American Morning
Pension gaps plague cities and states
By Carol Costello and Bob Ruff
We caught up with New York City Sanitation worker Chris Becker along his route in downtown Manhattan. It was 10 a.m. and Becker had been hard at work hauling the city’s garbage into his truck for four hours already.
Why did he take a job that defines backbreaking work?
“I didn’t come on the job straight out of school,” he told us. “I came on the job when I was 26-years-old. I saw all the big corporate mergers and people buying up companies and, you know, I got a little nervous, so I went for security. I took a couple of tests and sanitation was the first one that called me. I took it.”
A big part of that security for Becker is the Sanitation Worker’s Pension Plan. It allows him to retire after 20 years on the job, with full benefits, so long as he keeps contributing almost 10% of his salary to the plan. Now 37, Becker can retire at 46 and immediately start receiving his pension roughly equal to half his salary every year for the rest of his life.
Becker’s pension and those of millions of other state and local government workers without question provide them with security. But to cities and states struggling to balance budgets in a bad economy, those pensions represent a financial commitment that some of them say they can’t meet, at least not in full.
The conservative Heritage Foundation’s David John, along with his colleague Bill Gale of the Brookings Institution, have written extensively about pensions.
“There are going to be certain states and local governments, “ John says, “that are probably going to need a bailout or they’re going to need to file a bankruptcy.”
And why have so many gone so deeply in debt?
“If you make a pension promise now and you’re an officeholder,” John says, “you obviously make people very happy in the short run and you’ll be long out of office before you have to pay that sort of thing … (also) so many of these pensions are enshrined in contracts, it’s very hard and very expensive to go through and pull some of them …”
Chris Becker’s pension, for example, along with other publicly funded pensions in New York State, cannot be touched unless the unions that negotiated those contracts agree to do so.
Marcia Fritz, president of the California Foundation for Fiscal Responsibility and Change, has decided to tackle the problem head on in her state.
“We’ve got to do something,” she told us. “We’ve got an SOS going on with pension obligations … we’re in a "unionocracy." They’re the ones who decide who’s on the other side of the table to negotiate with them. And then they ask for what they want and they get it.”
Fritz estimates that the two largest pension systems in California are around $165 billion in debt. She and her colleagues are moving full steam to put a measure on the California ballot this fall that limits pension benefits for new public employees. This week they plan to begin gathering signatures.
Meanwhile, back in New York, we asked Chris Becker what he thinks about those who want to limit pensions for new public employees.
“I would say that’s terrible and it would be very unfair because this is a close-knit job. … Different pensions basically take away from morale on the job. And you know the public would probably end up with worse services in those cases if morale is low.”
What about suggestions that public pensions must be cut for current employees in order to save cities and even states from bankruptcy?
“Then there’s really no reason to take the job … you know, it’s really the only draw for our job is our pension, our benefits. … I don’t think it’s fair because of the economic downturn had nothing to do with us. You know, we really didn’t cause this mess.”
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It is important to adhere to the facts when discussing the issue of allegedly out-of-control public pensions. Marcia Fritz and the "California Foundation for Fiscal Responsibility and Change" are a pro-business front group in pursuit of an ideological agenda whose tactics include the demonization of individual California and other public retirees by deliberately distorting, cherry-picking, and inflating the size of their pensions in order to further an extremist right-wing, anti-labor agenda whose aim is to deliberately enrage and mislead voters and taxpayers, and thereby goad legislators into precipitous anti-labor "pension reform" initiatives. For example, the CFFRC conveniently ignores the fact that the average California public pension is actually less than $24,000 a year, or that the overwhelming majority of public pensioners collect pension incomes that include increasing percentages of their own money (i.e., salary contributions) to their pension funds. Instead, CFFRC's disinformation campaign falsely alleges that ALL of the assets in public pension funds are derived exclusively from taxes. Most egregiously, the "6,133" California public retirees, whose names and pensions have been sensationalized as examples of the average or typical amount received annually by California pensioners instead of the statistcally insignificant anomalies that they actually are, constitutes another deliberate attempt to mislead and anger the public. Over the last 20 years or so, the private-sector has dropped guaranteed pension plans for their employees like those offered to California's public-sector employees. The CFFRC's ultimate objective is to achieve retirement parity with private-sector workers, drastically reducing or eliminating public pensions as part of an over-arching, ideological atrategy of further reducing the power of workers by lowering their post-retirement standard of living.
I cannot believe that the people employed in government jobs think they are "due" this pension. Let them come out in the real world and see what it's like. They have a zero risk policy with their government pensions. If the stock market crashes and the pension fund is then underfunded – who makes it up? The taxpayer – time and again. For those of us who are in the private sector what happens when the market crashes? Who makes it up? We do or we make do with less. Time to get real fellas!! We need new and better contracts negotiated with the public sector unions that are fair to taxpayers. This cannot continue indefinitely – it will simply implode.
Great job Carol.
If we're going to scrutinize Government pensions, how about someone taking a hard look at Congress and the bundle they walk away with regardless of time spent on the job??
Carol,
I simply can not believe that the pension issue was not recognized long ago. After all, my generation saw all of our savings go down the toilet when 401K's and personal independant trading became more popular. Deregulation and flat out stupid greedy decisions has me looking at no retirement until I am over 70. This was supposed to be the solution to lack of jobs that even offered pensions anymore as our production industries ran out of the country 25 years ago. Health care costs alone for my parents bankrupted them. Eliminating any shred of an inheritance for me or my kids and grand kids. My father invested his money, carried insurance for years, employed 26 years by the same employer and two tiny pensions for one man in middle management. His first heart attack 11 years ago wiped out the insurance who canceled him immediately after and pre-existing conditions kept him from acquiring new coverage. Subsequent illness in the last eleven years cost him his home that was more than half paid for until we had to refi just to pay his hospital and doctor bills.
Seems to me that operating in the red and counting on the future debt owed, to pay for poor management of the nations assets, was a poor substitute democracy. I AM an American and I do question this capitalist state?
The next time CNN chooses to focus public attention on public pensions, I suggest foergoing the usual level of sound-bite reportage and paper-thin background research in order for the subject to be presented fairly and accurately and in its broadest dimensions.. Ms. Costello's piece distorted reality, creating the impression in the minds of viewers that public sector retirees unfairly enjoy grossly elaborate pensions and lifestyles at taxpayer expense. In fact, public employees accept far lower salaries than their private sector counterparts for doing the same or similar work, but none of that was mentioned. After 20 years or more of modest incomes and their own pension plan contributions, public workers earn government-guaranteed pensions which provide them with anything but the "lavish" lifestyle that was suggested, but in the overwhelming number of cases, the foundation of a lower-middle class standard of living.
More importantly, the appropriate sub-text for Ms. Costello's report was entirely absent. The problem lies not in "exorbitant" public pensions, but in the absence of private sector retirement benefit packages, including pension plans, which have been raided, drastically scaled-back, or entirely eliminated on a massive scale by large corporations, leaving their employees unable to sustain decent standards of living when they retire, and angry and envious at their public sector brethren who seem "rich" in comparison. Pro-business organizations such as the U.S. Chamber of Commerce and conservative think tanks such as the Heritage Foundation have deliberately stoked private retiree and taxpayer resentment against public pensions, calling for their wholesale legislative elimination or reduction, in order to deflect public attention from the sorry state of private sector retirement plans which have resulted from corporate policies they favor. Their effort is also a pre-emptive attack aimed at insuring that private employees remain pension-less in the future. Working hand-in-hand with their Republican Party allies in government, business lobbies are responsible for establishing a nearly united front of opposition to even the most modest proposals to enhance employee well-being in the U.S, particularly on such issues as the national minimum wage, national health insurance, and the Family and Medical Leave Act. They have steadfastly refused to compromise with labor, responding with the modern-day economic equivalent of the South's "massive resistance" strategy against civil rights by outsourcing American jobs overseas, suppressing worker efforts to organize and bargain collectively, and contributing lavishly to political campaign funding– all at the same time that corporate executives have received obscene compensation, bonus, and retirement packages, the earnings gap between supervisors and workers has widened to its largest in American history, and U.S. economic productivity has increased to the highest levels in modern history due to the introduction of technology and workers' efforts. But, the fruits of economic sucess and profitability have not been shared with the people who have made it possible. Quite the contrary, nothing less than an all-out corporate war has been waged upon the American worker. Pensions are merely one death among the casualties workers have sustained in that conflict, but to corporate America the job remains unfinished until public workers have been subjugated to the same extent, their wages reduced and their pensions eliminated. CNN's report on "Pension Gaps Plague Cities and States" missed a golden opportunity to present that story in its fullest, most factual context.
I worked for the State of Indiana for 35 years. Earned less than $35,000 per year and a pension of less than $18,000 per year. Could you list all States showing highest to lowest pensions?
GREAT, GREAT PIECE on CITY,COUNTY, STATE PENSIONS!
Though Aware of Good Retirements, the Cities Do Have to Pay All That PENSION MONEY as PEOPLE RETIRE
Including
ACCRUED Small Town USA Responsibility Must Be HORRENDOUS!
for
Policemen, Firemen + City Employees
Where
Like the Beautiful Carol Costello Said,
People Took Those Jobs + Did Them Knowing that
THE RETIREMENT FACTOR was a BIG PART Of IT, Which It Is!
There Will Have to BE SOME CHANGES MADE– BUT HOW!
The Republican Way of "JUST GO WITH IT"
is
Doing Like Reverend Wright Said,
It's Not FIXED but Coming Home To ROOST!
PROPHETIC WORDS!
GREAT PIECE Carol Costello
How much of the pension problem is due to the Republican-pushed massive expansion of prisons and prison guards? Republicans opposed, and even ridiculed, constructive programs like headstart and keeping gyms open in the evening for supervised basketball to provide encouragement and alternatives for children born into crime and durg-infested neighborhoods, but instead burdened our budgets with prisons for the damaged lives that result, at a cost of many tens of thousands of dollars a year per prisoner.
My company dumped our retirement on the goverment (PBGC). So much for contracts. The solution is to get elected to congress for one term and collect 100 % retirement and a good medical plan (not like the one there trying to give us) for life, funded by our generous taxpayers.
Don't quit paying employees their pensions just quit paying elected officials (congressmen & senators etc.) that have been convicted of theft. We still pay for them after they have gone to prison for stealing from us! That makes no sense and they don't deserve the pensions if they stole from us! They don't deserve it!
Thousands of "little guys" hauling trash, working at city hall or caring for children is not the problem! Let's look at Congressioanl pensions and Wall Street "retirement" packages that the "little guy" bailed out.
I agree that the exorbitant amounts paid out to government workers is ridiculous. This is only one thing that plagues the economy of California and many other states and the nation as well. However, the bulk of state workers only make a fraction of what the law makers, school administrators and management make. To take away a very small pension of $1000 a month from these workers is not the issue.
The issue is the fat cats. I cannot support a legislator or a member of congress who serves only three to four years getting the gold card of pensions plus health insurance...get rid of them, but leave the little guys alone.
We all know that the lawmakers will attack the little guy and keep their gold card pensions and insurance. So, nothing will be resolved. The average worker does not have a chance and these fat cats will keep whatever they can and punish the lower wage earners.
I have been a government employee since April '07. I am a teacher. As a young man, 25, what keeps me teaching where I am is the pension I will receive after 10, 20, or 30 years of service. Take this away, and where is the incentive to continue? Public Schools do not pay nearly enough to survive. Did I mention I teach in a maximum security prison?
Unfunded pensions present an unsurmontable financial problem that can only be solved by renegotiating the contracts to reduce the pensions and then proceed in the future with fully funded pensions such as defined contribution plans.
Why should government provide a retirement safehouse for its employees when virtually everyone else is responsible for their own nest egg? Furthermore, why is no one making any noise against the fact that government employees do not pay taxes?! This is absurd! This is an absurd dual priviledge for what most companies would state clearly that if any business operated like government – the US would be out of business. Oh wait... we almost are.