Today, Yahoo! featured an AP article on the brewing anger over government workers’ benefits, suggesting that the stand-off in the Badger State means additional scrutiny of the power of public employee unions. In the article, writer Geoff Mulvihill interviewed not just individuals upset at the spiraling costs of offering lavish benefits to the public workforce, but also scholars who have studied labor markets:
“It’s the government sector worker who’s the new elite, the highest-paid worker on the block,” said David Gregory, who teaches labor and employment law at New York’s St. John’s University.
For instance, most non-uniformed public employees who have worked in New Jersey for 30 years with an ending salary of $85,000 can look forward to retiring at 55 with an annual pension of about $46,000. Working until age 60 and a salary of $90,000 can bring a pension of $57,000. And many of the New Jersey’s public-sector retirees have no or low premiums for their health insurance.
For a private-section worker who retires at 55, relying solely on a 401(k) without an employer match, it would take a $100 contribution to a plan every week for 30 years and getting an annual return over 7 percent to get to the same level of pension benefit as the public worker retiring at that age. Those benefits would run out after 25 years for the 401(k) retiree. . . .
The government entities spent 1.7 times as much on health care per employee-hour worked and nearly twice as much on retirement costs. Public-sector workers — who are more often represented by unions — are far more likely to have defined-benefit pensions with promises to pay for the retirees’ whole lives.
The more people learn not just about the costly benefits which public employees have secured, but also the favors which states have granted their unions (such as requiring local school districts to “buy health insurance from a union company“), the more likely they are to supposed those like the modest one Governor Walker has proposed in Wisconsin.