Cost of COLA Return

On a day traditionally for returning presents let’s consider the cost of a couple of items that New Jersey can expect to see return in early 2016: our governor and cost-of-living-adjustments (COLAS) on public pensions.

The cost of the former is incalculable (per PolitickerNJ):

It was the same at the Statehouse last week. On press row, PolitickerNJ asked a staffer what was going on and received a blank look in response.

“Nothing,” was the reply, mouthed almost in despair and accompanied by the explanation that Gov. Chris Christie’s absence from Trenton as he runs for president has all but ground operations to a halt.

The staffer put his head in his hands.

A lobbyist in the hallway later explained that everyone is essentially waiting around for Christie’s campaign to end so that he can show up in Trenton and start exacting payback on those who didn’t more vigorously back his national ambitions.

“Everyone knows how vindictive he is,” the lobbyist said.

But as for COLAs, we have a better idea.

Looking over a spreadsheet developed from the liability value exhibits in the official New Jersey Retirement System actuarial reports reveals that the from 6/30/05 to 6/30/09 the value of accrued benefits steadily increased by about 7%.  Then with the 6/30/10 valuation that value decreased by 8.72%.  Since the pension reforms consisted primarily of the elimination of COLAs (benefit changes impacted only the newly hired so there would be little impact and the increase in member contributions only affected the asset side) if we assumed that the 6/30/09-6/30/10 period saw another 7% increase we get a value of accrued benefits as of 6/30/14 of $165 billion instead of the $141 billion reported officially – a brand new $24 billion liability waiting for the New Jersey Supreme Court to approve.

Other things to note:

  1. $24 billion is, of course, the official number using 7.9% interest.  Using GASB interest rates (per the last blog here) we can bump that up by 40% to about $34 billion.
  2. $34 billion is, of course, the GASB number using interest rates that average about 5.5%.  Considering the severely underfunded status of the plans (and the interest rate adjustment necessary to account for that status) we can bump that up by another 50% to about $51 billion.
  3. If the court rules that forgone COLAs need to be paid that is another $2 billion (and counting) to come up with immediately.
  4. With Christie back he may have one more stupid reform idea in his holster.

 

172 responses to this post.

  1. Posted by Anonymous on December 26, 2015 at 11:22 am

    John, what is your feeling on bestowing he honor of worst NJ governor ever upon Chris Christie? If not who do you have in mind? Thanks

    Reply

    • Very difficult to determine since there are so many aspects. On the pension issue I still put Christie Whitman as the worst for taking the payments out of the budgets making it impossible to reinstate the real cost and necessitating these actuarial games.

      Overall, this Christie might be the worst when you factor in the blind ambition, hypocrisy, and general incompetence that imbues every policy decision and, if so, there are others culpable too. Voters who allow themselves to be bought off, same for the opposition party, and the media uninterested or ill-equipped in reporting realities.

      Reply

  2. Posted by The Resident Nutcase on December 26, 2015 at 11:24 am

    — (benefit changes impacted only the newly hired so there would be little impact and the increase in member contributions only affected the asset side)—

    Not sure if I follow…… Ch78 requires the increase to 10% for member contributions into PFRS…
    Also, most are at 27.5%-35% of the healthcare premium… Which combined, equates to over $10,000 per year, per member. I’d say that’s impactful……

    Reply

    • This blog has only to do with the valuing of the accruing liabilities which slowed down in 2010 only because COLAs were taken away prospectively which reduced those liabilities by about 15% at the time. The other CH78 changes had to do with lowering benefits for the newly hired which lowered no other liability at the time (and very little afterwards) and requiring participants to pay a very little bit more comparatively (maybe about $200 million more into a fund that is paying out $10 billion annually) which had no impact on benefits or their values..

      Reply

      • Posted by Tough Love on December 26, 2015 at 4:33 pm

        Resident Nutcase,

        In case you missed (or choose to ignore) Mr, Bury’s point, what YOU consider to be material and “impactful”, John considers those CH78 changes required ………

        “participants to pay a very little bit more comparatively (maybe about $200 million more into a fund that is paying out $10 billion annually)”
        ———————-

        Public Sector workers pay a VERY VERY VERY small share of their VERY VERY VERY rich pensions and benefits. As I’ve stated MANY times, that grossly excessive pension/benefit “generosity” is the ROOT CAUSE of the mess we are in today.

        Reply

        • Posted by The Resident Nutcase on December 27, 2015 at 12:15 pm

          What about the ones who either die on the job…. Or very shortly after???? These pensions are not paid forever…. Eventually there’s an end to each and every single pension. And it decreases with each death!!!
          While people are living a bit longer, they are also working a bit longer as well.
          You love to miss points that don’t go with your weird narrative.

          Reply

      • Posted by The Resident Nutcase on December 26, 2015 at 4:56 pm

        $10,000 plus is impactful to those giving that up…………..

        Reply

  3. Posted by Tough Love on December 26, 2015 at 11:55 am

    What would be the cost of returning be (i.e. the SAVINGS to Taxpayers …. past AND future) had NJ NEVER granted it’s State or Local workers DB pensions, but only DC Plans EQUAL TO what Private Sector workers typically get from THEIR employers (3% of pay) plus their employer’s 6.2%-of-pay Social Security contribution on their behalf?

    Incalculable indeed ….. a flourishing, vibrant economy with an infrastructure and educational institutions the envy of the nation.

    Reply

    • Posted by The Resident Nutcase on December 26, 2015 at 11:58 am

      And…..what would be the current taxes in NJ if allllllll the money that was ever earmarked for payments into the pensions actually went into the god dam pensions instead of being used to balance the budget with tax breaks, cuts and subsidies???

      Reply

      • Posted by Tough Love on December 26, 2015 at 12:14 pm

        Past and Future taxes would be HUGE because, as I’ve stated before ….. “funding” requirements FOLLOW FROM (and IN DIRECT PROPORTION TO) Plan “generosity” … and a VERY VERY VERY “generous Plans” will always be VERY VERY VERY costly and difficult to fully fund.

        LOL …. thank you for helping me make MY point.

        Reply

        • Posted by The Resident Nutcase on December 26, 2015 at 12:35 pm

          That’s your opinion…..
          Which came first…the chicken or the egg???

          The underfunding of the pensions over decades is the root cause of the pension issue.

          We can go back and forth. But it’s just common sense…… When you don’t pay your bills….. The debt increases!!!!!

          Reply

          • Posted by Tough Love on December 26, 2015 at 1:04 pm

            Quoting ….. “Which came first…the chicken or the egg???”

            Let’s see if someone with even YOUR very limited intelligence can understand…………

            2 items …. the cost of (i.e., “funding”), and the item that you are buying (i.e the specific Plan provisions … or it’s “generosity” level).

            Can you DESIGN a Plan without knowing upfront what it will cost ? Of course you can.

            Can you “fund” ( figure out the specifics of paying for) a specific Plan without FIRST knowing how generous it’s provisions? Of course not.

          • Posted by The Resident Nutcase on December 26, 2015 at 1:26 pm

            Isn’t this why we have an ARC (annual recommended contribution)????????
            And if the state fails to meet the ARC…… What do we have TL?? I’m sure you’re simple and narrow mind could at least understand that??
            We have a pension system that is what TL????
            Say it with me….
            U..N..D..E..R…–FUNDED

            You can try to spin this any which way you can. But the readers will know that the state caused this problem after decades of not only not meeting the ARC but not PAYING ANYTHING AT ALL!!! Into the pensions!!

          • Posted by The Resident Nutcase on December 26, 2015 at 1:33 pm

            Spell check_ Sorry
            *Recommended = *Required

          • Posted by Tough Love on December 26, 2015 at 2:05 pm

            LOL

  4. Posted by Anonymous on December 26, 2015 at 11:58 am

    TL the master of hollow vocabulary.

    Reply

  5. Posted by Sean on December 26, 2015 at 2:03 pm

    Actually, Nutcase, YOU are the one doing the spinning. The promises made should NEVER have been made. THAT is the problem. From day one, they were NEVER affordable.

    If you and I were on a basketball court, and I said to you, “Hey Nutcase, will you give me a billion dollars if I can make this shot from half court?” and you said, “Yeah sure. Go ahead. You’ll never make it anyway.” Now, what if I actually made that shot? I could b*tch and moan for the rest of my life that I would be a billionaire IF ONLY you had funded my account. After all, I faithfully did my part, right? We all know the truth, though. The truth is that it was a ridiculous proposition to begin with, and not affordable the second it was made. It is no chicken or egg question. It all started with an unrealistic, affordable, and unsustainable promise.

    Now, I am quite confident that you will have some snarky comeback about how your pensions could hardly be compared to an idle and idiotic promise on a basketball court, but actually, I think it is precisely the same in principle. I simply used an over simplified example to make my point.

    It is truly tiring to listen to publics go on and on, ad nauseum, about their belief that everything would be fine, if only those rotten politicians had funded their pensions. I too, would be a billionaire, if only you had funded my bank account. But that is NOT the problem. The problem is: the PROMISES made should NEVER have been made in the FIRST PLACE. Period.

    Reply

    • Posted by Tough Love on December 26, 2015 at 2:11 pm

      Perfectly stated.

      Reply

    • Posted by Anonymous on December 26, 2015 at 2:28 pm

      Sean using YOUR analogy, “real men” don’t make promises or bets that they’re knowingly going to “welch” on. Put whatever twist on it you want but we ALL know what category you and TL fall into. Grape Drink!

      Reply

      • Posted by Sean on December 26, 2015 at 2:47 pm

        Politicians are not real men. They do not have to pay for the promises they make. They will say and do anything for their immediate gain, and public unions have seized on that opportunity, even though it is going to come back and bite them on the ass in the end.

        “but we ALL know what category you and TL fall into.”

        Once again, falling back on the only thing you know how to do…

        Reply

      • Posted by Tough Love on December 26, 2015 at 4:36 pm

        Since when are self-interested Elected Officials “real men” ?

        Reply

    • Posted by The Resident Nutcase on December 26, 2015 at 9:26 pm

      Nah! No snarky come back. You’re one in three…… No worries about people like you and TL. The majority will have their time come November. I’ll just sit back and watch as the public workers get vindicated.
      Some people….. You can’t reach.

      Reply

      • Posted by Tough Love on December 26, 2015 at 9:29 pm

        Quoting …… “Some people….. You can’t reach.”

        You got THAT right !

        Reply

      • Posted by Anonymous on December 27, 2015 at 1:20 am

        I don’t give two sh*ts about “November.” You can put one Santa Claus after another, after another, after another… in those seats. NONE of them are going to create the ocean of money needed to save these plans. Not even close.

        The only thing that will be vindicated is mathematics. Keep whistling in the graveyard; it will have zero effect on the outcome.

        Of course, some people just can’t be reached…

        Reply

        • Posted by Sean on December 27, 2015 at 1:23 am

          By the way, the above reply was posted by me (Sean) from a different computer. I didn’t catch it. I do not hide behind anonymous shields.

          Reply

          • Posted by The Resident Nutcase on December 27, 2015 at 1:25 am

            Lol. Ok….Sean.
            Relax guy!!!

          • Posted by The Resident Nutcase on December 27, 2015 at 1:29 am

            ………..” I do not hide behind anonymous shields”
            Ugh…..
            Great! Another goofball in the house!!
            There ya go TL….. You’re up to 6 people now who care about any of this.

          • Posted by Tough Love on December 27, 2015 at 1:48 am

            Nutcase,

            You are one oddball, and come up with the MOST ridiculous statements (I suppose it’s a combination of greed, arrogance, and FEAR ….. muddied by limited grey matter).

            Like where you said …

            Quoting … “Even an adolescent knows all equations have more than one variable!”

            And I responded …

            (1+3X) = 10 is an equation …. with X=3.

            How many “variables” are in that equation ?
            —————————————

            You should take a L*O*N*G pause BEFORE you start typing.

          • Posted by Tough Love on December 27, 2015 at 1:54 am

            And NUTCASE,

            I did notice that there were 2 comments time-stamped exactly … December 26, 2015 at 11:58 am.

            The first a response from “The Resident NUTCASE” to me, and the second from “Anonymous” simply insulting me.

            And BOTH with the same avatar………..
            —————————————–

            Hummm ….. yeah, it must have been your spouse.

          • Posted by The Resident Nutcase on December 27, 2015 at 9:10 am

            Like our new “tough guy”..Sean…. I don’t use no anon to post! Lol
            So each time you think it’s me…. I giggle.
            I never made the following statement..”Even an adolescent knows……. Blah blah blah”
            We all know John knows our IP…. And will call us out if we attempt to lie. So stop throwing false accusations around and stick to the point.

          • Posted by Anonymous on December 27, 2015 at 9:11 am

            Maube but probably not, the moderator will have to step in to clarify. But as Sean and previously MJ have stated, they’re one individual postig from multiple devices. Who knows, who cares ± evidently TL and John!

          • Posted by Anonymous on December 27, 2015 at 9:30 am

            TL your denial of the State’s failure to pay its ARC (or some significant portion thereof) is why you’re the one in denial about ALL of the facts in this matter. You and yours selectively state the points that make your case, if your going to sing the song don’t leave out ANY of the lyrics!

          • Posted by Tough Love on December 27, 2015 at 10:40 am

            I never “denied” that NJ State Gov’t (i.e., it’s Taxpayers) has contributed far less than the annually calculated AC, and in some years nothing at all.

            What I HAVE stated is that those ARCs are so egregiously high BECAUSE “funding” requirements FOLLOWS FROM (and IN DIRECT PROPORTION TO) Plan “generosity”, and that grossly excessive Plan “generosity is the ROOT CAUSE of the problem.

            There is ZERO justification for Taxpayers to be called upon to fund (via currently calculated ARCs) 80%-90% of the total cost of NJ Public Sector pensions that are ROUTINELY 3 to 5 TIMES greater in value upon retirement than those of comparably situated (in age at retirement, years of service, and final average pay) Private sector workers.

            It would indeed be interesting to see if all of NJ’s contribution over the years were sufficient (or MORE than needed) to fully fund NOT the ludicrously generous Plans that our self-interested, taxpayer-betraying elected officials granted NJ’s workers, but a DB Plan EQUAL in value to the retirement benefits typically granted NJ PRIVATE Sector workers. I believe NJ’s Taxpayers have already done so ….. and owe you NOTHING.

          • Posted by The Resident Nutcase on December 27, 2015 at 11:51 am

            “”In some years probably nothing at all!!!!!!!””……
            Um..TL….. Try DECADES of paying nothing at all…….
            DECADES!!!!!!!!

          • Posted by The Resident Nutcase on December 27, 2015 at 12:09 pm

            TL said..”What I HAVE stated is that those ARCs are so egregiously high BECAUSE “funding” requirements FOLLOWS FROM (and IN DIRECT PROPORTION TO) Plan “generosity”, and that grossly excessive Plan “generosity is the ROOT CAUSE of the problem.”

            you use too many caps!!!

            THE ARC IS SO HIGH BECAUSE THE STATE FAILED , FOR DECADES, TO FUND THE PENSIONS!!!!
            ANY IDIOT CAN UNDERSTAND THE ISSUES WITH NOT PAYING YOUR DEBTS….. THE RESULT IS A LIABILTY!!!!!!!

          • Posted by Tough Love on December 27, 2015 at 12:18 pm

            Nutcase, You use (because you lack) too little grey matter.

          • Posted by Tough Love on December 28, 2015 at 2:18 pm

            Quoting the Resident Nitwit ……….

            ““”In some years probably nothing at all!!!!!!!””……
            Um..TL….. Try DECADES of paying nothing at all…….
            DECADES!!!!!!!!”

            Well, not according to this graph, where “nothing at all” was contributed in only 3 years …………. 2001, 2010, and 2011.

            http://pension360.org/chart-a-history-of-new-jerseys-pension-payments/

  6. Posted by Sean on December 26, 2015 at 2:06 pm

    “It all started with an unrealistic, affordable, and unsustainable promise.”

    Should be: It all started with an unrealistic, unaffordable, and unsustainable promise.

    Reply

    • Posted by Anonymous on December 26, 2015 at 3:14 pm

      The original db pension worked fine until Whitman and others borrowed money and didn’t repay. The initial investment structure was a disaster that lost millions for years, presently the impact of borrowing and nonpayment has severely impacted the health of the NJ pension funds. The new investment structure highly rewards politically connected investment firms who get paid plus bonuses even when the funds under management suffer losses. Christie’ s backers required attacks against public workers in their quest to reduce/eliminate the middle-class.

      Reply

      • Posted by Sean on December 26, 2015 at 4:41 pm

        Anonymous,

        I actually DO agree with a lot of your feelings on this. There is no doubt the things you mention have an adverse impact. If it’s any consolation, I live in Illinois, which seems to me to be much worse.

        I am no fan of Chris Christie, or really any politician, for that matter. Between the government owned by Wall Street criminals, and the politicians who enrich themselves at the expense of everyone else, we the people are enticed, exploited, and extorted.

        As for the elimination of the middle class, I do agree this is happening, and it sickens me, too; however, I think it is a very complex combination of factors that are causing it. Corruption certainly has its part, but I think the advancement of technology, globalization, and a myriad other things are accelerating it. we are indeed living in interesting times.

        I would respectfully disagree with your premise that the original db plans worked fine. My view on this is as follows:

        The whole idea of giving a person a retirement pension was born in the industrial age, and was primarily designed to encourage older workers to leave, making way for a younger worker. Back then, it worked, because:

        1. Retired workers only lived a few years after retiring.
        2. For every 1 retiree, there were 10-15 workers paying in.
        3. Pensions were basic
        a. No COLA
        b. No taking in a high percentage of your working wage in retirement
        c. No free health care
        d. No spiking
        e. No double dipping

        There are probably other factors I’m leaving out, but I think you get my point.

        Now, look at how things have changed:

        1. Retired workers are living WAY longer, and pensions are, in many/most cases, passed on to a surviving spouse.
        2. We are now at the point where we have only 2-3 people paying into for every 1 retiree drawing out of, the system. (the ratio varies, of course, but it is definitely declining at an unsustainable rate).
        3. Pension spiking, double-dipping, disability fraud, all these things have added MASSIVELY to the unfunded liability.
        4. Free health care. The cost of health care rises at 2.5 times the rate of inflation. It is simply unrealistic to assume that you can just give this to someone, and their family, free of charge, for the rest of their lives. (health care and higher education are two other bubbles that will burst as well).

        The bottom line is: These benefits packages cannot be sustained, and the worst part of it, for public sector workers, is that the politicians and union leadership will not hesitate to throw the average public worker under the bus, once the pressure starts mounting.

        Sorry for being so long winded.

        Reply

        • Posted by Tough Love on December 26, 2015 at 5:09 pm

          Quoting Sean ….

          “These benefits packages cannot be sustained, and the worst part of it, for public sector workers, is that the politicians and union leadership will not hesitate to throw the average public worker under the bus, once the pressure starts mounting.”

          I agree. PSWs think their bought-off Elected Officials will ALWAYS support them. They fail to realize how quickly (and completely) these Officials will switch sides (supporting non-Public Sector voters) when they see the writing on the wall.

          The clock is ticking …… and they’ve begun jacking up that bus for all the Unions/workers soon to be thrown underneath.

          Reply

          • Posted by Anonymous on December 27, 2015 at 2:04 am

            There is a documented history of defined benefit pensions working for public sector retirees, there is also a documented history of private sector 401k. plans being miserable failures, creating serial commenters such as TO.
            . When do living longer become a quoted problem in the retirement industry?

          • Posted by Tough Love on December 27, 2015 at 10:45 am

            So the ones (the Taxpayers) who get far LESS, should PAY the HUGE DB Plan costs of those (the Public Sector workers) who get far MORE.

            And you see no problem with this ?

            Oh, of course no …. your a PSW riding this gravy train !

        • Posted by The Resident Nutcase on December 27, 2015 at 1:24 am

          There is no longer free healthcare. Workers as of 2011 who had 20 years or less are paying 35% of the premium while employed and into retirement.
          So there goes one of your points..
          Just saying….. I’ll get to the others soon….. But I actually have a life.

          Reply

          • Posted by Tough Love on December 27, 2015 at 10:49 am

            BS. Safety workers and teachers If hired before 2011 get healthcare in retirement with no premium if they retire with 25 years of service.

            Patently absurd.

            The subsidy should be the SAME as what a Private Sector retiree would get from his/her employer under similar circumstances ….. typically NOTHING.

          • Posted by The Resident Nutcase on December 27, 2015 at 11:58 am

            Once again you are wrong TL. Please get your facts straight and stop trying to spin the lies!!!

            Chp 78 makes everyone currently working pay into healthcare. This year 35% for most.
            Those who had 20 yrs as of 2011… Paid while employed but get free healthcare in retirement.
            Everybody else….. “The majority” pay into retirement.

            This brings in millions upon millions to the municipal governments!!!!
            These safety worker you like to speak of…. Deal with the trash of the world. Risk their lives everyday while doing it. Bringing contaminated and contagions home to their families. For this…. They were provided free healthcare. Then mid game the rules were changed. Now those very people sworn to protect and save you idiots have at a minimum a $10,000 pay cut!!! All the while you same idiots cry it’s not enough!!!!
            Too friggin bad!!!!! They took the job knowing the risk but also knowing they and their families would be taken care of……… You and your loverboy Christie changed all that!!!!!

          • Posted by Tough Love on December 27, 2015 at 12:31 pm

            Question …….. for someone OTHER than NUTCASE to answer………

            Do NJ Police and/or Teachers (hired before the 2011 changes) pay zero healthcare premiums will WHILE RETIRED (after 25+ years of service), or as NUTCASE stated is the continuation of premium-free retiree healthcare limited to ONLY those who already had completed 20 years of service as of 2011 ?

          • Posted by The Resident Nutcase on December 27, 2015 at 12:48 pm

          • Posted by The Resident Nutcase on December 27, 2015 at 12:57 pm

            I don’t see what’s so hard to understand. Ch78 is pretty clear.
            Any active employee who had 20 or more years of service credit as of 2011 was grangfathered in. So, while they pay the healthcare premium while active…. Upon retirement they get free healthcare.
            Everyone else….. Those who had less than 20yrs of service credit in 2011 …. Must pay while active and forever into retirement!!! And… Must attain 25 years service credit to even do that.
            BTW…. Most of the people who are grandfathered in…. Have or will retire very shortly.
            Those that have to pay….. Will remain working forever now…… There’s no longer an incentive to retire!!

            These facts are true and indisputable.

          • Posted by Tough Love on December 27, 2015 at 2:08 pm

            On initial reading, it seem that you are correct and the free retiree healthcare is now limited (primarily to those already retire with 25 years of service ….. but will remain so for the rest of their lives at great cost to taxpayers).

            However, for those that DO pay retiree healthcare premiums, somewhere in the many online State documents I read that retiree healthcare premium rates are set at 25% of Plan’s expected cost (with some upper and lower limitations base on the pension amount).

            Why should taxpayers pay for the 75% balance of PUBLIC Sector retiree healthcare premiums when employer-sponsored PRIVATE Sector retiree healthcare subsidies are usually ….. ZERO ?

            Public Sector worker/retirees are NOT “special” and deserving of a better deal …. on the Private Sector Taxpayers’ dime.

          • Posted by S Moderation Anonymous on December 27, 2015 at 8:14 pm

            Tough Love on December 27, 2015 at 10:49 am

            BS. Safety workers and teachers If hired before 2011 get healthcare in retirement with no premium if they retire with 25 years of service.
            ………………………….
            The Resident Nutcase on December 27, 2015 at 11:58 am

            Please get your facts straight and stop trying to spin the lies!!!
            ……………………………
            Tough Love on December 27, 2015 at 2:08 pm

            “it seem that you are correct”

            “However”

            Yadda, yadda, yadda….”Public Sector worker/retirees are NOT “special”
            …………………………
            Tough Love: Often in error, never in doubt.

            He (or she) will continue to educate us because s/he has arrived at a conclusion and any facts that might contradict that conclusion are either irrelevant or biased, or both. If you or a family member or friend (or some stranger you passed on the strret) either works for or knows someone who may have worked for any government entity, your opinions are not valid and your facts are irrelevant.

            If you ever worked as a policeman or fireman, your feet stink and you hate Jesus. Your pay should be cut fifty percent, and your pension should be no more than fifty percent of final pay.

            Saepe in errore versans, numquam animi pendens

            or/and

            Medice, cura te ipsum!

          • Posted by Tough Love on December 27, 2015 at 10:17 pm

            Quoting SMD …..

            “If you ever worked as a policeman or fireman, your feet stink and you hate Jesus. Your pay should be cut fifty percent, and your pension should be no more than fifty percent of final pay. ”

            Actually your wrong……. Police and fire pensions MIGHT be reasonable if they MAXED OUT at 50% (of final 3-yr AVERAGE pay) after 30 years, couldn’t collect other than a actuarially-reduced pension until age 65, and if it included no provision for COLA increases.

            Why, because THAT describes a pension that is in line with the BEST Private Sector pensions ……… and Pubic Sector workers are NOT “special” and deserving of a better deal on Private Sector Taxpayers’ dime.

            NJ’s Safety workers are VERY VERY well paid, with a BASE PAY typically over $125K after only 5 to 7 years. Private Sector workers (most making FAR less) must save mightily out of each net paycheck if they want to retire in reasonable comfort. Why should Public Sector workers be excused form that SAME obligation …. with the cost instead foisted upon Taxpayers? Why is that just of fair to Private Sector taxpayers?

          • Posted by S Moderation Douglas on December 27, 2015 at 11:00 pm

            You must be in the high rent district. BLS says the mean wage for “Police and Sheriff’s Patrol Officers” in New Jersey is $88,530.

            Assume the median wage is lower than the mean. I can’t find any rate for “typical” is that usually higher than either the median or the mean?

          • Posted by Tough Love on December 28, 2015 at 1:00 am

            SMD, You are likely averaging in part-year workers, as well as officers in the 1-st few years of employment. They start out low but in just 5 to 7 years “patrolmen” reach $125+K annually in all of the surrounding towns.

          • Posted by S Moderation Anonymous on December 28, 2015 at 5:36 am

            Not me. BLS

            “Annual wages have been calculated by multiplying the hourly mean wage by a “year-round, full-time” hours figure of 2,080 hours; for those occupations where there is not an hourly mean wage published, the annual wage has been directly calculated from the reported survey data.”

          • Posted by Tough Love on December 28, 2015 at 3:46 pm

            SMD, The following link gives the Police wages in 2013 in Paranus, NJ. which I picked because it is a large and busy town with the several shopping malls and many residents. It’s a nice town, but you have to put up with a lot of traffic from all the shopping.

            http://www.bergendispatch.com/Public/PFRS2013/Agency.aspx?id=PARAMUS+BOROUGH+++++++++++++++

            All with lower than $100K wages are the newer hires and a quick glance suggests an average salary of $140-$150K.

            All of the surrounding towns pay very similar wages.

          • Posted by S Moderation Anonymous on December 28, 2015 at 11:30 pm

            Coincidence, I suppose. Of the 21 counties in New Jersey, Bergen County has, hands down, the highest police salaries.

            And of the 69 Boroughs in Bergen County, Paramus has the fourth highest average police salary. (It’s $133,127 by the way, not $140-150,000 your quick glance is askance or askew.) And the average is not just “patrolmen”. It includes the entire dept. up to and including the chief, at $197,204.

            A quick glance at the other 20 counties suggests the BLS average pay of $88,530 for Police and Sheriff’s Patrol Officers is right on.

          • Posted by Tough Love on December 29, 2015 at 12:23 am

            SMD, Not sure of your #s, but the 2014 average Paramus NJ Police wages excluding the newer hires (those with less than 7 years service in Paramus) was $143,179.

            And yes, the $143,179 includes those with rank above patrolman …. with the highest wage at $211K.
            —————————————————

            Quoting ………. “A quick glance at the other 20 counties suggests the BLS average pay of $88,530 for Police and Sheriff’s Patrol Officers is right on.”

            As though you checked all 20 counties ………. and compiled sufficient information to state …”BLS average pay of $88,530 for Police and Sheriff’s Patrol Officers is right on.””

            I don’t believe that …. or you.

      • Posted by Tough Love on December 26, 2015 at 5:00 pm

        Anon,

        Quoting from John’s above comment …

        “Very difficult to determine since there are so many aspects. On the pension issue I still put Christie Whitman as the worst for taking the payments out of the budgets making it impossible to reinstate the real cost and necessitating these actuarial games.”

        Did you intentionally twist those words to become …… ” until Whitman and others BORROWED MONEY AND DIDN’T REPAY. ” (my capitals) ?

        Whitman took payments out of the BUDGET, and not, as YOU stated …… “BORROWED MONEY AND DIDN’T REPAY”. Instead of direct (budget-sourced) Plan contributions, she Issued BONDS with the proceeds going INTO PSW pension Plans (BENEFITING the Plans) but with the obligation to pay off those bonds the responsibility of the TAXPAYERS (screwing THEM, not your Plans).

        While issuing Pension Obligation Bonds is considered by most financial experts to be a bad idea, it only contributed to NJ’s problems BECAUSE of the huge lack of ethics of the Governors that followed her.

        Reply

  7. Posted by Anonymous on December 26, 2015 at 6:39 pm

    Even an adolescent knows all equations have more than one variable! In this case it’s pension benefits plus annual required contributions equals unfunded liability. While most Publics acknowledge both variables, the anti publics conveniently ignore the ARC – hmm wonder why?

    Reply

    • Posted by Tough Love on December 26, 2015 at 7:03 pm

      Quoting … “Even an adolescent knows all equations have more than one variable!”

      (1+3X) = 10 is an equation …. with X=3.

      How many “variables” are in that equation ?
      ——————————–

      Reply

  8. Posted by Anonymous on December 27, 2015 at 10:51 am

    If you have a standing obligation of salaries and benefits in the budget, that is paid every budget cycle for decades, then you decide not to pay the pension obligation instead use those monies on other line items, you effectively robbed Peter to pay Paul. Since the pension obligation is a known constant and the next payment is due the next budget cycle, creative financing comes into plan to replace the original pension nonpayment. Now there is the current budget year payment and long-term bond obligation repayments for the original nonpayment. Obviously, the money was taken, used and a scheme developed to replace.

    Reply

    • Posted by Tough Love on December 27, 2015 at 11:04 am

      Please add a paragraph #2, explaining exactly WHY taxpayers should agree to fund Public Sector workers pensions that are ROUTINELY 3x to 5x greater in value at retirement than those granted comparably situated Private Sector workers ….. when the ONLY reason such ludicrously rich pensions were granted in the first place was BECAUSE the PUBLIC Sector Unions BOUGHT the favorably votes of our self-serving, taxpayer-betraying elected officials with Campaign contributions and election support.

      Reply

      • Posted by The Resident Nutcase on December 27, 2015 at 12:19 pm

        Vote them out then…
        It’s part of Being American. You have the right to vote!!! Since things are the way they are…. Good or bad… Rather subjective….. They are this way because of the will of the people!!!!!

        Reply

        • Posted by Tough Love on December 27, 2015 at 12:36 pm

          Yes, Taxpayers SHOULD vote such self-serving, taxpayer-betraying elected officials out of office.

          But I still see ZERO reason that taxpayers should agree to fund such fraudulently acquired pension promises.

          Reply

        • Posted by Sean on December 27, 2015 at 3:11 pm

          Nutcase: “Vote them out then…”

          I do not believe it is possible for you to be that naive, so I can only conclude that you are willfully ignorant on this.

          It doesn’t matter who we the people elect, so long as public sector unions have an inside track to put a stranglehold on policy makers. Deny it all you want, but history is pretty clear: every union eventually bankrupts the entity it claims to serve. This is why public sector unions should be illegal; it is an inherent conflict of interest, and the people PAYING the bill get hoodwinked constantly.

          At least in the private sector, unions have to sit across the table from the one who will be paying the bills. The business owner can negotiate with his best interest in mind. Taxpayers have no such benefits. Take it or leave it, or move out of the area. Please don’t insult our intelligence with that whole “you elect these people to represent you” crap. It’s funny how publics can so easily see corruption in the corporate world, while they are feeding and benefiting from the MOST corrupt of systems. How rich.

          Nutcase: “It’s part of Being American. You have the right to vote!”

          Right. For that, you should thank a veteran. Since you can read and write…thank a teacher.

          You’re welcome. I am both.

          Reply

          • Posted by Anonymous on December 27, 2015 at 3:35 pm

            Public workers, union negotiators, state workers and union lawyers at the negotiation table are taxpayers.

          • Posted by The Resident Nutcase on December 27, 2015 at 9:42 pm

            I’m also a veteran there Sean…… Been there. Do e that!! Which is why I can say these things!!!

          • Posted by The Resident Nutcase on December 27, 2015 at 9:46 pm

            And as a teacher…. Hypocritically talking shit about the very same benefits you receive….you’re no better than a judas!!! You sit here and complain because you and your ilk have milked the system the most. More than any other state worker…. For decades. Paying crap into your pensions or healthcare while getting the very best pensions of all. Now that you’re in trouble…. You’re sitting here on the wrong side of the fence because you know you are doomed!!!
            Karma is a bitch…. Sean!!!

          • Posted by Tough Love on December 27, 2015 at 10:36 pm

            The Resident Nutcase,

            NJ Safety-worker pensions are MUCH greater in value than those of NJ’s teachers ………. with richer “formulas” and younger full/unreduced retirement ages.

            What planet are you living on?

  9. Posted by Sean on December 27, 2015 at 3:42 pm

    For those who think taxpayers should just keep ponying up more money…

    This article is focused on Illinois, but it’s happening all over. As one radio talk show host put it: You don’t really own your home in Illinois. Your home is simply collateral for a public pension.

    It’s really sickening what’s happening to homeowners, as this article illustrates. I’m sure I’ll get hit with some version of “hey, we public workers are taxpayers too” or other nonsense. Here’s the link;

    https://www.illinoispolicy.org/story/home-is-where-the-hurt-is-how-property-taxes-are-crushing-illinois-middle-class/

    Reply

    • Posted by mrdenis on December 27, 2015 at 6:29 pm

      New Jersey politicians should take a long hard look at how companies treat overly punitive tax increases ….

      Reply

        • Posted by Sean on December 27, 2015 at 8:18 pm

          Good article. Illinois lost something like six businesses in a ten day time frame, taking all the jobs and tax revenues three miles down the road to northwest Indiana. Our blue collar jobs are getting decimated. But hey, the public unions are looking out for the middle class, right? They just don’t get it. They think they can keep treating companies like they are the source of all evil, but at the same time, businesses should be happy, willing and able to be ATMs for whatever the union wants. So, businesses, more and more, are giving the one finger salute and leaving. Homeowners are starting to follow.

          Reply

        • Posted by S Moderation Douglas on December 27, 2015 at 9:50 pm

          And yet……

          “Illinois among top states in creating businesses”
          Crains, Chicago business June 19, 2015

          It’s a mad, mad, mad, mad world.

          Reply

          • Posted by Sean on December 27, 2015 at 11:14 pm

            Yep. We are doing well in tech. But as I said, SMD, BLUE COLLAR jobs are being decimated.

            Wanna argue that one?

          • Posted by Sean on December 27, 2015 at 11:16 pm

            Wanna talk about Population loss in Illinois?

          • Posted by S Moderation Anonymous on December 28, 2015 at 12:23 am

            Nah. Statistics is funny. They will say almost anything you want them to say. According to TaxFoundation, Illinois has the thirteenth highest state and local tax burden in the country. But it is very regressive. The lower three quintiles pay higher than the US average state and local tax burden, and the top quintile some of the lowest.

            Illinois’s 2015 Business Tax Climate Index Ranks 31. California ranked 48 and led the nation in job creation last year.

            Statistics is funny.

  10. Posted by Sean on December 27, 2015 at 3:47 pm

    Anonymous: “Public workers, union negotiators, state workers and union lawyers at the negotiation table are taxpayers.”

    So what?!

    The four parties you mention are also SPECIAL INTEREST GROUPS, who do NOT have the common good on their agenda.

    Funny how you leave that little tidbit out of the bs you’re slinging…

    Reply

    • Posted by Anonymous on December 28, 2015 at 8:13 am

      The “common good” at the public employee negotiating table is the collective bargaining agreement, it provides workplace justice. When did public employees become the enemy? By the way Sean, Illinois seems to be drowning in its own pension related cesspool, you should focus your attention on solutions, you know handle your home issues before trying to inject yourself in ours.

      Reply

      • Posted by Anonymous on December 28, 2015 at 12:54 pm

        I’m interested in the problem on a national scale. California, New Jersey, and Illinois. It isn’t about me “solving” anything. All of this is EVERYONE”S business. The mathematics will eventually put it all in line with reality.

        Public employees have not, nor will they ever be, the enemy. I have too many friends and family, as well as myself, who work, or have worked in the public sector. No. The problem is the public sector union leadership and politicians, who have totally and completely screwed it up for ALL of us.

        Reply

        • Posted by Anonymous on December 28, 2015 at 1:46 pm

          Such and”educated fatalist”, there are solutions to NJ’ s pension issues, the NJABP hybrid can be expanded with existing insurance providers. “Problems have solutions”. TL is a mean-spirited pension witch burned by her present and former private sector employers. Pay no attention to her bottomless rants.

          Reply

        • Posted by Tough Love on December 28, 2015 at 3:54 pm

          Quoting …. “The problem is the public sector union leadership and politicians, who have totally and completely screwed it up for ALL of us.”

          True, but don’t underestimate the greed and taxpayer-be-damned-attitude (demonstrated by the refusal to even modestly compromise) of the workers themselves.

          Reply

          • Posted by Sean on December 28, 2015 at 4:45 pm

            I can say from my experience that you are correct. I’ve never had any coworker, ever, say anything with regard to the viewpoints of taxpayers, when I worked at the FDA or as a public school teacher.

            In my current job, we do virtually identical work as the state facility does down the street. They make, at least 20%-30% more than we do, and will retire with full benefits, WAY beyond what we get, yet they are bitter about Governor Rauner and his “attempts to STEAL what is ours.” One employee, went on a ten minute rant to me about how Rauner and his rich friends were trying to steal from “little people like us” and I thought to myself, “Dude, WE are not in this ‘together.'” But, he is absolutely convinced that it is HIS pension, HE paid for it, and HE worked hard for it.

          • Posted by Tough Love on December 28, 2015 at 6:01 pm

            Quoting …”But, he is absolutely convinced that it is HIS pension, HE paid for it …”

            Sure … “HE paid for it “.

            VERY VERY few PSW’s pay for more than 10-20% of the total cost of fully funding their very rich pensions …. over their working careers and using appropriate assumptions in that calculation.

          • Posted by Anonymous on December 29, 2015 at 6:39 am

            Sean, your present employer most likely received government funding, they choose to pay you less than employees at state-run facilities, free market, you chose to accept the salary and benefits, free will.

          • Posted by Sean on January 1, 2016 at 6:11 pm

            Quoting Anonymous:

            “Sean, your present employer most likely received government funding, they choose to pay you less than employees at state-run facilities, free market, you chose to accept the salary and benefits, free will.”

            Exactly. You see, the company I work for cannot possibly afford to pay these unrealistic demands. One BIG difference between the company I work for and the state-run facility my counterparts work for:

            Our company isn’t bankrupting the state!

            Look around you. The demands made by public sector unions are bankrupting one government after another, and it will continue, unabated, until we all WAKE up!

            Thank you for proving my point.

  11. Posted by Sean on December 27, 2015 at 8:32 pm

    I highly recommend Mike “Mish” Shedlock’s blog. Today he has a post titled, “Illinois Death Watch.”

    He has many salient points, like this one:

    “Corrupt politicians in bed with union officials have hollowed out the state beyond repair. Let’s not pretend otherwise.”

    Great article, which most here will not want to open their eyes to…

    Here’s the link:

    http://globaleconomicanalysis.blogspot.com/2015/12/death-watch-illinois-despite-massive.html

    Reply

  12. Posted by Sean on December 27, 2015 at 10:38 pm

    Quoting The Resident Nutcase:
    “And as a teacher…. Hypocritically talking shit about the very same benefits you receive….you’re no better than a judas!!! You sit here and complain because you and your ilk have milked the system the most. More than any other state worker…. For decades. Paying crap into your pensions or healthcare while getting the very best pensions of all. Now that you’re in trouble…. You’re sitting here on the wrong side of the fence because you know you are doomed!!!
    Karma is a bitch…. Sean!!!

    I gotta hand it to you Nutcase. Of all the people on the Public side who post here (like the Anonymous Brothers, TruthNolie, Mr Bwahahaha), YOU are, by far, my favorite! I love your passion. Really. I do think you are in the habit of speaking before you think, but hey, don’t hold back.

    Sir, I WAS a public high school English teacher. I still hold a state certificate, and I have taught every level of student, from pre-school, to PhDs. I WAS a fully tenured teacher in the public school system, but I left in disgust after five years, and I had a stellar record. No one on this blog agrees more with your sentiment about teachers than I. Of all the groups, no one is more disconnected from reality than public educators, and I still have plenty of friends in the system. There are good people teaching, of course, but the overwhelming majority of them are whiny babies who are clueless, spoiled brats. And you are right: They have, BY FAR, sucked the most out of local economies. In fact, one guy responded in an article about the vanishing suburbs south of Chicago by saying, “You should really follow the money. I believe that no single entity sucks more life out of local economies than public school districts. The public school system is bankrupting every municipality as far as the eye can see.” I believe he’s right.

    When I worked as a public school teacher, I just could not believe how other teachers complained, and how entitled they felt about their pay and benefits. They truly do live on Fantasy Island. I once told a fellow teacher, “If I hear ONE more of you people say, ‘It’s all about the kids,’ I’m going to punch them in the face. It never was, is not now, nor will it EVER be, about the kids! So shut up already!”

    You are also right that karma is indeed a bitch, and that teacher pensions are doomed.

    That is why I am no longer a part of that system.

    Reply

    • You indicated that you were from Illinois, so pardon me if I comment on NJ teachers vs. (for example) NJ “professional” firefighters and state police. While teachers may be whiners, in my opinion their whining pales in comparison to the aforementioned other groups. They whine about the underfunding of their ridiculous pensions while simultaneously laughing in derision and contempt of the very public that is being extorted to fund the idiocy. I know, I know, they risk their lives 24 hours per day seven days per week, but retiring at 47, 50, 52 on and on with some ridiculous percentage of their “final” juiced up pay is an outrageous affront to any logical, rational taxpaying citizen. No PR campaign as been more successful than that of the “first responders” without whom we would surely all die in a matter of hours.

      Reply

      • Posted by Sean on December 28, 2015 at 12:37 am

        Drone: Yeah, you are probably correct. I think we could agree that both groups are numbers 1 and 2 in the whiny, we’re heroes and we’re deserving camp. Probably because I spent so much of my time around teachers, their mentality is more etched in my mind. Suffice to say, my experience at the military, federal (FDA), and local (public school system) levels all showed me a similar pattern of, “I earned it, it’s MY pension, and no one is going to take it from me” and so on. Like a few years ago, Chicago Public Schools went on strike. They agreed to a deal, but were “highly disappointed” that they ONLY received a 17% pay raise over the next three years. This at a time when their neighbors all around them are losing their jobs. AND, of the 9% they are supposed to pay into their retirement, taxpayers pick up 7% of it. That’s right. They pay in 2%. When they were asked to pitch in the full 9%, they screamed that they were getting a 7% pay cut, which is true, but I thought “we’re all in this together” and we need to have “shared sacrifice.” It just never ends. When reality sets in, and MATH has the final word, as it ALWAYS does, I will have not one bit of sympathy for them. And watch, when it starts collapsing around them, watch how “willing” they become to come to the bargaining table. Watch how they point their fingers at everything and everyone else BUT themselves. Bitter tears are ahead, yet they keep ignoring the signs…

        Reply

        • Sean – I have been focusing on the public sector benefit issues since about 1988 when I lived in Atlantic City. They had eight (8) fire houses and dozens and dozens of firemen for a permanent population of less than 40,000. The level of abuse and sanctimonious rationalization nationwide sometimes goes beyond my ability to comprehend. And speaking of teachers, I recall recently that a very old professor at, I believe, CCNY, retired after teaching for 60 or 65 years. His annual pension: over $500,000. Why? No cap on accruals. The meter just kept on running. Any rational organization would clearly put a maximum on any and all pensions, but since the public sector is clearly insane and completely self-serving I guess such a payout makes all the sense in the world. He “earned” it therefore he “deserves” it.

          Reply

          • Posted by Sean on December 28, 2015 at 1:10 am

            Right. I remember watching a documentary about the economic downturn of 2008, and this guy was talking about the entitlement mentality. He said something to the effect of, “You could take someone working as a clerk at a gas station, start paying that person $300,000 a year, and within a year, that person will be walking, talking, and acting like he earns and deserves every cent of it!” Sounds really crazy, but I think there is merit to the statement.

            If you want to read an excellent book, pick up a copy of Illinois Pension Scam by Bill Zettler. Everything is well documented. Totally debunks all of the bs that public workers try to throw out there to justify what they are doing. The book of course, is focused on Illinois, but NJ is doing the same thing. His focus is primarily on the education system, but it is one fact after another, all documenting the history of extortion by the public sector.

          • Posted by Tough Love on December 28, 2015 at 3:53 am

            Yup CUNY professor Edgar J. McManus, now 91. with a pension of $560K (last year (Cola increased since then ?).

            Limited life expectancy for sure. Just hope (for the Taxpayers sake) that if he has a younger wife and took the 100% J&S pension option, that that J&S option was calculated with the APPROPRIATE actuarial reduction (and not given away for peanuts) ……. which of course is highly unlike in the “PUBLIC” arena.

          • Posted by S Moderation Anonymous on December 28, 2015 at 1:13 pm

          • Posted by Tough Love on December 28, 2015 at 4:00 pm

            Yup ….. Jeanne Louise Calment was a French supercentenarian who has the longest confirmed human lifespan on record, living to the age of 122 years, 164 days.

          • Posted by Anonymous on December 28, 2015 at 7:33 pm

            He was in the optional pension plan, the insurance based group annuities pay a lot more plus serious longevity payments.

  13. Posted by S Moderation Anonymous on December 27, 2015 at 11:54 pm

    “If I hear ONE more of you people say, ‘It’s all about the kids,’ I’m going to punch them in the face…..”

    “That is why I am no longer a part of that system.”

    LOL. And for that we are all grateful.

    Reply

    • Posted by Sean on December 28, 2015 at 12:22 am

      You know, SMD, when I wrote that line, I thought to myself, “Watch, some moron is going to try to spin this into something derogatory and personal.” Wah. Wah. Wah. Gee, SMD, I sure hope I can recover from it. You try to come off as the wise elder spokesman, yet you cannot resist lowering yourself.

      Sorry pal. My admin loved me. My students loved me. The principal of the school I taught at said, “Man, I hate to see you go. If you ever want to come back, I’d hire you in a minute.” LOTS of my former students have come to me over the years to tell me how much I meant to them. You see, SMD, my point to saying that line is that I was tired of the phony public school mantra, “It’s all about the kids” when I could clearly see that their actions didn’t line up. Somehow though, I think you knew that, SMD. It’s just that I am in opposition to your viewpoints, so, you just had to go there.

      Now, SMD, carefully parse and spin that into what you want the narrative to be. That is YOUR forte. ALL of your entries on the various blogs that you post on have the same theme: “Just move it along folks. Nothing really that bad is happening to the taxpayers. We’re not really ripping them off TOO much.”

      I will say: I do respect the fact that you at least try, for the most part, to say something that has at least a modicum of thought behind it. I’ll give you that…

      Reply

      • Posted by Tough Love on December 28, 2015 at 1:21 am

        Quoting Sean ….

        “You see, SMD, my point to saying that line is that I was tired of the phony public school mantra, “It’s all about the kids” when I could clearly see that their actions didn’t line up. Somehow though, I think you knew that, SMD.”

        Sean,

        Of Course SMD knew that. He pulls this crap all the time …. which is one of the reasons that I have called him an ASS several times.

        Reply

        • Posted by Sean on December 28, 2015 at 1:46 am

          Yep. I really think he should change his handle to S Desperation Douglas. Even when he tries to rebut with something factual, he carefully dodges the heart of the matter, then attacks a small sliver of a peripheral issue, all the while trying to come off as the wise, moderate, elder spokesman for world peace.

          He basically wants everyone to believe the public sector theft is largely an exaggeration by haters.

          And when I said the infamous line about punching someone in the nose, I said it in a meeting with fellow teachers, who all laughed, and wholeheartedly agreed with me.

          Context matters, unless you are trying to justify a hopeless viewpoint, which he is.

          Reply

  14. Posted by S Moderation Anonymous on December 28, 2015 at 12:39 am

    Cause “I’m going to punch them in the face…..” is neither personal nor derogatory.

    We all love you, man. It’s just that you and TL have a tendency to exaggerate. Moderation is here to, well, moderate. It’s a blessing and a curse.

    Reply

  15. Posted by Sean on December 28, 2015 at 12:56 am

    Feel better buddy. Nothing of substance to argue, so hang onto that one line. Glad I could provide you with something to hold on to. Nice touch, throwing TL in there. I have seen TL own you on so many occasions, so of course, it’s all exaggeration. What would we do with out the moderate one to moderate, with his clear, objective, and unbiased white wash…

    Reply

  16. Posted by S Moderation Anonymous on December 28, 2015 at 1:37 am

    I know, right?

    “Public sector workers retire 10 to 15 years earlier than private sector.”

    ” those PRIVATE-Firm-workers that build our roads and firetrucks most definitely do NOT get Defined Benefit Pensions (of ANY type, …….”

    “in the last 20, most Public Sector wages have caught up to the Private Sector.”

    All lies, and yet SMD is “diverting” because, one study says that New Jersey employees have a 23% compensation premium? TL owns nothing but his own biased opinion.

    The expert who has deigned to educate us all is consistently short on facts. Or long on “facts” that ……aren’t.

    I’m feelin’ fine.

    Reply

    • Posted by Tough Love on December 28, 2015 at 3:11 am

      SMD,

      Your above comment is a PERFECT example of what Sean described as …..

      “Even when he (SMD) tries to rebut with something factual, he carefully dodges the heart of the matter, then attacks a small sliver of a peripheral issue, all the while trying to come off as the wise, moderate, elder spokesman for world peace.”

      You see ….ALL of your above are indeed slivers of peripheral issues….. brought up to divert the readers focus from the IMPORTANT issue.

      And isn’t IMPORTANT issue (the “heart of the matter” as SEAN calls it) the fact that Public Sector pensions that are ROUTINELY 3x-4x (4x-6x for Safety workers) greater in value at retirement than those granted Private Sector workers who retire at the SAME age, with the SAME years of service, and the SAME pay ….. and with 80-90% of total Plan costs foisted upon taxpayers ?

      Reply

      • Posted by S Moderation Anonymous on December 28, 2015 at 8:44 am

        “You see ….ALL of your above are indeed slivers of peripheral issues…..”

        Here’s another “sliver”:
        Tough Love is educating us about the “excessive” pay and benefits that s/he has “calculated” in the public sector.

        1) Retirement age is a very important factor in comparing compensation. Not a “sliver”. Tough Love was WRONG about public workers retiring 10 to 15 years early.

        2) Wages are a very important factor in comparing compensation. Tough Love was WRONG about public sector workers catching up to the private sector.

        3) The existence of defined benefit pensions for a large class of workers is a very important factor in comparing compensation. Not a “sliver”. Tough Love was wrong AGAIN.

        This is only three factors. There are more. How can anyone give any credence to your “heart of the matter” calculations when you are either ignorant or lying about such important factors in that calculation?

        You’re the expert? When I said there were thousands of FULL career workers who retire with pensions under $30,000, you challenged me on that fact. Fact, not sliver. You were apparently not aware of that fact when you calculated the “heart of the matter”. You asserted, in capital letters that NO doctors received defined benefit pensions. I supplied a link stating that one of the largest non profit hospitals in the west has a 401(k) plus a fully company paid DB and company paid retired health insurance for the doctor, spouse, children, and parents. Something of which you were not aware whilst calculating the “heart of the matter”.

        Not a “sliver”. Not a diversion. You say New Jersey police have a “BASE PAY typically over $125K after only 5 to 7 years.”  BLS says the mean wage for “Police and Sheriff’s Patrol Officers” in New Jersey is $88,530. Which of these figures did you use to calculate the “heart of the matter”? Do you really think a difference of over $35,000 a year is a diversion? An insignificant “sliver”?

        I’m sure you are proud of your “2 long mathematical demonstrations” calculating to two decimal points the difference between public and private pensions. I don’t know how that gets to the “heart of the matter” when you are comparing two entirely different compensation schemes; one which has DBs for over eighty percent of workers, and the other with fewer than fifteen percent in DBs. Of course they are different. No one said they weren’t.

        Logic.

        Facts.

        That’s the heart of the matter, and you are clueless.

        Reply

        • Posted by Tough Love on December 28, 2015 at 4:11 pm

          SMD,

          I posted it (see below) way up above an hour ago, but just now seeing this (and noting that you are STILL trying to redirect the readers focus AWAY FROM the IMPORTANT issue at hand ….. the undeniably grossly excessive Public Sector pensions, and that TAXPAYERS are called upon to pay for 80%-90% of Total Plan costs) I’ll repeat it here:
          —————————————————-

          SMD, The following link gives the Police wages in 2013 in Paranus, NJ. which I picked because it is a large and busy town with the several shopping malls and many residents. It’s a nice town, but you have to put up with a lot of traffic from all the shopping.

          http://www.bergendispatch.com/Public/PFRS2013/Agency.aspx?id=PARAMUS+BOROUGH+++++++++++++++

          All with lower than $100K wages are the newer hires and a quick glance suggests an average salary of $140-$150K.

          All of the surrounding towns pay very similar wages.

          Reply

          • Posted by Tough Love on December 28, 2015 at 4:13 pm

            Oh, forgot to mention, those were 2013 wages …. should probably increase by 5%-10% for 2016.

      • Posted by S Moderation Anonymous on December 28, 2015 at 8:54 am

        LOL!!!

        Posted by Tough Love on December 27, 2015 at 2:08 pm

        “……it seem that you are correct and the free retiree healthcare is now limited (primarily to those already retire with 25 years of service ….”

        Imagine that, if you will. Tough Love, incorrect again. No matter. It’s just another sliver. A diversion.

        Whatever you do, don’t recalculate. Your opinion as to the heart of the matter should be sufficient. For you.

        Reply

  17. Posted by Sean on December 28, 2015 at 1:53 am

    Good night Dougie. Sleep well in your little cocoon.

    Reply

  18. Posted by PatB on December 28, 2015 at 2:12 am

    Interesting Sean, your are part of the statistic that roughly 50% of teachers quit after 5 years. Are the quitters mostly the excellent teachers or the crappy ones? Curious about what you did afterwards .

    Reply

    • Posted by Sean on December 28, 2015 at 2:52 am

      Wow. Long story. As far as who quits, I don’t have any hard data, but my personal experience was the former. There were a lot of teachers with less than five years who just felt their hands were tied and left for greener pastures. I always said, half jokingly, that there is more politics in education than in politics. Political agendas, parents who don’t care, a whole lot of factors are at work, but the bottom line is our kids are being short-changed at every turn of the road. Schools fall into two general categories: They are either breeding grounds for tomorrow’s productive citizens, or they are dumping grounds for today’s problems. I could go into any school, anywhere, and without speaking to a single person, I can tell you which category a school falls into, within a few hours. Don’t listen to any of the spin and rhetoric, just observe very carefully, inside the classrooms.

      Ironically, I have 2/3rds of my Master’s in Education Admin completed, which would enable me to be a principal. It was during my course of study that I decided that I not only did not want to be an administrator… I no longer wanted to be a part of the lie of the public system.

      My wife and I home schooled our two boys. They are 16 & 18, and they are attending our community college, and doing well. Just to give you an example, by the time my sons were 5 years old, they could both read at a second grade level. The program we used was once the number one program used in public schools. It has since been abandoned, and replaced with a program that was once used in the 1800s by schools for the deaf, but abandoned due to its ineffectiveness. I don’t know what is currently being used in schools, but stuff like that goes on all the time. Political agendas have infected every aspect of our lives.

      When I resigned, several teachers expressed to me that they wanted to leave, but they were “too far along” to quit now, etc. Unfortunately, a lot of bad teachers with tenure know they have a great gig, and they hang on. I kid you not, I saw more than a few teachers that I would feel more comfortable pulling someone off a bar stool to teach my kids than them. No joke. Teachers with 15-20 years, who didn’t even take attendance, gave no assignments, etc. I don’t know if it’s still available on Netflix, but I recently watched a movie called “The Cartel.” I thought it was a movie about drug dealers, but it was actually a very eye-opening documentary about a public school district in New Jersey. Very sad to watch, but I couldn’t help but nod my head in agreement throughout.

      Anyway, currently I work at a training facility for the developmentally delayed. The pay is lousy, but I do enjoy it.

      Reply

      • Posted by Tough Love on December 28, 2015 at 3:23 am

        Sean,

        You should consider finishing your Masters and looking for employment in a school that caters to exceptionally bright students. I’m guessing that would be a good fit.

        While I’m in the financial service field, not a teacher, I’ve always enjoyed training bright/inquisitive newcomers.

        Reply

        • Posted by Sean on December 28, 2015 at 1:47 pm

          You’re right. I probably should finish. I do occasionally teach an English/Writing class, here or there, and I spend my time helping my sons with their college papers, etc.

          Ironically, I am more fascinated with the financial markets, which was partially a factor when I left teaching. Mostly, though, it was my disgust with the public school system.

          Reply

  19. Posted by S Moderation Anonymous on December 28, 2015 at 4:39 am

    “he carefully dodges the heart of the matter, then attacks a small sliver of a peripheral issue,”

    I’m not sure what the heart of your matter is, but TL specifically and emphatically has stated many times that there is no justification for what he calls excessive public pensions because public workers now earn as much or more in wages than the private sector. It is a claim that has been repeated in several variations in articles and comment sections for years. The fact that it is not true may be peripheral to you, but seems very germane to me.

    Number one, for those who accept that premise without question, it is inflammatory. Suggesting that all public employees are overcompensated.
    The truth, according to every major economic study is that, on average, state and local workers earn less in wages than equivalent private sector workers. (Yes, police and fire are in a separate category. If you can find three unbiased persons who know a way to properly determine their value, please enlighten us.)

    Number two, the wage dispersion of public and private sector workers is a critical concept in determining what form pension reform should take. Unless one prefers the simple minded suggestion to reduce ALL future accruals by at least 50%.

    They differ by degree, yes, as evidenced by the imbecile cretin’s morbid fascination with the “23%” meme. But all the studies agree, one more time:

    At the lower educated, unskilled levels, public worker benefits and pensions bring their total compensation much higher than their private sector equivalents.

    At the college level occupations, benefits in the public sector just about make up for the lower pay, making their total compensation roughly equal.

    At the professional level, public workers earn much less in wages, and benefits are not sufficient to overcome that deficit.

    Yes, it is true that the degree of pay difference varies by state, with Illinois, New Jersey, California, Connecticut, and others having somewhat higher relative benefits. But still, generally lower wages overall than the private sector.

    And it’s not “just a few PhD s” as the idiot likes to claim. According to the same source as his “23%” quote, fully 60% of public workers nationwide are either “roughly equal” or are compensated much less than their private sector peers. Total compensation. With pensions and health benefits valued at the risk free rate.

    Here’s another fact. According to the most conservative study, public workers nationwide earn on average 12% less in wages than the private sector. With benefits “properly” calculated, their compensation is 10% higher than the private sector. If you remove those public workers with less than a bachelors degree, that 10% premium disappears.
    Disappears.
    Then you get to the philosophical question I asked. TL: what do we do with all those clerks and janitors, making $30,000 a year who are theoretically “overpaid” because they have a modest pension and retiree healthcare?

    After you figure that one out, tell us how much a policeman is worth. If you think he is worth as much as a janitor, because his job requires “only a GED”, you’re dumber than the idiot. (More and more the GED thing is no longer true, anyway) If you think he is worth less than a roofer because the roofer’s job is more dangerous, don’t even bother answering. You are hopelessly biased.

    Moderation never said there is nothing wrong with the pension system. Never said that most are not underfunded. Moderation never said that further reforms are unnecessary.

    Moderation did say that if you want to demonize all public workers by exaggerating and lying, and using biased and emotional propaganda, he will call bee ess. It’s the least I can do.

    Reply

    • Posted by Tough Love on December 28, 2015 at 4:47 pm

      SMD

      You can write a long diatribe or focus on just the PERTINENT information. This Blog focuses on NJ’s pension mess, and in NJ, the 23%* overall for (all workers combined from the janitor to the doctor) greater Public Sector “Total Compensation” (wages + pensions + benefits) advantage IS the pertinent piece of financial information that impacts NJ’s Private Sector Taxpayers’ pockets. And that 23% Public Sector “Total Compensation” advantage is AFTER accounting for the fact (per the figure #1 in the study linked below) that NJ’s average Public Sector “wages” are 4% below those of comparable Private Sector workers.

      That 23% Public Sector compensation advantage is VERY real and VERY material.

      Taxpayers …. contemplate for a moment how much better YOUR retirement would be if YOU had 23% in additional (TAX-Deferred, as are NJ Public Sector pensions) wages to save and invest in every year of YOUR career. How much would YOU have in ADDITIONAL retirement savings …. $500,000, $1 million, perhaps $2 Million ?

      THAT is what NJ’s Public Sector workers are right now promised ….. from YOU.

      ——————–
      * Source: Figure #6 here:

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

      Reply

  20. Posted by Sean on December 28, 2015 at 1:30 pm

    SMD. Good points. I do not demonize all things public, nor do I think that all PSWs are overcompensated. I do believe that there is enough inefficiency in too many cases, that will end up sinking ALL boats. That’s the problem. There are far too many plans that are completely unsustainable, and attempting to keep them, as is, will spell doom for the rest.

    I would be most curious to hear what YOU believe is wrong. Each side staunchly defends its position. I get that, but to your point, I do not think that all public workers see no problems with things the way they are, but at the same time, that is true for those of us in the private sector as well. We do not hate public workers, nor do we think they deserve nothing. No one is at either extreme.

    Reply

    • Posted by S Moderation Anonymous on December 28, 2015 at 4:29 pm

      In no particular order, today’s example of Dr. McManus $560,000 plus pension is a convenient starting point. It’s the big numbers that pension reformers have headlined in, I think, a misguided attempt to stir up envy and emotions.

      “They don’t pay you much when you’re working, but the pension is certainly good,” McManus told The Post. “Darn right I deserve it.”

      To many of us, this seems ludicrous (perhaps even “whiny”). The average Joe American with the average $53,000 annual salary (I was earning $4,400 a month when I retired) does not see the doctors $116,364 final salary as “not much”. And certainly not his $560,000 pension.

      But, according to actual nationwide data, the American Enterprise Institute (hardly a bastion of liberal bias) determined the average salary nationwide for PhD s in the private sector was $136,767. This data was from 2009 to 2112, the year the doctor retired.

      Is he overpaid? According to AEI, even with the value of his pension accrual corrected to reflect the risk free rate, the total compensation of the average private sector PhD still exceeds this doctors compensation by over 21%.

      $560,000 pension is still a headline grabber, though.*1

      So, step one. In it’s 2012 pension reform, California capped pensionable salary at the same level as the Social Security cap. (If I don’t say that this is only for new employees, TL will say I am omitting material information. So it is said.) Originally, I thought this was a bad idea, knowing that the economic studies all agree that at this level, public workers clearly earn much less than the private sector, how does it make sense to decrease their compensation even further?

      On further thought, though, there is a logic. For many, the idea of a pension is to provide basic sustenance, or security, in ones old age. Fair enough. I could agree to that, and the California public sector has agreed. If a police chief in San Jose has a $180,000 final salary, then a pension just short of $100,000 should keep his head above water. He doesn’t need the taxpayer to “give” him $150,000, or more in pension. If he feels he needs more, he can fund it himself. If, as most safety workers do, he is contributing 10% or more of salary towards his pension, that deduction will cease when he reaches the Social Security max each year. That deduction can be diverted to an IRA or other account as he sees fit. As has been noted several times, of course, his (and the doctors) present day wages may have to be increased to compensate for the lower pension.

      So, there’s a beginning. Oddly enough, even among the most staunch reformers, criticism is concentrated on the highest earners, and the highest pensions as the “heart of the matter”. Pensions generally below $50,000, especially for full career workers, seem to be considered reasonable sustenance, and even if/when “haircuts” may be implemented, most propose much bigger haircuts to the “$100,000 club” and little, if any cuts to those below “$50,000. I have no objection to the idea of not reducing the lower pensions in a worst case scenario (full disclosure, my pension, after 37 years service, retiring at 62, is under $50,000)

      The ironic point, though, is that to the extent the little corporals “23% public sector advantage” MAY be somewhat correct; that advantage in average compensation is driven by the pensions and retiree healthcare of the lowest skilled, lowest paid, lowest pensioned public workers, NOT by the PhD s, police chiefs, public sector attorneys or doctors, etc., with the alleged egregious pensions.

      * note 1 “Headline grabber” $100,000 plus pensions in this entire post refers to non safety workers in the economic studies. Police and fire pensions are headline grabbers also, but in a different category, until someone comes up with a definitive way to determine the “fairness” of their compensation.

      Step one: Cap the pensions.

      Reply

      • Posted by Tough Love on December 28, 2015 at 5:31 pm

        Quoting SMD ….

        “So, step one. In it’s 2012 pension reform, California capped pensionable salary at the same level as the Social Security cap. (If I don’t say that this is only for new employees, TL will say I am omitting material information. So it is said.) ”

        Glad you did so. Omitting important information is problematic and misleading (and some may say intentionally misleading).

        With pensionable compensation capped at the SS wage base, CA’s pensions might become reasonable and fair, if:

        (a) CA’s pension “formulas” were also cut by HALF … thereafter still more generous than what most Private Sector workers get, and
        (b) COLAs were eliminated, or perhaps the share of pensions subject to COLA- increase was limited to the AVERAGE SS benefit in the year of payout.

        EQUAL ….. but NOT better.

        And yes, reflecting any DEMONSTRABLE difference in cash pay (appropriately adjusted for such things as a shorter average work week) up or down.
        —————————————————–

        Of course, the CAP on pensionable income rightfully SHOULD apply to all existing (as well as just new) workers….. as such changes almost always do in Private Sector (ERISA-regulated) pension Plans.
        =========================================

        Quoting SMD ….. “Pensions generally below $50,000, especially for full career workers, seem to be considered reasonable sustenance”

        The goal of Public Sector compensation should be to provide “market rate” total compensation equal to that of comparable jobs in the Private Sector (where 85% of all workers are employed).

        Throwing in a need for “reasonable substance” in interesting…. but irrelevant. Private Sector Taxpayers aren’t working to make sure that all full-career PUBLIC Sector workers get “reasonable substance” in retirement 100% VIA Taxpayer-paid-for pensions. Public Sector workers (even the lowest paid) should save for their retirements OUTSIDE of their pension as must all (even the lowest paid) PRIVATE Sector Taxpayers.

        Reply

    • Posted by S Moderation Anonymous on December 28, 2015 at 4:31 pm

      Step two: Punch that whiny Professor McManus in the face.

      Sorry, apparently even Moderation can’t resist a snarky remark.

      Reply

    • Posted by Tough Love on December 28, 2015 at 4:57 pm

      Quoting Sean … “We do not hate public workers, nor do we think they deserve nothing. ”

      I agree. Public Sector workers deserve “Total Compensation” EQUAL TO (but NOT more) than their private Sector counterparts*.

      * and where there are no “direct” counterparts, e.g., Police, then by comparison to Private Sector workers in jobs with comparable “risks” and similar requirements with respect to education, knowledge, experience, and skills.

      And to be clear … In my opinion (yes, it’s my opinion), to accept as reasonable, necessary, appropriate, or affordable a “Total Compensation” package for the TYPICAL NJ Police Officer (with just 5-7 years of experience) of $200K annually is patently absurd.

      Reply

      • I do not think public sector workers deserve compensation equal to the private sector. Reason? Employees gravitate to the public sector because either they cannot or choose not to compete as they generally have to do in the private sector. Private sector workers have to compete to secure employment and then to retain it as a result of their own ongoing accomplishments. The public sector attracts people who generally lack ambition, energy, a strong work ethic on and on. Government at all levels is completely over populated and, but for bureaucratic empire building, half of the government paper shufflers could be off loaded without too much impact on the taxpayers who pay them. All they do is put in time in mostly meaningless jobs and mentally compute how much of their ill-begotten pension has been accrued after another boring day at their government sinecure. Anything the government “performs” could be outsourced to the private sector at much less cost. Trying to compare their “value” to the private sector is an apples and oranges exercise.

        Reply

        • Posted by Tough Love on December 28, 2015 at 7:10 pm

          PSDrone,

          For what it’s worth, the 23%-of-pay Public Sector worker “Total Compensation” advantage in NJ (over their private Sector counterparts) I referenced above, excludes the significant incremental value of the far greater Public Sector “job security”.

          Per that AEI study, the 23%-of-pay Public Sector worker “Total Compensation” advantage rises to a 34%-of-pay Public Sector “Total Compensation” advantage when “Job Security” is properly included.
          ——————————————

          As a further note, neither of the 23% or the 34% includes NJ Police who are by far (as a group) the highest paid and highest pensioned of all of NJ’s Public Sector workers. High much higher would those 2 percentages be if NJ’s Police had been included in the comparison of NJ’s Public vs Private Sector workers …. 5%, 10%, more ?

          I generally don’t raise these issues, not wanting SMD, “the great denier” to have a heart attack !

          ======================

          As to the HUGE benefits of “outsourcing”, I re-direct your attention to a comment-string in an earlier John Bury Blog here:

          https://burypensions.wordpress.com/2015/12/20/gasb68-numbers-for-new-jersey/#comments

          Se the comments (about 1/4 way down from the beginning) about Sandy Springs, GA.

          Reply

        • Posted by Anonymous on December 29, 2015 at 1:23 pm

          The reality is that there is public employment and those seeking work, salaries and benefits gain employment in this sector.

          Reply

      • Posted by S Moderation Anonymous on December 28, 2015 at 7:17 pm

        Just out of curiosityousness, from whar did the $200,000 figger come, from? Is that mean or median? Or “typical”, whatever that means?

        A blast from the past: Los Angeles Police Average Total Compensation $157,151 Per Year (2014)

        http://unionwatch.org/how-much-do-los-angeles-police-officers-make-2/

        Wherein the infamous mathematical calculation culminating in:

        “The above beneficial ratios are multiplicative, giving the overall advantage of 2.40 x 1.3846 x 1.3889 = 4.62 times.”

        Which, as I recall, we agreed later was a comparison between a hypothetical policeman and an imaginary brain surgeon (really!)

        Seriously, Ed Ring makes his calculations based on “the average LAPD base salary of $94,660” and apportioned per employee.

        Yet in the comments, Chris the Cop says:
        “As a LAPD patrol cop, I don’t know any patrol officer who average that much. I have my all w2s, to prove I didn’t receive half of the supposed “average salary” in the last 5 years. I’m sure all patrol officers could do the same.”

        ¿¿¿ Are we talking $200,000 compensation just for patrol cops, or are we talking average for the entire detective and command structure???

        Or median

        Or typical?

        “=4.62 times.”

        You still crack me up!!!

        Reply

        • Posted by Tough Love on December 28, 2015 at 8:46 pm

          NO SMD, you crack yourself up …. apparently.

          Follow along……… The 5-7 year NJ Police Office (in all the towns surrounding where I reside… a very typical middle-middle class area) have BASE “wages” of just about $130K, rising to about $145K if you include ALL Officers with 7+ years of service ….. and I re-checked the accuracy of those figures using a Asbury Park Press website’s 2014 Police database.

          The TRUE value of NJ Police pensions (assuming the now suspended COLAs are reinstated … as most suspect they will be via the current Court challenge, and using appropriate assumptions in that calculation, and NOT the extremely rosy assumptions used in NJ’s “Official” pension valuations) is a level annual 50% of pay to fully fund the promised pension over the Officer’s working career (thereby NOT making FUTURE taxpayers who received no benefit from the Officer’s services pay for it).

          Most officer have “families” and elect “Platinum+” Family health coverage, today costing in total about $30K with the officer (so I’ve been told) now paying about $10K out of that $30K total.

          Retiree healthcare promises (just like pensions) sould be fully funded over their working career and even if we don’t now do so, the career-years are the appropriate years to which to associate those costs. 2 studies suggest that to fully fund retiree healthcare costs over the worker’s career requires a level annual 10-12% of pay….. I’ll use a lower 8% figure because police wages are higher than “average”.

          So where are we…….

          For the 5-7 year Officer we have:

          Wages = $130K
          Pension = 50% x $130 = $65K
          Healthcare while active = $20K
          Retire Healthcare = 8% x $130 = $10K

          Add it up … $130K + $65K + $20K + $10K = $225K

          And I didn’t add anything for the myriad of miscellaneous benefits paid for by Taxpayers. E.g., The Life insurance and Disability insurance coverage they get isn’t “free”, likely costing towns $ thousands per year per officer.

          And the above being way over the $200K figure you challenged, was just for the Officers with 5-7 yeas of service. Add another $20K or so for the officer group including everybody with 7 or more years of service.
          ________________

          Just MORE of your BS

          Reply

  21. Posted by S Moderation Anonymous on December 28, 2015 at 5:16 pm

    Step two: Recognize that there is a difference between “unsustainable” pensions and “unnecessary, unjust, unfair to Taxpayers,” pensions, in the words of the little corporal.

    Though most pensions in New Jersey today may be classed as unsustainable, it would be hard to argue that the professors pension is “unjust” if, as Biggs and Richwine conclude, his total compensation is materially less than a private sector PhD.

    On the other hand, the under $30,000 pension of a retired office worker might be considered by some to be unjust, because it is much higher than the (mostly nonexistent) 401(k), or the Social Security available to most private sector workers in that salary range.

    Please trust me, this was to me one of the greatest revelations in the AEI study, and one of the reasons I still highly recommend that study (Overpaid or Underpaid? A State-by-State Ranking of PublicEmployee Compensation, Biggs and Richwine, April, 2014)

    Although for months I was loathe to discuss the compensation of the lowest paid, for fear of the knee jerk reaction exhibited by the little corporal. Logic: A>B does not necessarily mean that A is excessive. But in TL’s world, it means that lower level public workers should be put on Medicaid instead of taxpayer supported health insurance. Better known as the Walmartization of the public sector. (At a time, ironically, when Walmart is increasing wages, so their workers will be less subsidized by “taxpayers”.)

    Safety workers aside for the moment, the main reason New Jersey and Illinois pensions are considered unsustainable is the failure to contribute the ARC for decades. CalPERS is by no means out of the pension woods, but not even remotely in danger of going pay-as-you-go in the foreseeable future. I wish New Jersey and Illinois the best of luck.

    Reply

  22. Posted by Tough Love on December 28, 2015 at 5:41 pm

    SMD,

    I’m remain unpersuaded…….. (and replacing “janitor” with “office worker” doesn’t change things). Repeating my comment from an earlier Blog-article…………..

    ———————————————
    If a Private Sector janitor makes $30K annually plus 3%=$900 annually into a 401K Plan, and the PUBLIC Sector janitor makes $35K plus a pension (likely with a level annual current taxpayer contribution requirement of $8K-$9K) then YES …. then janitor “deserves” no pension contribution.

    P.S. ……. no matter how many time you bring this (“Janitor thing”) up, you will get the SAME answer … there is no reason for Taxpayers to pay Public Sector workers more in total compensation than their Private Sector counterparts. Justifiable needs (food, healthcare, etc.) not met via income should be provided EQUALLY to both Public and Private Sector workers via Social Services ………… NOT by artificially inflating Public Sector compensation.

    I will quote the above paragraph in the future as I’m quite sure you are not done bringing this up …… perhaps with a running count to remind you that Public Sector workers are NOT “special” and deserving of a better deal than their Private Sector counterparts.

    Reply

  23. Posted by Tough Love on December 28, 2015 at 7:50 pm

    A number of comments today touched upon the many ways in which Public Sector workers get a “better deal” than Private Sector workers but PAID FOR by (you guessed it) …. Private Sector taxpayers.

    Here is a VERY financially significant one, rarely discussed. While I was previously aware of this, it came to mind today while researching some NJ Police wages in order to respond to SMD re NJ Police wages.

    Specifically, (for the few Private Sector workers lucky enough to still have Final-Average-Salary DB pension Plans of the type granted virtually all of NJ’s Public Sector workers), when a Private Sector worker moves from say job “A” to job “B” (even in the identical field, doing identical work) the pension from job “A” is frozen, and ultimately (regardless of how many years later you elect to collect that pension), it will be calculated using the final average salary in THAT job “A”.

    Not so for NJ’s Police. In researching a few NJ town’s Police pay in 2014, I noticed what appeared to be newcomer wages but with 10 years of NJ PFRS participation. Digging in a bit deeper, they WERE indeed newcomers TO THAT TOWN (explaining the lower wages) but had been Police Officers in other towns.

    Both Public & Private Sector workers should be freely able to move for better (or more convenient) work opportunities. But NJ Police in PFRS (as well all other NJ Public Sector workers in PERS) have a HUGE (yes HUGE) financial pension advantage over their Private Sector counterparts because …. even if moving 10 times ….. all of the years of service will be added up and the pension formula will use the FINAL average salary from ONLY the LAST job in that calculation.

    Certainly a VERY VERY VERY material Public Sector compensation advantage that SHOULD BE factored into any comparison of Public and Private Sector “Totoal Compensation”. ….. and I doubt that it is.

    Reply

  24. Posted by S Moderation Anonymous on December 28, 2015 at 7:50 pm

    “no matter how many time you bring this (“Janitor thing”) up, you will get the SAME answer …”

    I assumed that from the get-go. Doesn’t make it any less fun. Perhaps some day we can discuss your precious “free market” which theoretically controls the private sector wages, and how it is influenced by government earned income credit, welfare, and health care subsidies that allow employers to hire workers at below market wages. Or perhaps the very real effect of government as “ideal employer” which, by paying healthcare and pensions actually exerts an upward pressure on those low wage employers.

    Mebbe not.

    I think the janitors were tired of me using them as an example, anyway. A janitor by any other name:

    Jethro to Bill: “Hey par’, y’heard the latest mule-skinner joke, well..”

    Bill to Jethro: “I’m tah-erd of them jokes makin’ fun of us mule skinners. I’ve been a hard workin’ mule skinner all mah lahf an’ I can’t get no break of ’em. Hey, kin’ ya tell-it on some other varmint. Make it mebbe a yarn on some other perfeshun?”

    Jethro: “Well shore, pard’ I kin make it a joke on taffy pullers”

    Bill: “Taffy Pullers?”

    Jethro: “Taffy Pullers!”

    Bill: “Well hah!, I’d plumb luvvit if you’d make yore trick on some o’ them dumb taffy pullers!”

    Jethro: “Stand By!”

    Bill: “I’m a standin’ by”

    Jethro: “Here it comes”

    Bill: “I’m a hearin’ ya!”

    Jethro: “Well, there’s two o’ them dumb taffy pullers, see?”

    Bill: “I see!”

    Jethro: “And they’re skinnin’ this mule, see . . . . . .” !!!!
    ……………………………………..
    How about that? I crack myself up, too!!!

    Reply

    • Posted by Tough Love on December 28, 2015 at 7:56 pm

      Quoting …… “Or perhaps the very real effect of government as “ideal employer” ”

      I just couldn’t get past that ….. I may have to puke !

      Reply

    • Posted by Sean on December 28, 2015 at 8:18 pm

      “discuss your precious “free market” which theoretically controls the private sector wages, and how it is influenced by government earned income credit, welfare, and health care subsidies that allow employers to hire workers at below market wages.”

      You are painting with too broad a brush here, SMD. We do not have free markets, for the most part. We have crony capitalism, aided and abetted by…politicians (read: government). Point fingers all you want at how evil capitalism is, but government thrives on it like a parasite. No one is innocent.

      Reply

      • Posted by Sean on December 28, 2015 at 8:49 pm

        I also think it’s high time we start looking at things from the OTHER side, for a change.

        “I want” and “I need” are fine, but how about, “What can we afford to GIVE?” I appreciate a basic level of X dollars per month for basic sustenance, but what about all the people who do NOT get that? If we cannot afford to give this to EVERYONE, then why are we doing it for ANYONE? How can we, as a society, look at a homeowner and say, “Gee, Molly, it does indeed seem unfair for you to have a mortgage of $1100 a month, and a monthly tax bill of $1500 per month, and next year, and every year after, it will continue to go up…but you see, we have to make sure that the 5% (or less) of our population who work for the government, receive enough for their monthly sustenance.” Molly replies, “Yeah, but I don’t get anything per month for my sustenance. What about me?” “Well, Molly, you will get social security. I guess you will just have to save up the rest for yourself.” Fair enough, but why doesn’t EVERYONE ELSE have to do the same? How do we choose who is “worthy”?

        Is this fair? Why don’t we, as a society, put caps on what taxpayers are forced to GIVE, and whatever that buys, so be it? I mean, at what point do we say, “Look. Enough is enough. This is what we can contribute, and no more.”? It may not be enough to provide someone else a comfortable retirement, but hey, that’s all we can give. Why should any person, or group of people, be forced to pay for the economic well-being of another person, or group of people, when they themselves have no such help?

        Healthcare. I KNOW the benefits are different everywhere, but bear with me. How in the world can ANYONE say to someone else, “We’ll provide you with free health insurance in retirement, for the rest of your life,” having NO IDEA how much it will cost?! How can you just promise that, and then force others to pay up, no matter what the cost? It might’ve been $50 a month back when you promised it; it could be $2000 a month down the road. I don’t want a lengthy discussion on health benefits, I am just using it as an example of irresponsible planning/lack of planning.

        Reply

        • Posted by Tough Love on December 28, 2015 at 8:52 pm

          Quoting Sean ….. “Is this fair? Why don’t we, as a society, put caps on what taxpayers are forced to GIVE, and whatever that buys, so be it? ”

          Yup ….. THAT’s called a Defined Contribution pension Plan !

          Reply

          • Posted by Anonymous on December 29, 2015 at 12:34 pm

            The IRS codes cap compensation from Defined Benefit retirement plans, start at 401.

          • Posted by Anonymous on December 29, 2015 at 12:39 pm

            Define Contribution payout, public employer for lifetime income are insurance based group annuities.

          • Posted by Tough Love on December 29, 2015 at 12:49 pm

            Anon, Sean is not talking about the IRS limitation on the PAYOUT amount, but on the INGOING contribution from Taxpayers.

        • Posted by Anonymous on December 29, 2015 at 11:02 am

          This rant points to personal choices, how much can you afford for housing, what type of work will support one’s lifestyle, will the wife work etc.

          Reply

        • Posted by Anonymous on December 29, 2015 at 12:37 pm

          Health benefits are insurance products in group policies that use insurance calculations to insure benefits.

          Reply

  25. Posted by S Moderation Anonymous on December 29, 2015 at 2:34 pm

    ” We do not have free markets, for the most part. ”

    That’s why I called them “precious”.

    The largest discrepancy between public and private compensation, percentage wise, is at the lower end of the pay spectrum, and due almost entirely to benefits.

    TL apparently feels the wages and benefits of unskilled labor are the “correct” value because they are determined by the market. Therefore, public workers at that level should be………….

    Wait for it…….

    EQUAL.

    I say a true free market could drive unskilled labor down to the Grapes of Wrath level. The invisible hand has no heart. Wage dispersion has been increasing the difference between the lower and upper income deciles, and I’m not just talking about the “one percenter’s” or erosion of the “middle class”. The wages and benefits for the lowest paid workers have been dropping and average pay for many of the professions and management have been rising. I’m not saying that’s a “bad” thing, but, again, I’m not just talking about CEOs or the Romney types.

    Wages and salaries have decreased on the low end and increased on the high end. The difference in government employment is that they have put a floor and a ceiling on wages and benefits. Compensation is not nearly as dispersed as in the private sector. *

    One example was a comparison of a public department of around a thousand employees to a private sector company of the same size doing similar work (accounting, etc.) Manager of the public sector dept made $150,000 plus benefits. Private sector manager made over $700,000 total. The taxpayers would never stand for a public manager making that much. And any private sector worker with “equal” skills, education, to that manager could be earning anywhere from $150,000 to over a Mill. Vagaries of the market. But according to Biggs, the average for that group would certainly be above the compensation of the public sector manager. That’s why simply “raising the ceiling” for public sector professionals won’t work.

    Lowering the compensation for our clerks (or mule skinners) is another matter. That’s easy. Cut their benefits. No retiree healthcare. 3% match on Defined Contribution plan. Done.

    So far, no one in a position of authority has called to ask my opinion or permission, but if it makes you feel better, it probably will happen. Most, if not all, of public sector protocols began in the private sector and, over time, were adopted in the public sector. DB pensions may be in their death throes in the public sector as we speak.

    * “not nearly as dispersed” I originally wrote “more egalitarian”, but didn’t want to make TL puke.

    You’re welcome!!!

    Incidentally, the pattern of higher compensation for public workers at the lower skill and education level, and lower average pay at the highest education and Professional level seems to be common in almost every OECD country, for what it’s worth.

    Reply

    • Posted by Sean on January 1, 2016 at 6:55 pm

      For the most part, I think your observations in this post are excellent. I want to add two cents to this snippet:

      “Wages and salaries have decreased on the low end and increased on the high end. The difference in government employment is that they have put a floor and a ceiling on wages and benefits. Compensation is not nearly as dispersed as in the private sector.”

      I think this is a very important distinction lost on a lot of people. I do think a “floor” and “ceiling” approach is a GOOD thing.

      No, I am not a socialist, nor do I want to discourage innovation or the entrepreneurial spirit which is vital to our economy; however, there are many ways that capitalism IS the problem. While I do not think raising minimum wage to $15 per hour is the correct thing to do, I also believe that a minimum wage is necessary. As a society, we ought to have a point where we say, “we just do not allow that level of exploitation,” etc. You bet your ass, if there was no minimum wage, somebody, somewhere, would offer to pay people $1 per hour, and sadly, there would be those who would apply. At the other end, when the level of compensation for corporate CEOs reaches several hundred times that of the lowest level worker in a company, SOMETHING IS WRONG.

      I’m oversimplifying, I know, but I am a simple man. I also know it’s not the focus of this blog, so I’ll leave it at that…

      Reply

  26. Posted by S Moderation Anonymous on December 29, 2015 at 3:09 pm

    *

    I have conceded that I am not well experienced with a spreadsheet beyond the basics.

    I can’t even find the “typical” function on mine.

    I will have to accept TLs calculation that the typical NJ Safety workers have a BASE PAY typically over $125K (after only 5 to 7 years.) Or $143,179, depending on which version you prefer.

    Apparently when the Bureau of Labor Statistics calculated the average patrolman salary in New Jersey, ($88,530, May, 2014) they :

    1) Neglected to limit their data to the one county with the highest average salaries.

    2) Neglected to limit the data further to the four highest paying Boroughs in that county.

    3) In addition to patrolmen, they included the entire management, including chief, in their average.

    4) Neglected to exclude those patrolmen with less than 7 years on the job.

    It’s hard to get good help these days.

    * note: This is just a diversion. 23% is the heart of the matter, but that don’t apply to safety workers anyway.

    Pfft!!!

    Reply

    • Posted by PatB on December 29, 2015 at 7:28 pm

      Lol, I have posted in the past that TL cherry picks her stats for maximum shock value. Submitted for your approval, for contrast, is the Camden county police pay schedule, which I am sure she will wish to adopt statewide:

      http://camdencountypd.org/wp-content/themes/ccpd/pdf/BCPO-Offer-Sheet.pdf

      Reply

      • Posted by Tough Love on December 29, 2015 at 9:00 pm

        PatB,

        I checked your linked schedule against the Asbury Parrk Press DATAUniverse and they appear consistent, and considerably lower than Police wages in Paramus, NJ.

        It does seem backwards …. a Crime-ridden (high-risk) area like Camden paying lower wages than a shopping-center-based Middle class town.
        ____________________

        All very interesting, but isn’t the focus of this Blog the VERY poorly funded NJ Public Sector pensions and how politicians & professional consultants (as well as the grossly excessive pension plan generosity in the first place) contributed to that problem ?

        Don’t become another SMD, as it’s not attractive, Sean flushing him out correctly when he said:

        “I really think he should change his handle to S Desperation Douglas. Even when he tries to rebut with something factual, he carefully dodges the heart of the matter, then attacks a small sliver of a peripheral issue, all the while trying to come off as the wise, moderate, elder spokesman for world peace.”

        Reply

      • Posted by Sean on January 1, 2016 at 7:11 pm

        Actually, I think this discrepancy makes an excellent point, and you can see it in the education system as well, and that is: MAYBE WE SHOULDN’T BASE EVERYTHING WE DO ON PROPERTY TAXES.

        Like one educator said: “It sucks to think that the quality of a child’s education is tied directly to the value of the houses in the district.”

        We all see this, firsthand. I see a school that has carpet, air conditioning, tvs in every room, and excellent resources. Down the street, another school has to end most sports and music programs, has outdated books, and little to no resources. Why? Property values.

        To the above example, the cops in the dangerous areas should earn more (I mean, shouldn’t there be an incentive to draw cops to work there?), while the mall cops should earn less, as they have far easier, and less dangerous, working conditions.

        My point: Maybe property taxes, based on property values, is an outdated, unreliable, and obsolete way to fund the needs of governments.

        Reply

    • Posted by Tough Love on December 29, 2015 at 8:39 pm

      SMD,

      NOTHING was “neglected” and the statistics I gave were properly identified … and in the context given, were clear to anyone WITHOUT the DESIRE to find fault (such as yourself).

      Reply

  27. Posted by S Moderation Anonymous on December 29, 2015 at 10:48 pm

    “NJ’s Safety workers are VERY VERY well paid, with a BASE PAY typically over $125K after only 5 to 7 years.”

    5 to 7 years ……meh. Not a huge effect on the average. Why any rational person would exclude them from the average is not clear. Seems like with normal attrition there will always be new employees cycling through, but, meh.

    But a fifth grader can tell you that Paramus safety workers are not typical of safety workers in the state. Not even close.

    There’s no desperation here Love. It’s a wicked pleasure watching your dissimulation.

    PatB nailed it with “maximum shock value.”

    Reply

    • Posted by Tough Love on December 29, 2015 at 11:05 pm

      It would be interesting to be able to drop the complete NJ PFRS participation with County, Town, salary, rank, years of service, etc into a spreadsheet and definitively calculate whatever “averages” we would like to see, for example:

      * Those with up to 7years and just reaching “FULL SCALE” (which was the “point”)
      * All Over 7 years of service “patrolmen”, regardless of service duration
      * All Over 7 years of service Offices regardless of service duration or rank
      * Each of the above split by Count and/or Locality within County

      But I cannot find such a database to do so without a great deal of manual intervention ………. perhaps that’s how out crocked politicians define “transparency”.
      ———————–

      I agree with Sean, changing your name to S. “Desperation” Douglas seems quite appropriate.

      Your STILL trying to draw the reader to “peripheral” issues …….. and away from the undeniable fact that Public Sector pensions in NJ (and elsewhere) are 3-6 times greater in value at retirement than those of their Private Sector counterparts, and with 80-90% of total Plan costs foisted upon Private Sector taxpayers.

      Reply

      • Posted by S Moderation Anonymous on December 29, 2015 at 11:47 pm

        “Your STILL trying to draw the reader to “peripheral” issues ……..”

        Seriously Love? I’m sitting here minding my own bidness. You are the one who brought up police salaries. Seemed high to me. As my friend Carl Sagan said, Extraordinary claims require extraordinary evidence.

        The evidence isn’t there. It isn’t there in spades.

        Desperation, thy name is Tough Love.

        Reply

        • Posted by Tough Love on December 30, 2015 at 12:32 am

          SMD (or is it now SMA ?),

          Per my several in “long” detailed mathematical demonstrations of the MULTIPLES greater Public than Private Sector pensions (that I doubt you ever understood ….. you’re a “train” guy, not a “math” guy.), the salary level DOES NOT MATTER and at ALL salary levels, Public Sector pensions are ROUTINELY 3 to 6 times greater in value at retirement than those of their Private Sector workers retiring with the SAME pay, the SAME years of service, and at the SAME age. That beneficial PUBLIC Sector multiple derives from the combination of (a) greater formula factors, (b) earlier full/unreduced retirement ages, (c) Post-retirement COLA increases, and (d) more liberal definitions of “pensionable compensation”……. but NOT salary level.

          (I doubt if you understand ….. you’re a “train” guy, not a “math” guy.)

          But heck, If the AVERAGE wages of the Police Officers tied at the waist to my property tax bill were $88,530K, I would not likely consider their “wages” to be excessive, but I would still MOST CERTAINLY still consider BOTH their pensions and benefits grossly excessive.

          Reply

          • Posted by Sean on January 1, 2016 at 7:24 pm

            Quoting TL:

            “Public Sector pensions are ROUTINELY 3 to 6 times greater in value at retirement than those of their Private Sector workers retiring with the SAME pay, the SAME years of service, and at the SAME age.”

            THIS is why governments everywhere are going broke, and why governments everywhere are going to start falling like dominoes.

            There are many excellent observations/comments, and points of view, but in the end, THIS is the bull’s eye. Everything else is, unfortunately, peripheral to that.

  28. Posted by S Moderation Anonymous on December 29, 2015 at 10:49 pm

    Not EVEN close!!!

    You still crack me up.

    Reply

  29. Posted by Tough Love on January 2, 2016 at 10:37 pm

    SMD, given your REPEATED commentary that Safety workers don’t retire THAT young I thought I’d post this from an article I read today (re Arizona pensions) …… quoting:

    “Retirement system data shows that the average public safety worker retires after 23 years on the job at the age of 51. They get back all of the contributions they’ve made within 22 months.”

    Source:

    http://www.paysonroundup.com/news/2016/jan/01/voters-decide-pension-plan/

    Reply

  30. Posted by S Moderation Anonymous on January 3, 2016 at 8:36 am

    Startin’ the year of with a bang i see. So, on average, your saying in Arizona safety workers retire nine years earlier than the private sector? Keep working. You’ll get that 15 yet.

    Did you know, Arizona has “20 and out” like New York and some others? 50% at 20 years regardless of age. Yoost like the military.

    I can’t tell if Pete Aleshire is being intentionally deceptive or just isn’t careless with his reporting:

    “Currently, police officers and firefighters can generally retire after 20 years and receive 50 to 80 percent of their highest pay for life —”

    What he don’t say is that to get that 80%, you have to work at least 32 years (not 20).

    50% @ 20 Just like the military. (80% @ 32 is also the same as the military; 2.5 times years of service.)

    Did you know the military can retire at age 38 with 50% of pay, and healthcare for life?
    They get back all of the contributions they’ve made in the first month, cause ….they didn’t make any.

    Gonna be a long year, I reckon.

    Reply

    • Posted by Tough Love on January 3, 2016 at 11:35 am

      Private sector workers don’t “retire” at age 60 in the same sense that Public Sector workers “retire”. A significant share simply can no long find a job, even though they want one.

      Startin’ he year as an ASS. ….. why should I be surprised.

      Reply

      • Posted by S Moderation Anonymous on January 3, 2016 at 2:07 pm

        May be an interesting year after all. If we can get you to upload your spreadsheet app. Mine doesn’t have a “typical” function. Now I can’t find a “significant share” macro, either. Apparently Gallup doesn’t have that capability, either. “Average” is the best data they can come up with.

        I’ll trade you my spell checker for your spreadsheet.

        Here’s to an interesting and enlightening 2016.

        “Here comes another one, just like the other one”

        Jack Johnson “Posters”

        Reply

  31. Posted by S Moderation Anonymous on January 3, 2016 at 8:38 am

    You still crack me up.

    Reply

  32. […] the cost of the return of COLAs […]

    Reply

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