Public employees doing very well, thank you

Rick Moran
As Steve Greenhut points out in this excellent City Journal essay, what is going on in California with public employees and their unions is a travesty:

The old deal seemed fair: public employees would earn lower salaries than Americans working in the private sector, but would receive a somewhat better retirement and more days off. Now, public employees get higher average pay, far higher benefits, and many more days off and other fringe benefits. They have also obtained greatly reduced work schedules, thus limiting public services even as pay and benefits shoot ever higher.


What has happened? The unions representing state and local government workers as well as firefighters, police, transit workers and others have become so powerful that politicians dare not cross them. They are organized and their members vote. That's a combination that has created  two tiered system with government workers on one elevated level and the rest of us below them:

Government employees use various scams to boost their already generous benefits, which include fully paid health care and cost-of-living adjustments. The Sacramento Bee coined the term "chief's disease," for example, to refer to the 82 percent (in 2002) of chief's-level employees at the California Highway Patrol who discovered a disabling injury about one year before retiring. That provides an extra year off work, with pay, and shields 50 percent of their final retirement pay from taxes. Most of these disabilities stem from back pain, knee pain, irritable bowel syndrome, and the like-not from taking bullets from bad guys. The disability numbers soared after CHP disbanded its fraud unit.As I document in my new book, Plunder!, government employees of all stripes have manipulated the system to spike their pensions. Because California bases pensions for employees on their final year's salary, some workers move to other jurisdictions for just that final year to increase their pay and thus the pension. Even government employees convicted of on-the-job crimes continue to collect benefits. Municipalities have adopted Defined Retirement Option Plans, or DROPs, in which the employee earns his salary and his full defined-benefit retirement pay at the same time, with the retirement pay going into an account payable upon actual retirement. And as average Americans work longer to sustain themselves, public employees can retire in their early fifties with their plush benefits.

Unfunded liabilities from these pension plans is in the trillions of dollars with taxpayers on the hook for the balance. It isn't just "unsustainable." It is a catastrophe waiting to happen. The entire system in California and other states could collapse if the stock market tanks again, as much of the pension money is invested in financial instruments - some of them incredibly risky.

I imagine a few cities and perhaps a state or two will have to go bankrupt before anything concrete is done about the problem. But by then it may be too late for many states and localities as the tipping point is fast approaching and authorities seem helpless in the face of public employee union power to do anything about it.

 

Hat Tip: Ed Lasky

As Steve Greenhut points out in this excellent City Journal essay, what is going on in California with public employees and their unions is a travesty:

The old deal seemed fair: public employees would earn lower salaries than Americans working in the private sector, but would receive a somewhat better retirement and more days off. Now, public employees get higher average pay, far higher benefits, and many more days off and other fringe benefits. They have also obtained greatly reduced work schedules, thus limiting public services even as pay and benefits shoot ever higher.


What has happened? The unions representing state and local government workers as well as firefighters, police, transit workers and others have become so powerful that politicians dare not cross them. They are organized and their members vote. That's a combination that has created  two tiered system with government workers on one elevated level and the rest of us below them:

Government employees use various scams to boost their already generous benefits, which include fully paid health care and cost-of-living adjustments. The Sacramento Bee coined the term "chief's disease," for example, to refer to the 82 percent (in 2002) of chief's-level employees at the California Highway Patrol who discovered a disabling injury about one year before retiring. That provides an extra year off work, with pay, and shields 50 percent of their final retirement pay from taxes. Most of these disabilities stem from back pain, knee pain, irritable bowel syndrome, and the like-not from taking bullets from bad guys. The disability numbers soared after CHP disbanded its fraud unit.

As I document in my new book, Plunder!, government employees of all stripes have manipulated the system to spike their pensions. Because California bases pensions for employees on their final year's salary, some workers move to other jurisdictions for just that final year to increase their pay and thus the pension. Even government employees convicted of on-the-job crimes continue to collect benefits. Municipalities have adopted Defined Retirement Option Plans, or DROPs, in which the employee earns his salary and his full defined-benefit retirement pay at the same time, with the retirement pay going into an account payable upon actual retirement. And as average Americans work longer to sustain themselves, public employees can retire in their early fifties with their plush benefits.

Unfunded liabilities from these pension plans is in the trillions of dollars with taxpayers on the hook for the balance. It isn't just "unsustainable." It is a catastrophe waiting to happen. The entire system in California and other states could collapse if the stock market tanks again, as much of the pension money is invested in financial instruments - some of them incredibly risky.

I imagine a few cities and perhaps a state or two will have to go bankrupt before anything concrete is done about the problem. But by then it may be too late for many states and localities as the tipping point is fast approaching and authorities seem helpless in the face of public employee union power to do anything about it.

 

Hat Tip: Ed Lasky