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Schwarzenegger: Public Pensions and Our Fiscal Future

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Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#111

Post by CWuestefeld »

kenjackson wrote: post #80
illumin8 wrote: post #67

Earlier quoted context omitted.

Yes, but those private employees making more than $1M are probably some of the best talent in the industry, where as the federal employees could have any range of talent from "breathes, and has a pulse" to "rockstar developer." Also, the private employees when they retire get no health benefits and have to fund their own retirement from a 401k, whereas the federal employees have guaranteed health care for life and a…

You're right on most counts. But this is the tradeoff. Private: Can make it rich. Really rich, And on average probably make more money while working, assuming the same type of work. OTOH, if you don't make it rich your retirement may not be as nice as you'd like. Public: Will never be rich. You can solve P=NP, factor large numbers in constant time, and create a revolutionary new UI that every loves, and you'll still…

Considering the early age that many public pensions allow you to retire at, you can have your cake and eat it too. Retire early on a guaranteed public pension, then take your chances in the private sector.

Or don't take chances. It's very common for bureaucrats to retire to become lobbyists, working for private industry at comfortable salaries in order to exploit the regulatory system for others.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#112

Post by arohner »

MaysonL wrote: post #91
pg wrote: post #20

I have a feeling these graphs do more to explain the problems that Berkeley professor wrote about ( http://blogs.berkeley.edu/2010/08/24/a-letter-to-my-students... ) than the explanations he proposed.

I have a feeling those graphs are more than a little fishy - the bottom one especially. Retirement costs went up ~5X from 2000 to 2010? And they'll go up by the same from 2010 to 2020? I call BS.

The costs are going up for several reasons:

1) Many pensions are underfunded. The state has to play "catch up" because they weren't putting enough money in the fund in the past.

2) Pension funds play the stock market. In a recession, the fund needs more money because the market is down.

3) (I'm not sure this is the case for California, but it's definitely the case for the federal gov't) The gov't often guarantees pensions issued by bankrupt companies. The gov't just takes on the extra debt, and often bankrupt companies don't keep up with their pension contributions.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#113

Post by [deleted] »

MaysonL wrote: post #91
pg wrote: post #20

I have a feeling these graphs do more to explain the problems that Berkeley professor wrote about ( http://blogs.berkeley.edu/2010/08/24/a-letter-to-my-students... ) than the explanations he proposed.

I have a feeling those graphs are more than a little fishy - the bottom one especially. Retirement costs went up ~5X from 2000 to 2010? And they'll go up by the same from 2010 to 2020? I call BS.

[deleted]

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#114

Post by farmerbuzz »

MaysonL wrote: post #105
spoiledtechie wrote: post #99

Earlier quoted context omitted.

Its not BS at all. Many states have problems with this. And if you even get close to state budgets at all which very rarely do citizens do, you will see this problem in more than just a few states and cities and even counties...

I agree that California and other state and local governments have a problem with pensions. What I'm saying is that the graph severely overstates the magnitude of the change in costs over the past and future decades.

Do you have some evidence to support this?

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#115

Post by camiller »

_delirium wrote: post #61
mark_l_watson wrote: post #11

About 25 years ago in California, Orange Country went bankrupt and public employees had to do "give backs" of (if I remember correctly) about 1/2 of their retirement funds and other concessions. I think that this will be the model for the future, but a state levels. It may not seem fair to change the rules on public employees, but effectively the rules have changed for private employees because the economy at federal…

> It may not seem fair to change the rules on public employees, but effectively the rules have changed for private employees It's possible this has happened some places, but not at any major companies I know about. Companies that have phased out defined-benefit pensions have generally not done so retroactively, but only closed them to new hires. Phasing them out retroactively would be a breach of contract, since the…

Also some of the old phone company (AT&T prior to the 1974 breakup) employees had their retirement benefits whittled away over the years, my father-in-law included. Additionally most private sector employees are not under any sort of contract. I didn't sign a contract at any of the three corporations I've ever worked for (over the past 22 years). Fortunately my retirement was all 401k and as I changed jobs I rolled those into a rollover IRA under my control so I don't have to worry about under-funded pensions, I only have to worry about how bad I suck at picking stocks.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#116

Post by furyg3 »

aresant wrote: post #66
furyg3 wrote: post #51

The "job losses" graph is basically trash, since there are far more private sector workers than public sector workers. Better would be to rate it by percentage. I'm slightly shocked that the WSJ would print it (the graph, not the article).

Here's the real data which is still striking, eg private is 2x the rate of public: Job losses June 2008 to June 2010 State government Statewide: -8,800 / -3.3% County government Statewide: -18,500 / -5.1% City government Statewide: -14,100 / -4.9% Private sector Statewide: -1,200,000 / -9.3% Via http://www.signonsandiego.com/news/2010/aug/23/government-jo...

Indeed it's still a big difference, but it's not "off the charts!" as the graph would have you believe.

Plus, it's fairly reasonable that there would be such a difference between private / public job loss rates.

Employment rates in the operations department of most companies I've worked for are relatively flat during both boom and bust times, when the rates of the rest of the organisation fluctuate wildly. In boom times you need IT/HR/Facilities/Finance... and in bust times you do, too. Sales? R&D? Maybe not so much.

I can imagine that most public services are more on the Ops side and less on the Sales side.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#117

Post by kenjackson »

CWuestefeld wrote: post #111
kenjackson wrote: post #80

Earlier quoted context omitted.

You're right on most counts. But this is the tradeoff. Private: Can make it rich. Really rich, And on average probably make more money while working, assuming the same type of work. OTOH, if you don't make it rich your retirement may not be as nice as you'd like. Public: Will never be rich. You can solve P=NP, factor large numbers in constant time, and create a revolutionary new UI that every loves, and you'll still…

Considering the early age that many public pensions allow you to retire at, you can have your cake and eat it too. Retire early on a guaranteed public pension, then take your chances in the private sector. Or don't take chances. It's very common for bureaucrats to retire to become lobbyists, working for private industry at comfortable salaries in order to exploit the regulatory system for others.

I'd actually do it the opposite way. Take your chances when your young and are more willing to work 24/7. When you get older, do the gov't job with the pension ready at the normal retirement age.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#118

Post by dasil003 »

aswanson wrote: post #109
ericb wrote: post #71

Earlier quoted context omitted.

I think this is a game theory problem. CEOs (looking at you, GM) and politicians up against tough unions have an easy out with no "cost" to themselves. They pass the buck by placating unions with pension concessions so all seems well during their tenure. Long after they've collected their bonuses or enjoyed reelection, someone else gets to deal with the unsustainable consequences.

One solution may be to have taxpayers directly vote on benefits for public servants...make the unions take on the people who will be paying for it rather than temporary placeholders with no real skin in the game.

Assuming reasonably educated voters. But as we've seen in California, the ballot initiative process only helps the idea that can be distilled down to a compelling soundbyte and is championed by the deeper pockets.

I'm afraid public employee compensation reform probably loses on both counts.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#119

Post by jbooth »

pg wrote: post #20

I have a feeling these graphs do more to explain the problems that Berkeley professor wrote about ( http://blogs.berkeley.edu/2010/08/24/a-letter-to-my-students... ) than the explanations he proposed.

They do, and the biggest part of those projected costs is the healthcare for retirees. Many government insurance pools are self-insured, and old people consume a lot of healthcare.

But the Berkeley professor is still right in a way. Every single dollar in future retirement pay or health benefits for a public employee was negotiated in good faith in exchange for lower pay right now, this year, so we can balance the budget. Throw in term limits and a little demagoguery and politicians have every incentive to cut a deal that balances the budget this year while kicking costs down the road.

So when the Prof mentioned that for the last 30 years, our society has been taking out a loan for our kids to repay, he was still correct, especially when looking at these graphs.

Re: Schwarzenegger: Public Pensions and Our Fiscal Future

#120

Post by jbooth »

yummyfajitas wrote: post #37
jordanb wrote: post #27

Earlier quoted context omitted.

It's worth observing that: 1) Orange County went bankrupt by cooking the books. After the scandal broke, their treasurer went to jail. 2) The Republican administration turned a blind eye to the Democratic treasurer's malfeasance because it was allowing them to keep taxes very low, which was making their government very popular. 3) The government refused to raise even a temporary tax to avoid bankruptcy, as that posit…

...low level employees who had no part in the high level corruption,... The low level employees didn't vote for and join unions which helped that Dem treasurer to get elected? They didn't push for overly generous pensions and non-transparent accounting? They must have behaved very differently than contemporary unions.

Give me a break.

Those low level employees do a job under a contract which was supposedly negotiated in good faith.

Now because you don't like "unions" or "government" it's ok to stiff people who perform a public service for a previously agreed upon wage and benefits? What, because highway workers weren't doing financial due diligence on the multi-hundred-million dollar county's books? It was their responsibility to do this? I thought that was the responsibility of the guy who got thrown in jail for cooking the books.

This is what that professor was talking about when he was apologizing. Everybody wants to cut taxes and make public servants work for free, whether it's out of simple selfishness or a more highly evolved ideology (aka fancy selfishness).

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