwood is weeded out. And importantly, in bad times the employer can give the workers nothing and even decrease their pay.

            In the Public Sector legislating for “automatic annual COLAs” takes away the need flexibility. When funds are not available for raises they should NOT be locked in to HAVING to provide them.

            A retired CEO of one of Americas largest Corporations once said that all companies should periodically purge the poorest performing 10% of their workers, being not only non-productive, but often a detrimental influence on the performance of more productive workers. The EXTREMELY limited ability (and WILLINGNESS) to do that in the Public Sector is a huge problem……. and wastes resources that could be used to better reward the more productive. The Unions should rethink their “protection” of the slackers.

          • Posted by Tough Love on June 29, 2015 at 12:44 pm

            S Moderation Douglas,

            Per the BLS, in 2014, only 6.6% of all Private Sector workers belonged to Unions. With such a low %, and certainly with not all companies/workers within the 6.6% having contracts that include automatic annual COLAS (and likely near zero in the Non-Union Private Sector), it is assuredly a very small percentage of ALL Private Sector workers that get them.

            Just another “fairness” reason NOT to guarantee such automatic annual COLA increases to Public Sector workers.

          • Posted by S Moderation Douglas on June 29, 2015 at 2:19 pm

            Automatic COLAs in contracts are just a means to an end. It’s not even a raise, just the recognition that the value of the wage has declined. The employee is essentially receiving the same service at reduced cost. A good deal if you can get away with it, but eventually you will lose employees to companies that keep up with inflation.

            In the private sector, wages have historically kept up with inflation. The big concern lately is that they have *barely* kept up. Normally wages have increased faster than inflation, reflecting increased productivity. Note the GE contract linked above. There is both a COLA formula and a “general wage increase” averaging 2.5% a year.

            But the private sector increase is a fairly steady curve because there are thousands of employers comprising the average. Some, like GE, increase wages faster than inflation and some increase at about the same rate as CPI. And, of course, others lag inflation. They may be dying enterprises or sectors of the economy hard hit by current economic trends, like manufacturing or construction.

            A state, as a large single employer, has a more “sticky” salary curve. For revenue, or purely political reasons, it can go several years with no “general” wage increases. (There are always various individual raises due to step increases, as when a new or promoted employee completes probation). As I have said, this does not affect me, but when the state goes three years with no COLA, and CPI has increased by 3% a year or more, it does affect recruitment and retention. Especially if it occurs when the *average* private sector wage is increasing faster than inflation.

            Then you have the political hot potato I mentioned in California ’79. A 14.5% general increase after several years of no raises (and double digit inflation). Vetoed by Governor Brown, overridden by legislature, including 28 Republican votes.

            Side note* yours truly was one of several occupational groups singled out for an additional 5% increase due to DPA survey of market rates. A one year increase of 19.5%, and we still fell short of keeping up with inflation.

            Boom or bust. Is that any way to run a railroad?

            As I said, I have no dog in this hunt, automatic COLAs just seems like a more practical solution for both parties.

            (For those outside the state, Prop 13 was passed in 1978, in California, which resulted in a lot of shuffling finances between state and local governments. And a 14+% increase in wages the next year? One can imagine the “letters to the editor”. No world wide web then to vent on.

            S Moderation Douglas, aka: No dog

  16. Posted by Anonymous on June 28, 2015 at 10:35 pm

    TL: will you be getting married soon?

    Reply

  17. […] came yesterday. . Aside from parading an ignorance of the time value of money in an argument used previously with teachers and different numbers ($195,000 in with $2.6 million out) the issues with this […]

    Reply

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