Time to Cut Pay of CA State Employees (& Pensioners)
An AP article today serves as a reminder of anecdotes many of us have heard (and others experienced) of friends, family members and acquaintances taking pay cuts in order to keep their jobs:
It’s one of the bleak realities of the economic recovery: Even as more employers are starting to hire, the new jobs typically pay less than the ones that were lost.
So, it’s not just our already employed friends working for less money, it’s also the newly employed.
But, while private sector employers are slashing pay checks, it remains boom time for government employees, even in cash-strapped states like California. On the last state of the year just concluded, a state judge in the Golden State
. . . ruled that Gov. Arnold Schwarzenegger had abused his discretion in ordering furloughs of state workers, dealing a blow to the administration’s efforts to cope with the state’s ongoing fiscal crisis.
Alameda County Superior Court Judge Frank Roesch said the administration must halt the furloughs for workers represented by three unions, including Service Employees International Union Local 1000, which represents 95,000 state employees.
The Governor had ordered “most state employees to take three days off a month without pay as the state faced a massive budget deficit.” Even a former Democratic Speaker of the California Assembly finds that “80 percent” of the state’s budget deficits is “due to employee costs.“ And, as George Will notes today, it’s not just the cost of current employees:
It took years for servile liberalism to turn the state into what [William] Voegeli calls a “unionocracy,” run by and for unionized public employees, such as public safety employees who can retire at 50 and receive 90 percent of the final year’s pay for life.
A first step toward righting the budget woes of the Golden State would be for the legislature to do for state employees what private sector employees have done for theirs: slash salaries. And while our legislators are at it, they should slash pensions for public sector retirees as well and prevent able-bodied retirees from receiving their pensions until they’re 65 (or 70).
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I don’t think our lords in the governing class (or the rent-seeking corporatists) think it’s possible to exceed the carrying capacity of the serfs. But that doesn’t mean it isn’t happening.
While the economy continues to lose jobs and as pay continues to fall, our elites continue grow the government and to import
replacementguest workers and are now pushing another amnesty (to replace a recalcitrant electorate?).Comment by SoCalRobert — January 10, 2010 @ 7:49 pm - January 10, 2010
What about the sanctity of contracts? Has that not always been a fundamental value of conservatives? Or is it only when its their contracts?
Comment by Tano — January 10, 2010 @ 10:34 pm - January 10, 2010
Tano – I had the same thought… is it legal and moral to change the terms in the middle of the game (especially for those already retired)?
I agree that a fundamental change in benefits for retirees wouldn’t be fair but is there any reason that gummint workers should be immunized against the same day-to-day realities faced by those of us in the private sector?
Are we who were too dumb to get a government job to work until we die so that gummint workers can retire as early as age 50 while collecting pensions twice what a private sector worker earns *working*?
The problem is that governments back-loaded pension costs (promise today; figure out how to pay for it in a few years when the promise comes due – or, more often, leave that problem for others).
The first thing that needs to happen is that no future promises should be made. New gummint hires should handle their own retirements (e.g. 401k). If the unions don’t like it – tough. They can get a job in the private sector with the rest of us proles.
Ditto for Social Security. The looming pension crisis (tens of trillions in unfunded liabilities which will come due sooner rather than later) will make the mortgage meltdown seem like a minor glitch.
See here:
http://watchdog.org/2010/01/08/state-of-the-states-broke-and-going-broker/
http://www.businessweek.com/magazine/content/05_24/b3937081.htm
http://www.lao.ca.gov/handouts/state_admin/2009/Public_Employee_Pension_11_13_09.pdf
Comment by SoCalRobert — January 10, 2010 @ 11:27 pm - January 10, 2010
“is there any reason that gummint workers should be immunized against the same day-to-day realities faced by those of us in the private sector?”
Obviously yes. Workers negotiated for their health and pension benefits in lieu of salary. To break the contract and take away those benefits, without replacing them with the foregone salary, is theft, plain and simple. That such things occasionally happen in the private sector is an argument for outlawing them in the private sector, not for perpetrating them ourselves. If the government cannot abide by basic moral and legal principles, how can they ever enforce the same on others?
“Are we who were too dumb to get a government job to work until we die so that gummint workers can retire as early as age 50 while collecting pensions twice what a private sector worker earns *working*?’
Thats ridiculous. Educate yourself as to the facts before making charges. I know that once upon a time I was considering a job with the feds – the pension and health benefits were good, but were just about the same as I found in comparable positions in the private sector.
“New gummint hires should handle their own retirements (e.g. 401k).”
Since the mid-eighties, federal employees pay into Social Security, like nearly everyone else, and have a “Thrift Savings Plan” – essentially a 401k, and a defined benefit plan. Minimum retirement age under the plan is 55-57. with 30 years for full benefit (except is special circumstances). The general benefit formula is 1% of the average of your highest three years times your years of service. That means, roughly, 30% of your ending salary, if you have done 30 years.
When you add to that your SS benefits, and whatever you save in your 401k, it comes to a decent retirement. It is pretty similar to what one finds in decently run corporations, at least that is my experience. I don’t think that it is in any way excessive.
“Ditto for Social Security.”
Social Security is in fine shape. Worst case scenario, if we do nothing whatsoever to tweak the parameters, is that 30 years from now, benefits would have to be cut 30% from what they otherwise would be (given current adjustment rates). That would not be pleasant, but that is the worst case scenario. The system would be solvent and healthy as far as the eye can see at that reduced rate.
OF course, I am not an advocate of cutting benefits 30% in 30 years, so I would support some minor tweak (and that is all it would take) to make the system able to pay all benefits in the future.
Comment by Tano — January 11, 2010 @ 12:54 am - January 11, 2010
Fair points on the pension issue, but not on the salary issue. If government employees don’t like the salary cut, then they don’t have to keep the job.
I just don’t think it’s right for government pensions to “vest” before a person has reached natural retirement age (or is disabled and unable to work). Seems we taxpayers will have to pay for generous and early-vesting pensions negotiated between public employee unions and the politicians they bought off.
We need also find a way to cut off the public employee unions from the state spigot.
Comment by B. Daniel Blatt — January 11, 2010 @ 1:00 am - January 11, 2010
To break the contract and take away those benefits, without replacing them with the foregone salary, is theft, plain and simple. That such things occasionally happen in the private sector is an argument for outlawing them in the private sector, not for perpetrating them ourselves. If the government cannot abide by basic moral and legal principles, how can they ever enforce the same on others?
Now watch the paid shill Tano reverse himself instantly.
In short, blabbering Tano and his Barack Obama will gladly use government power to void contracts and take away compensation, but then babble that it is “theft” for them to do the same thing to government workers and welfare addicts like themselves.
Comment by North Dallas Thirty — January 11, 2010 @ 1:02 am - January 11, 2010
And don’t forget how the babbling Tano contradicts himself.
First Tano blabbers this:
Workers negotiated for their health and pension benefits in lieu of salary.
But then the poor ignorant shill states this:
I know that once upon a time I was considering a job with the feds – the pension and health benefits were good, but were just about the same as I found in comparable positions in the private sector.
So Tano first tries to argue that the gold-plated benefits and pensions in the government sector are required because they’re “in lieu of salary”.
But then Tano, in an attempt to downplay these, tries to argue that “they’re the same as in private industry”.
In one sentence he defends their being huge because it’s “in lieu of salary”….but then in the next contradicts himself by claiming they’re “the same as private industry”.
Which is it, child?
Comment by North Dallas Thirty — January 11, 2010 @ 1:05 am - January 11, 2010
Meanwhile, the pension problem is easily handled.
1) States offload their pension systems into Voluntary Employment Benefit Associations (VEBAs) run by the unions, similar to what the automakers did in their last UAW contracts.
2) The VEBAs pay the benefits and collect the costs from current workers.
3) The state pays its portion by making the pension payments from the VEBAs tax-free.
4) The VEBAs self correct when new union members realize what they’re having to pay to support the retired ones; either the retired ones win and the plans collapse under their own weight, or the younger ones win and benefits are cut to the point where they’re sustainable.
Comment by North Dallas Thirty — January 11, 2010 @ 1:10 am - January 11, 2010
In lieu of salary????? IN lieu of salary???? Government workers are now paid MORE than private sector workers. Please dont even try that “in lieu of salary” crap.
And the only theft going on is Democrats using the force of government to steal money from the only people who create wealth — the private sector — and using it to hire more government workers who create NO wealth, only confiscate it, but are then dependent on Democrats for their income.
Comment by American Elephant — January 11, 2010 @ 5:29 am - January 11, 2010
NDT, I’ll add Tano’s contradictions to the ongoing list. So far…
So Tano, ever going to answer heliptrope’s challenge?
or maybe NDT’s debunking of your health care talking points here?
Or his exposing you as a liar (again) here?
Or here?
Or no rebuttal of this montage of “Tano gets his ass handed to him” here?
Or how about helitropes smacking of you here.
Comment by The_Livewire — January 11, 2010 @ 7:40 am - January 11, 2010
Assuming we are not talking about contracts with the Mafia or negotiated with a union that threatens to kill the enterprise or an amorphous contract like Social Security that has metastasized with all sorts of entitlements and rule changes, ….. contracts are binding instruments.
I am a fan of not changing the rules while the game is being played. However, the continuity of life is not a game that begins and ends. Therefore, the metaphor does not apply.
If you signed onto a job where security and a pension were part of the contract, those rules no longer apply if the party offering the contract goes belly up.
The full faith and credit of the United States has come to an awful turn. If you are hot to buy US bonds, you are likely to be classed in the lower reaches of the IQ nomenclature.
The full faith and credit of California is likewise shot to heck. Either the state whacks its spending enormously or it hires a huge tax swat team to take the money of its citizens to try to keep up with its bills.
To use another metaphor, when the government goes into serious bankruptcy, that is a contract game changer.
Obambi’s wizards tried to foist General Motors off on the union. The union knew that they had sucked the life out of General Motors and that owning it was going to cost them big time. The union preferred to have Congress back their pensions because there is no way General Motors will ever recover under the current obligations.
So, this “sanctity of contracts” as a simple minded slur may work for throwing a brick into the crowd, but in reality it is a ruse.
Comment by heliotrope — January 11, 2010 @ 9:50 am - January 11, 2010
So eliminate unnecessary positions, cut current salaries of state workers and change the retirement system for all new workers. Something has to be done because the status quo cannot last nor can California continue to fleece the taxpayers to pay for this. But hey, as long as I don’t have to pay for it California is free to continue the misery as long as it likes. Virginia and other states appreciate the business fleeing the Golden State for friendlier climes.
Comment by John — January 11, 2010 @ 9:53 am - January 11, 2010
Drudge has these headlines:
Just write in Obama and the US and you can see the future of socialism in chaos.
Comment by heliotrope — January 11, 2010 @ 10:31 am - January 11, 2010
This is why it should be illegal for public employees to unionize.
Comment by V the K — January 11, 2010 @ 12:04 pm - January 11, 2010
Tano – ridiculous? These stories aren’t at all hard to find.
As far as Social Security. It will be insolvent in the next couple of years (expenses exceeding income). What do you think is in the “lockbox” to pay future benefits?
In NY and OH (and others): Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401(k) plans, the pensions for government employees are guaranteed.
http://taxdollars.freedomblogging.com/2009/08/31/metropolitan-water-district-prepares-to-hike-employee-pensions-dispite-investment-losses/33937/
http://corner.nationalreview.com/post/?q=ZTk3ZGQxMDFiZmEyNzVjODExY2UxZjJjOTY5ZjU4NWU=
http://taxdollars.freedomblogging.com/2009/08/25/golden-parachutes-for-public-retirees-are-unsustainable-experts-say/32093/
Comment by SoCalRobert — January 11, 2010 @ 9:54 pm - January 11, 2010
“Social Security… will be insolvent in the next couple of years (expenses exceeding income). What do you think is in the “lockbox” to pay future benefits?”
It will not be insolvent because it has assets with which to make its payments.
For 30 years or so, SS took in more money than it paid out – in anticipation of this time when baby boomer retirements would necessitate greater payouts. That money was lent to the Treasury. Those obligations must, of course, be paid back to the SS system – the obligations are backed by the full faith and credit of the Federal government. Not to pay them back would be like the government defaulting on any other bond or obligation. Will not happen. So the SS system is secure for another 30 years or so.
I anticipate your response – where does the money to pay back SS come from. Well, it comes from us, the taxpayer, obviously. If you think that is a problem, well fine – it is a problem for the Treasury, it is a problem for taxpayers, but it is not a problem for the SS system.
“Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401(k) plans, the pensions for government employees are guaranteed.”
That is, of course, a good thing. We should find a way to make private-sector pensions more secure. Amazingly though, Republicans have tried to destroy the security of the only secure part of our retirement packages, Social Security.
Comment by Tano — January 12, 2010 @ 12:59 am - January 12, 2010
Actually Tano, savings accounts are even more secure than Social Security, because unlike SS, they are not based on an unsustainable ponzi scheme.
And your explanation for why Social Security is solvent just goes to show the liberal thinking that got us in the economic DISASTER we are in today.
Comment by American Elephant — January 13, 2010 @ 2:01 am - January 13, 2010