.
Quite the nostalgic time warp but some people are still living in that age. For example, Fred Beaver, director of the New Jersey Division of Pensions and Benefits from September 2002 through April 2010, had an opinion piece in njspotlight urging more taxes to fund public pensions that got a couple of things right*, but as for the big things:
And before we hear the call that the pensions should be eliminated as they have been in the private sector, the public should be reminded that those did not disappear because they were too rich and unaffordable. They disappeared when corporate raiders learned they could close the plans and scoop up the excess assets to help finance their acquisitions and doomed private-sector employees to uncertainty over stable retirement expectations.
The movie Wall Street likely had a role in the passage of laws taxing these reversions away thirty years ago. It was the disappearance of 15% investment returns, lax funding rules, and younger workers (along with a push from draconian PBGC premiums) that doomed large Defined Benefit plans in the private sector.
And then we get to the cost of benefits according to Mr. Beaver:
During this same period, the state’s normal costs, that is, the annual additional accrued cost for another year of service for covered active employees (which are the same whether or not there is a surplus or shortfall) for these same funds changed as shown in the accompanying table:
A quick note: TPAF in 2001 included the cost of retiree health benefits and PFRS does not reflect the fact that the state does not pay employer Social Security and Medicare contributions of 7.65% for those enrolled in PFRS.
So, what exactly is the problem? Is the rate of 2.116% “unsustainable” when the average private employer is contributing 3% to their employees’ 401(k) plans? Both figures reflect only direct contributions. All administrative costs are typically derived from total plan assets.
Completely missing from this analysis is the role of the politician/union/actuary cabal in determining what those normal costs are going to be which is entirely driven (on all sides) by keeping contributions as low as they possibly can be. If the average annual cost of benefits under PERS is really 2.116% of pay then why not do away with the plan and provide public employees with that 2.116% of pay for them to invest as they choose. Because….
.
.
Burypensions Blog 
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 22, 2019 at 10:43 pm
Fred Beaver is your typical public employee with “Entitlement Mentality”, where public employees feel they are ENTITLED to these ginormous, massively over generous pensions. They actually start to BELIEVE their own nonsense, that they DID earn these pensions fair and square. Their lies become so deep rooted in their subconscious their lies become reality to them, a psychosis. LIKE they actually EARNED them, fair and square, legit. We ALL know that is a falsehood. A Con. A Fraud. Public employees have 1%er pensions today NOT because they are brilliant, super motivated or the best of the best. NOPE, public employees have 1%er pensions today because they do NOT live or work in reality. The live and work in a closed loop system, a gov monopoly with NO competition. There is NO true labor competition in government employment. If there were, if public employees faced competition and competed in the free market, they would get their lunch handed to them inside out…If $200K/year GED educated public employee cops and firewhiners, and the jobs they perform, were worthy of that kind of compensation the private sector would be going GANG BUSTERS after them when they left their cushy gov jobs at age 50. GUESS WHAT!!! There is NO JOB MARKET for current/ex/retired public employees!! Nothing. Nada. Zilch. Doesn’t exists! And for good reason, most/majority are not worthy of even 25% of those $200K/year jobs.
Posted by E on November 24, 2019 at 9:46 am
While certainly not at the pay level they received while active, there certainly is a job market for retired police if in fact they are interested, at least here in N.J.
Class 3 officers are in demand here. It’s not for everyone as many want a clean break and want nothing to do with law enforcement. In N.J., retired cops are a pool of employees who are able to still legally carry a gun. Almost no one here except police officers, active and retired can do that. That opens up many security type positions to them. While certainly not a competitive option compared to their salary as an active officer, to say that there is Zilch or Nada opportunities for officers to supplement their pension is a lie. Many also have their own business or work for someone in the trades and real estate is a popular option as well. Again, not the majority of guys, but enough that your statement that a retiring officer is unemployable is just patently not true. Marine1 should be just about finished now. I can guarantee you he will not just be sitting home doing nothing for the rest of his life. Lol.
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 24, 2019 at 12:43 pm
Again, not the majority of guys, but enough that your statement that a retiring officer is unemployable is just patently not true.
What I said was there is no job market in real life, the private sector, for retired/ex gov employees. I think you made my point EG. With the exception of a rent-a-cop, which is low paid unskilled employment, you raised no viable labor skills. They are free to start their own small business, real estate agent or whatever, but they’re not getting hired by private sector employers at even 1/10th of what they made in gov.
Posted by E on November 24, 2019 at 2:17 pm
We agree to disagree my friend.
Rent a cops are usually mall cops making $10-15 an hour. Class 3 guys make about $50,000 or so. Not great but usually more than enough. Many cops also get into sales. Of course they aren’t going to have the experience of someone who is doing it for decades. Using your logic, you would think that the reason that retired cops aren’t making $150,000+ when they retire is because those jobs don’t exist for the majority of private sector folks. Therefore, the reason is not because of the GED mentality(code word for —I have to insult because I can’t provide stats or evidence to back it up, but it really bothers me that they make so much) but because the majority of jobs in the private sector are not there to begin with.
Outside of the police, most folks stay longer and don’t really need to work for $$$ or for that long. The pressure is also not on someone like me because my kids will be out of college, my wife works and my house will be almost paid off. Some guys make poor life choices while on the force and for them it is different. What can I tell ya?🤷♀️
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 22, 2019 at 10:49 pm
And before we hear the call that the pensions should be eliminated as they have been in the private sector, the public should be reminded that those did not disappear because they were too rich and unaffordable. They disappeared when corporate raiders learned they could close the plans and scoop up the excess assets to help finance their acquisitions and doomed private-sector employees to uncertainty over stable retirement expectations.
Fred Beaver is a moron. This was true, 100% TRUE, decades ago. Before Congress passed ERISA. ERISA was enacted in 1974. ERISA stopped the pension raiders and their frauds cold. That type of fraud went on decades ago, not today. Not in recent history. ERISA STOPPED all of that fraud 46 years ago. Decades ago. If a Victor Posner tried to do today (if he were still alive) what he did in the 1960s and 1970’s he would be in prison. Beaver is an ass clown of biblical proportions….
Posted by Tough Love on November 22, 2019 at 11:34 pm
Rex,
You are right, but off on timing. Those pension raids of the 1980s were stopped by a 50% IRS excise tax on pension withdrawals other than for intended purposes …… but a decade or more after ERISA was enacted.
Private Sector Corporations freeze/end their DB Plans because (ESPECIALLY in this interest environment) they are VERY expensive (especially with the crazy-high PBGC premiums) and VERY risky.
Posted by Anonymous on November 23, 2019 at 12:45 am
Bradley Mills,
“…What he declines to state is that Completely missing from this analysis is the role of the politicians,actuarys and public employee unions in determining what the normal costs are going to be which is drivrn by keeping contributions as low as they possibly can be. Even though those low contributions would never actually cover the real cost.”
John Bury,
“Could not have said it better myself.”
————————–
Too true. Most states are funded at (ostensibly) 65-75% because actuaries keep contributions as low as possible.
Then there’s New Jersey…
“DON’T PAY THE (already low-balled) BILLS, THE DEBT GETS LARGER”
Posted by Tough Love on November 23, 2019 at 10:43 am
OP …. getting to the ROOT CAUSE of the problem ………..
DON’T GRANT SUCH LUDICROUSLY EXCESSIVE PENSIONS AND THOSE BILLS ARE A GREAT DEAL SMALLER.
Posted by bpaterson on November 24, 2019 at 3:41 pm
look little blue lines are cropping up again, hallelujah! However, suggest for someone in the know to compile other graphs showing annually the amount of money in the pension funds versus the draws from it with some extrapolation outward to give us an idea of each fund’s precarious position.
Posted by Anonymous on December 8, 2019 at 10:58 pm
You may find what you’re looking for here, or a link to it.
https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/06/the-state-pension-funding-gap-2017
Reply
Posted by Anonymous on November 24, 2019 at 3:54 pm
You may find what you’re looking for here, or a link to it.
https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/06/the-state-pension-funding-gap-2017
Posted by Anonymous on November 23, 2019 at 12:32 pm
Invalid…
Illogical root cause.
Many states/counties/cities have less generous pensions and are in the same mess. Others have higher pensions and are (much) better funded.
In general, by reducing the pensions/healthcare for the least educated, least skilled public workers (those who earn much more than their private sector counterparts) you can actually reduce the “average” compensation difference.
Good luck with that.
1) It is not politically feasible. (for good reason)
B) Most states/cities would —still— not properly fund their plans.
Another inconvenient truth.
Posted by Tough Love on November 23, 2019 at 1:27 pm
Illogical ROOT CAUSE ???
If the DB Pensions granted Public Sector workers (when valued using the more conservative/appropriate assumptions & methodology required by the IRS in the valuation of single-employer Corporate-sponsored Private Sector DB Pension Plans) required Taxpayer contributions that were 25 TIMES greater than the MOST COMMON Private Sector employer contribution towards their workers’ retirement security (via a 401K “match” of about 3% of pay), would anyone DISAGREE that the Public Sector pensions were too generous ?
Assuredly NOT.
Well, to fully fund Public Sector pensions over the working careers of their employees (as SHOULD BE done), it requires a TAXPAYER contribution (in addition to the worker’s contribution) typically in the range of 20% to 30% of pay for non-Safety workers and 30% to 50% of pay for Safety workers. So instead of the absurd 25 times greater figure in threw out above (to make a point), they typically ARE (yes the typically ARE), using the midpoints of the ranges just mentioned, about 25%/3%=8.3 times greater for non-safety workers and 40%/3%=13.3 times greater for non-safety workers.
So am I wrong ? Is the ludicrously excessive GENEROSITY of Public Sector pensions (AND the very very expensive free or heavily subsidized retiree healthcare that rarely exists today as an employer-sponsored benefit in the Private Sector) indeed NOT the ROOT CAUSE of the problem ?
——————————————————————-
And no Stephen, any lower Public Sector “wages” (even where it does exit under an apples-to-apples comparison to their Private Sector counterparts) wouldn’t come remotely close to offsetting/justifying these absurdly generous Public Sector pensions and retiree healthcare benefits.
Posted by Anonymous on November 24, 2019 at 1:49 am
Copy/paste
Posted by Smooth Moderation Truth on April 17, 2016 at 12:03 pm
So, here we are, again.
Posted by Tough Love on April 16, 2016 at 5:02 pm
The groups impacted by MPRA are FAR FAR different than Public Sector workers, where pensions are so absurdly generous (and so fraudulently obtained from Union-BOUGHT Elected Officials) that they were NEVER justifiable ….and SHOULD BE materially reduced.
These workers have run-of-the-mill pensions, clearly very modest (and MULTIPLES LESS) than those granted Public Sector workers.
____________________________________________________
TL 7:56 am
“Earth to SMD, examples REQUIRE “assumptions”. Tell me which were not appropriate or reasonable ?”
_____________________________________________________
Really?
Aristotle’s error:
“Observation versus Authority: To modern educated people, it seems obvious that matters of fact are to be ascertained by observation, not by consulting ancient authorities. But this is an entirely modern conception, which hardly existed before the seventeenth century. Aristotle maintained that women have fewer teeth than men; although he was twice married, it never occurred to him to verify this statement by examining his wives’ mouths.”
Back to 2016. You do not prove that one has a pension MULTIPLES LESS, by SUPPOSING that the the salaries are the same and the pension formula-factor is the same.
“(which assuredly is NOT true)”??? What the hell??
If you want to compare pensions, you do not have to …assume… anything. Several published examples of the Teamsters pensions are given. The state pension is easily calculated using actual facts that are easily obtained. Using 35 years, to match the private driver, the public workers pension is $2,566.56 per month. The private pension is given as $3,500, which is clearly not MULTIPLES LESS than $2,566.
Posted by Tough Love on November 24, 2019 at 12:46 pm
Stephen,
Still falling back to the misleading commentary by comparing the Public Sector pensions to a Private Sector UNION-worker pension?
Surprise surprise.
How about an apples-to apples retirement security comparison of PUBLIC Sector workers to the 93.6% of PRIVATE Sector workers not in Unions?
Posted by Tough Love on November 24, 2019 at 2:04 pm
Stephen,
And by the way (and to prove the point …… that the ROOT CAUSE of pension messes are their ludicrously excessive benefit levels) what’s the odds that that Private Sector UNION teamster in a MEP Plan would actually receive all that he/she was “promised” in the absence of a Gov’t bailout of these failing MEP Plans ?
Posted by Anonymous on November 23, 2019 at 12:35 pm
For future reference; SHOUTING and constant repetition will not change the facts.
Posted by Tough Love on November 23, 2019 at 1:31 pm
Nor does your repeated cut & paste of misleading/incomplete commentary.
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 24, 2019 at 12:45 pm
Nor does your repeated cut & paste of misleading/incomplete commentary.
Dougie’s comments and posts serve a purpose for me, I read them when I want to go to sleep at night, they make me doze off in 30 seconds flat….
Posted by Anonymous on November 24, 2019 at 3:15 pm
It is roughly divided into thirds, in my opinion, and of course it ebbs and flows over time. About a third of public workers, the least educated, least skilled, earn much more than equivalent private sector workers. Mainly due to pensions and retiree health care. About a third (mostly professionals and managers) earn much less, even with their so-called exorbitant benefits. And of course the middle third, many skilled and semi skilled, who earn roughly the same total compensation.
In Biggs data nationwide, the “overpaid” group is about forty percent, skewed higher mainly by the high population centers on the coasts, and Illinois.
There are many ways to compare compensation, Biggs “human capital” being only one. Each has it’s own strengths and weaknesses. You will never get the EQUAL you are obsessed with. Especially if you are obsessed with the handsome one. He is an outlier, even in New Jersey. Marine1 earns much less and will have a commensurately lower pension. And Marine1 is probably about average for the state, so thousands of LEOs in NJ earn even less than he.
You will find the same range of wages (and benefits) in private sector occupations. The median salary for attorneys nationwide is about $120,000 a year, ranging from $83,000 in Montana to $170,000 in New Jersey or California. And the difference within each state even greater, from a tenth percentile of about $50,000 to a nintieth percentile well over $200,000. Comparing benefits and job duties/qualifications makes it even more complicated. Sometimes it’s not even what you know, it’s who you know. Comparison as you envision it is futile. According to the Bureau of Labor Statistics, the biggest determination of compensation is not between private/public employers, it is between small/large employers. Government, whether state, city, county (and especially federal) is almost always a “large” employer.
You are hung up on public union corruption. It is real. It is also a drop in the proverbial bucket compared to that in the private sector.
Now that the dog has dozed off, I can say that, according to Biggs, the average public pension as a percent of wages has decreased over the last decade, and the average wages of the public sector has increased less than the private sector. Don’t worry, it’s only temporary.
You may have some very strong opinions about public compensation (understatement) but they will always remain just opinions.
“… as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.”
Donald Rumsfeld
There is a lot you don’t know you don’t know, and a lot you think you know that just ain’t so.
But the subject of this blog is pensions. “Comparison” of public/private compensation would undoubtedly be much simpler with a switch to DC plans. But comparison is still futile; too many variables. And, guaranteed, in many cases an elimination or reduction in DB pension formulas will lead to offsetting salary increases. Also, somehow, the redistribution of income to the lower educated public sector workers will continue.
In my own never to be humble opinion, we would be much better off to make some form of ERISA type reforms to public DB plans, which may (in some cases) entail formula reductions. And, as said before, may (in some cases) entail salary increases.
The “pro DB” argument of Ed Ring:
1. “Impose a ceiling on pension benefits to retirees, based on the principle that pensions are supposed to ensure retirement security, not lavish affluence. Similarly, establish a floor for pension benefits to retirees, based on the principle that employees at the low end of the pay scale are nonetheless entitled to retire with an income sufficient to live with dignity.” *
2. “Hence there are two distinct virtues to defined benefit plans, both based on the fact that these plans allow large numbers of participants to pool their risk. This means that even though some participants may live longer than average, their income is secure their entire life, because by definition whoever collected more from the plan by living longer than average had their higher than average withdrawals offset by those whose lifespans were shorter than average. And because risk in a defined benefit fund is shared across generations of workers, during eras when investment returns are low, existing workers guarantee extra cash coming into the plan to keep it solvent, and during eras when investment returns are high, surpluses are fed into the pension fund that can also be used to make up the shortfall during lean years.”
*note: “income redistribution”
The con, as I understand Mr. Bury and others:
Government simply cannot be trusted to properly fund a defined benefit plan.
The other possible con, in my opinion; the one you choose to ignore, is the compaction of compensation in the public sector that all the human capital studies mention and Biggs (and Keefe, before him) somewhat quantified. It is basically a redistribution of pay, from the higher to the lower paid public workers. This is a policy decision, although one that many people are unaware of. Why should (on average) a public sector janitor earn thirty percent more than a similar private sector janitor, while a public sector attorney earns thirty percent less than the private sector?
Now go wake up the dog. He needs to go out.
Posted by Tough Love on November 24, 2019 at 7:09 pm
“in your opinion”?
LOL ………..
Why is your (conflicted/biased) opinion one that such be taken seriously given that you are a retired Public Sector workers getting one of these excessive pensions. Indeed, yours isn’t very high in dollars, but it is assuredly multiples greater than what a Private Sector Light Bulb Changer (your Private Sector counterpart) gets from his/her employer.
Posted by Anonymous on November 24, 2019 at 8:23 pm
My opinion is every bit as good as yours, or better, unless you would like to post your CV on line. Even then, you can hardly claim to be unbiased.
The reason I like to copy paste that particular post is that you were absolutely certain (insultingly so, until fact-checked)
“These workers have run-of-the-mill pensions, clearly very modest (and MULTIPLES LESS) than those granted Public Sector workers.”
Those are exactly the workers we were discussing; the private sector who build the roads vs. the public sector who maintains them.
TL; often in error, never in doubt.
If you’re looking for bias, start with a mirror.
Posted by Tough Love on November 24, 2019 at 11:09 pm
So how well are the Teamsters doing in funding that MEP Plan ?
Not so well huh.
Perhaps they promised too much ………… there we are again with that nasty little ROOT CAUSE thing again.
Posted by Anonymous on November 25, 2019 at 1:38 am
Which Teamsters? Western Conference of Teamsters, not so bad.
Sure, Jane the actuary has several articles linked here:
https://www.forbes.com/sites/ebauer/2018/12/03/understanding-the-central-states-pension-plans-tale-of-woe/#63c185a56c10
Concerning trucking deregulation, government regulations preventing building up funding reserves to be prepared for future losses, two record recessions, unprecedented market losses, and record low interest rates.
But you stick with that root cause thing.
It’s not like some MEPs are much worse off than others, depending on the industry, location, and economic sector. Not like some plans with more generous benefits are healthier than others with less generous terms. Just stick with that root cause thing. It has the advantage of simplicity, whether it can be empirically substantiated or not.
If it fits your bias, it floats your boat.
Posted by Tough Love on November 25, 2019 at 7:57 am
Stephen, I have stated several times that I have no expertise on Private Sector UNION Plans (only Single employer Co prorate-sponsored Plans), and I do agree that lots of things contributed to their problems outside of the generosity of their Plans.
In their case, the “generosity” problem itself is narrow, mostly being the 30 & out provision at any age. That’s VERY costly.
Public Sector Plans are a whole different animal. They are too generous in EVERY way………….. unnecessarily rich formula-factors, VERY young full retirement ages, HEAVILY subsidized early retirement adjustment factors, COLA increases (almost unheard of in Private Sector Plans) but thankfully now suspended in NJ, allowing Disability retirement under provisions that nobody backing them up with THEIR OWN MONEY would allow, etc., etc., etc. And that excessive generosity is indeed the ROOT CAUSE of the Public Sector pension mess.
Posted by Anonymous on November 25, 2019 at 12:10 pm
” etc., etc., etc.”
” lots of things ” contributed to public sector plan problems. Lots of things contributed to single employer plans. That’s why they call it a global pension crisis. Even the best of the best..
——————————-
‘World’s Best’ Pension System Facing a Crisis
Long recognized as having the most solid national pension program, the Netherlands is facing “once unthinkable” cuts to retirees
Nov. 22, 2019
———————————–
Logically, if the total compensation of any given public employee is equal to, or less than the compensation of an equivalent private sector employee, there is no excessive generosity in that case. If excessive generosity does not exist, it cannot be the ROOT CAUSE. It is tautological.
And it has been empirically demonstrated by Biggs and others that many, or most state workers nationwide are not overcompensated. The “average” public sector advantage is a manifestation of the Pareto Principle. 80 percent of the result is caused by 20 percent of workers. Or 60/40.
Your go-to obsession is that, because the public sector average compensation is higher than the private sector, all public workers are overpaid (greedy, corrupt, evil, lazy, biased [etc., etc., etc.]).
I disagree. And if you continually misstate the problem, you can never find the appropriate solution. Like many others, you are distracted by the lightning rod “$100,000 pensions”. Yet you have also consistently and adamantly declared there is no reason for a public sector menial laborer or clerk to earn more (much more, relatively) than a similar private sector worker.
The math is simple. You like Biggs. Go back to table 4, page 60. Eliminate all those with “some college” or less. You’ve always wanted to do that anyway. Now go to table 1, page 58. You will find you just eliminated 40 percent of state workers. All calculated by Biggs to be “overcompensated”. Your problem is solved. The average compensation advantage of the remaining public employees is gone. It is now, in fact, a public sector disadvantage.
Except…
You can’t do it. Politically it is a non starter. And ethically and socially.
“The national pattern that public-sector workers with college degrees are compensated somewhat less and those without college degrees are compensated somewhat more than their private-sector counterparts holds true for Connecticut as well. The more compressed pay structure—with top and bottom pay closer together—reflects the fact that people are drawn to public service for nonpecuniary reasons and that government employers have an interest in setting a higher floor on compensation than private-sector employers, some of whom pay poverty-level wages and pass health care and other costs onto government programs. Because public-sector workers are more likely to have college degrees, public employers—and taxpayers—are getting a bargain while ensuring a decent standard of living for less educated workers.”
Monique Morrissey
Root cause is fake news.
Posted by Tough Love on November 25, 2019 at 4:55 pm
Quoting Stephen Douglas ………..
“Logically, if the total compensation of any given public employee is equal to, or less than the compensation of an equivalent private sector employee, there is no excessive generosity in that case.”
True, but that’s not the case for all Public Sector workers taken as one group (with each worker compared to their Private Sector counterpart), and isn’t THAT what financially impacts the Taxpayers?
Per Dr. Biggs AEI Compensation study, in BOTH our home states of CA and NJ, on a TOTAL COMPENSATION basis (wages + pensions + benefits) Pubic Sector workers (as a group) have a 23%-of-pay ADVANTAGE over their Private Sector counterparts.
And ……. per that same study, if the value of the MUCH greater PUBLIC Sector job security is included, that 23% rises to 33%-of-pay.
And ……. the AEI Study excluded Public Sector Safety workers (e.g., Police, Fire), a group with MUCH higher than average wages, and the richest and hence most costly pension & benefits. Had they been included in the AEI Study, the above 23% and 33% PUBLIC Sector Total Compensation ADVANTAGE would assuredly have been materially GREATER.
Taxpayers …………
How much more would YOU have for YOUR retirement needs if YOU had an additional 23% (or 33%) of pay to save and invest in every year of YOUR career ……….. $500K, $1 Million, perhaps $ 2 million for some?
————————————————
Stephen,
Your shit DOES stink.
Posted by Anonymous on November 25, 2019 at 5:17 pm
“True, but that’s not the case for all Public Sector workers taken as one group (with each worker compared to their Private Sector counterpart), and isn’t THAT what financially impacts the Taxpayers?”
When you can walk onto a car lot and pick any vehicle and pay the average price of all vehicles on the lot, I will agree.
All public workers are not average. All public workers are not overpaid. Do the math. You insist on cutting the “overpaid” workers anyway. (Got a problem with EQUAL?) Once you do that, your average advantage will be gone.
Then maybe New Jersey could just start paying the actual conservatively calculated ARC. (Spoiler alert; they still won’t.)
My odor is irrelevant.
Posted by Tough Love on November 25, 2019 at 6:37 pm
Stephen,
I’ll bring it down to a level that even a light-bulb-changer can understand.
If Public Sector employers stopped paying their lowest level workers 3 or 4 times greater total compensation (in wages + pension + benefits) than their Private Sector counterparts, and the tens of thousands of run of the mill paper-shufflers 2x the compensation that their Private Sector counterparts get, they would have enough money to equalize the compensation of Public Sector PHDs and Professional with that of their Private Sector counterparts, and STILL HAVE 23% of pay LEFT OVER ……….. perhaps to return to NJ’s residents in the form of LOWER Taxes.
Posted by Anonymous on November 25, 2019 at 8:24 pm
“…paying their lowest level workers 3 or 4 times greater total compensation (in wages + pension + benefits) than their Private Sector counterparts…”
Now you sound like the dog.
But yes, other than the hyperbole, that is what I have been saying for years. But you kept/keep implying that all public workers are overpaid and pensions should be cut by (at least) fifty percent. And I repeat, in addition to those undercompensated “Public Sector PHDs and Professional” workers, there are thousands of public workers who are already neither over nor underpaid. They are also not the root cause of underfunding.
Nevertheless, many of them will likely see their pensions cut because… Math.
They (including me) may be cut in states like California with optimistically seventy percent funding, and even more likely in NJ, Ill, and Ky, because, “Don’t pay the bill…”
Posted by Tough Love on November 25, 2019 at 8:49 pm
Quoting Stephen ………….
““…paying their lowest level workers 3 or 4 times greater total compensation (in wages + pension + benefits) than their Private Sector counterparts…”
Now you sound like the dog. ”
———————————
Not so far fetched. Many low level Private Sector workers are near minimum wage with ZERO pension, likely no 401k Plan, extremely minimal healthcare benefits while active, and ZERO once retired. The higher (double?) pay and generous (formula-wise) DB pension & benefits of the comparable PUBLIC Sector workers could easily top 3 times the compensation of that low level Private Sector worker.
I don’t disagree that “some” Public Sector worker earn less (even on a Total Compensation basis) than their Private Sector counterparts ………. likely the SMALL % in the PHD and “Professional” groups that are segregated in Biggs AEI Study.
I don’t care………..
As a Taxpayer what matters is the net result of the compensation differential from ALL PUBLIC Sector workers taken together and compared to their Private Sector counterparts. And when doing so we have that 23% PUBLIC Sector Total Compensation ADVANTAGE that I noted in an earlier comment. THAT needs to end.
Posted by Anonymous on November 25, 2019 at 10:19 pm
You already ended it…
“Yadda, yadda, yadda… they would have enough money to equalize the compensation of Public Sector PHDs and Professional with that of their Private Sector counterparts, and STILL HAVE 23% of pay LEFT OVER ……….. perhaps to return to NJ’s residents in the form of LOWER Taxes.”
The “SMALL % in the PHD and “Professional” groups that are segregated in Biggs AEI Study.” is ten percent of public employees. (Biggs table 1 page 58) and the “equally compensated” MAs and BAs are another forty percent.
I don’t care……….. either.
There are a lot of problems with public pensions other than “excessive generosity”. Problems similar to MEPs, private single employer plans, and… The Netherlands.
You can’t see the forest for the trees.
Posted by Tough Love on November 26, 2019 at 11:20 am
Stephen,
Giving the % population splits and comparisons BY INCOME LEVEL doesn’t change then FACT that when EVERY income group of Public Sector employees is included in the Total Compensation (wages + pensions + benefits) comparison with their Private Sector counterparts, the net result is a VERY material Public Sector ADVANTAGE……………. yes, that 23%-of-pay (discussed above) in CA and NJ.
THAT is what financially impacts the Taxpayers.
Or again, bringing it down to your level ………..
“If Public Sector employers stopped paying their lowest level workers 3 or 4 times greater total compensation (in wages + pension + benefits) than their Private Sector counterparts, and the tens of thousands of run of the mill paper-shufflers 2x the compensation that their Private Sector counterparts get, they would have enough money to equalize the compensation of Public Sector PHDs and Professionals with that of their Private Sector counterparts, and STILL HAVE 23% of pay LEFT OVER ……….. perhaps to return to NJ’s residents in the form of LOWER Taxes.”
Posted by Anonymous on November 26, 2019 at 3:06 pm
“I’ll bring it down to a level that even a light-bulb-changer can understand.”
“Or again, bringing it down to your level ………..”
That’s the level I have been at since 2014, when I first read Biggs’ study.
Your Public Sector ADVANTAGE……………. (yes, that 23%-of-pay (discussed above) in CA and NJ.)
Is entirely driven by the lowest level workers.
Entirely.
You said it yourself; stop paying them more than their counterparts “and STILL HAVE 23% of pay LEFT OVER ………..”
—————————————-
“…what financially impacts the Taxpayers.”
The average 23%-of-pay advantage, will be gone, and then some.
Gone.
So, where’s the beef?
Posted by Tough Love on November 26, 2019 at 8:14 pm
Stephen,
Misleading again … and in spades:
The ONLY group which for which (per the Biggs AEI study) there is a material PRIVATE Sector advantage is the combined PHD and Professional group, which comprises 10% of Public Sector workers and 3% of Private Sector workers.
That’s a Big WHOOP.
In the BA and Masters categories it essentially a wash, and in the HS Diploma and some-College categories, the PUBLIC Sector has a material advantage. Yet those with less than a BA constitute 40% of all Public Sector workers and 62% of Private Sector workers.
That’s a Big DEAL……… and has huge negative financial consequences for Taxpayers because they are paying for that Public Sector advantage …… and MUCH MUCH more in $$$$ that they save in the lower compensation of the PHD/Professional group.
——————————————-
And lets not think a Masters in the Public Sector takes the same effort, and intelligence and a master in the Private Sector.
Most Masters in the Public Sector are earned by teachers, the vast majority of whom get an MA in “Education”, not in the underlying subject matter, which is far more difficult to obtain, especially in the STEM fields. A Math or Chemistry or Biology or Physics teacher with a MA in Education is NOT as well trained or as knowledgeable as the someone with a MS in the subject area. And clearly, they do NOT deserve equal compensation.
Posted by Tough Love on November 26, 2019 at 9:10 pm
Stephen,
And some enlightenment on the ludicrously excessive CA Police pensions NOT included in Bigg’s AEI Compensation Study ………..
How much GREATER than the Study Result of a 23% of pay (33% with the value of the much greater Public Sector job security factored in) PUBLIC Sector Total Compensation ADVANTAGE would it have been if Safety workers with their out-sized wages and off-the-wall too generous pension & benefits WERE included ?
Posted by Anonymous on November 27, 2019 at 12:38 am
Now what?
Why are we wasting bandwidth?
You have already grasped the crux of the situation.
Public workers can be divided into three groups…
One group, generally the highest educated*, earn much lower wages, and their higher pensions and benefits are not enough to compensate for the lower wages.
The middle group earns lower wages than equivalent private workers, but… lower wages are offset by higher pensions and benefits (deferred compensation.) As a result, they earn roughly the same as private sector peers.
The last group, generally the least educated/unskilled public workers earn more than similar private workers.
This last group is critical. They are the only ones “overpaid”. Reduce their compensation to the private sector label and there is no public sector advantage, by definition.
By definition…
https://www.google.com/url?sa=t&source=web&rct=j&url=%23&ved=2ahUKEwiurr3G0YnmAhUSO60KHb2QCiYQwqsBMAR6BAgLEAU&usg=AOvVaw0VTJzWxrN8ZFOD4xbU2nov
Problem solved.
Posted by Anonymous on November 27, 2019 at 1:00 am
Don’t get hung up on degrees.
“Educational attainment is the single most important predictor of earnings.”
“Empirically, education is followed by experience in advancing earnings. People learn by doing and by working in a variety of job tasks as they advance through occupational levels. Most occupations reward experience and on-the-job learning as they are associated with more competent and productive performance.”
“Other factors widely found to affect compensation include gender, race, ethnicity and disability.”
(Allegretto and Keefe)
————————–
It’s not an exact science. But no matter how you define them, nationwide and in every state, there is a group of public employees who earn more than their private sector peers. From what I’ve read, this salary, or compensation, advantage it true for most OECD countries.
Nationwide, by Biggs study, it’s about forty percent of public workers. In your state it may be fifty percent or more.
There are some states, according to Biggs, where there is no average public sector advantage. Even in those states there will be a group, typically the lower educated, who are “overpaid”.
Don’t get hung up on the numbers.
Posted by Tough Love on November 27, 2019 at 5:04 pm
Yada Yada Yada Stephen,
Nothing tot see here. Really?
https://www.pressdemocrat.com/opinion/10379343-181/pd-editorial-calpers-numbers-tell
Yup, in YOUR Sate of CA. While the vast majority of Private Sector workers get no more than a modest 3% of pay into a 401K Plan for THEIR retirement security needs (and most often NOTHING towards retiree healthcare costs), annual Taxpayer Pension contribution requirements for CA Safety workers now AVERAGE over 50% of pay, and for some towns it’s already over 100% and growing. Sure ……… move along, move along …. nothing to see here folks !
————————–
Quoting from the linked article:
— On average, local governments in California are paying 50 cents on top of every payroll dollar to cover retirement costs for public safety employees.
— Two dozen jurisdictions are paying 70 cents on the payroll dollar, twice as many as last year, and that number is expected to double again next year to 50.
— In a few jurisdictions, taxpayer contributions to CalPERS exceed payroll expenses for public safety employees.
Posted by Anonymous on November 27, 2019 at 8:03 pm
To most regular readers of this blog, this is old news. I don’t think the editorial board of the Press Democrat really did this story justice. They once had great reporting and a very interesting and informed comments section. A few years ago they limited comments to subscribers only…
“We value open and honest dialogue, but the proliferation of hate speech, anonymous trolling and personal attacks have created a commenting environment that is not conducive to respectful thought exchange and sharing of viewpoints. Rather than eliminating comments entirely, we have made this feature a benefit for our subscribers.” (April 5, 2017)
Thank you again, John Bury. We appreciate the research and analysis you put in, and the ability to discuss. And the puns in the article titles, although they sometimes go over my head.
Back to California; the State Controller has a website which lists the normal cost for each city, county, etc. Rohnert Park, named in your article, (and in Ed Mendel’s “Calpensions”) has normal costs for 2018 of 22.7 percent for first tier safety employees (the most expensive group)
And
Almost $3 million and rising for UAL. We can assume, or at least I do, that the reason for “$3 million and rising” is that the 22.7 percent normal cost should be higher.
Quoting John Bury above… “Completely missing from this analysis is the role of the politician/union/actuary cabal in determining what those normal costs are going to be which is entirely driven (on all sides) by keeping contributions as low as they possibly can be.”
Quoting TL…
“Nothing tot see here. Really?”
Yes, we see that apparently we are not learning from past mistakes.
And.
“The common theme for those [blue-ribbon pension study] commissions was that their findings were largely ignored by their sponsors.”
Posted by Anonymous on November 27, 2019 at 9:27 pm
Since it’s the season, thanks to Ed Mendel also. Calpensions.com is also a great source with usually good comments.
I thought we lost him, but he came back after a short break.
Posted by Tough Love on November 27, 2019 at 9:48 pm
Stephen,
Police Pensions (in CA or NJ or anywhere else) that routinely cost TAXPAYERS 10, 15, 20, even 30+ times MORE than the 3%-of-pay that Private Sector workers typically get in 401K contributions as their ONLY employer-provided retirement security …….. should NEVER be out-of-mind or be treated as “old news”.
The ludicrous generosity of Safety worker Pensions (AND Benefits) is indeed the ROOT CAUSE of why they require such HIGH contributions.
———————————
Quoting …………
“Back to California; the State Controller has a website which lists the normal cost for each city, county, etc. Rohnert Park, named in your article, (and in Ed Mendel’s “Calpensions”) has normal costs for 2018 of 22.7 percent for first tier safety employees ”
Sure, 22.7% via a Normal Cost using assumptions that the Plan will forever earn 7.5% on it’s ASSETS and therefore, via phony (and outrageous accounting rules), allowing the Plan to discount the Plans LIABILITIES (that are MUCH greater than those ASSETS) also using 7.5%. Well, CalPERS admits to an (INFLATED) funding ratio of just about 70%. To earn the 7.5% on it LIABILITIES (with ASSETS only sufficient to cover 70% of it’s liabilities) it would need to earn 7.5%/0.70= 10.7% on it’s ASSETS.
So CalPERS need to earn, in an EXTREMELY low interest environment, 10.7% on it ASSETS just to not lose ground on existing LIABILITIES. What are the odds ???
You are correct that the 22.7% “should be higher” …………. a LOT higher, with the 3%@50 formula Plan really requiring a total (EE +ER) Normal Level annual Cost contribution of about 60%-of-pay if valued using the SAME assumptions & methodology that the US Gov’t requires of Private Sector Plans in the valuation of their DB Plans
———————–
The Officials that established Standards that allow such DELIBERATE low-balling of the true expected cost ………… and sticking the Taxpayers with the bill when they inevitably DO come up short ………….should be jailed.
Posted by Anonymous on November 28, 2019 at 1:40 pm
aka chicken little
“Tough luck, the hanging judge on the loose.”
———————–
S Moderation Douglas
Happy Thanksgiving
Posted by Tough Love on November 28, 2019 at 2:22 pm
Stephen Douglas,
Retired Public Sector light bulb changer, who now plays economist ………..
Happy thanksgiving
Posted by bpaterson on November 24, 2019 at 3:55 pm
So I checked data universe, theres a guy named fred beaver, made $126k, worked less than 8 years at public employment and gets a pension around $16k for some reason possibly illegal. I thought one had to be vested for 10 years???? Of course Frd says raise taxes, he’s got skin the game. https://content-static.app.com/datauniverse/caspio/bundle/NJ_retirees.html?appSession=67BKF7S6M3E5103V17K33F3J88G81H1C2D0BW20R05227J238U34IR8WZ474NPHZJ82A99YR0EQEH2A838275WA8ZUSJ47G8BJGWQD3T0S6WRH8U36Z52QR1LH45YIRM&PageID=8&PrevPageID=2&cpipage=3&RecordID=212956&cbCurrentRecordPosition=25&Mod0LinkToDetails=True&CPIorderBy=MTHLY_PENSION_ALLOWANCE&CPIsortType=desc&cbCurrentPageSize=10
Posted by Tough Love on November 24, 2019 at 7:15 pm
Not sure if NJ has raised the vesting duration to 10 years, but is WAS 5 years, and like everything else in the PUBLIC (but NOT Private) Sector, such changes only impact new workers.
Posted by Anonymous on November 24, 2019 at 7:57 pm
And $16k is about right for 8 years and $126k FAS.
Posted by E on November 24, 2019 at 9:25 pm
All this talk about averages……
If I have one foot in a pail of water that is 142 degrees and another in a pail of water that is 33 degrees, am I indeed comfortable because the average temperature of the water in the pails is a tepid 87.5 degrees?