The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: dude on April 16, 2018, 06:46:38 AM
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my god, this is obscene:
https://www.nytimes.com/2018/04/14/business/pension-finance-oregon.html?action=click&pgtype=Homepage®ion=CColumn&module=MostEmailed&version=Full&src=me&WT.nav=MostEmailed
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You know, if cities and states just adopted the same pension system the Feds have, this ridiculous bs wouldn't happen and the general public wouldn't be convinced that ALL pensions pay out like you hit a goldmine. Also, they would stay solvent, which would be nice.
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You know, if cities and states just adopted the same pension system the Feds have, this ridiculous bs wouldn't happen and the general public wouldn't be convinced that ALL pensions pay out like you hit a goldmine. Also, they would stay solvent, which would be nice.
Yeah, I'm increasingly of the mind that pensions should be barred outright and that everyone should have the same opportunities to invest in retirement accounts.
When you think critically about it, it's hard to come up with a system more unfair to the worker than a no-choice private pension plan.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
I guess, move to Oregon and enroll your kids in crumbling schools then?
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You know, if cities and states just adopted the same pension system the Feds have, this ridiculous bs wouldn't happen and the general public wouldn't be convinced that ALL pensions pay out like you hit a goldmine. Also, they would stay solvent, which would be nice.
+1,000!
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
I'd call that irresponsible, not obscene, personally. That wasn't what I felt the other posters were referring to as obscene though.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
I guess, move to Oregon and enroll your kids in crumbling schools then?
I have no desire to move to Oregon in the first place, and even less of a desire to have kids, much less send those non-existent money-pits anywhere...
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The guaranteed minimums used in some pension valuations are laughable.
They gotta cut the minimums (more than they already have) for employees, raise taxes, and cover other shortfalls through borrowing. That's pretty much all there is to do until this problem fixes itself over time.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
I'd call that irresponsible, not obscene, personally. That wasn't what I felt the other posters were referring to as obscene though.
No, that's pretty much it. Well, it depends - I can't say for sure what % $76k a month is, compared to his annual salary? But my thoughts, in random order:
- nobody should get a pension equal to 100% of their max income while working.
- pensions need to be better funded, and better taken care of. Unfortunately, our local and state pensions are in the red because of overly aggressive assumptions on how much the fund would be making - yet they don't cut pensions when the funds fall short by a few %. What that means is: crumbling schools and crumbling roads. I mean, this is ridiculous. Don't we know better by now?
- I guess we do know better, because many (if not most) public agencies have 2-tier pension systems where newer employees have much less generous pensions, have to wait longer, get less, etc. But we will still go broke on the old ones.
- There is no reason to collect a pension for longer than you were actually working. Many sheriff, police, and firefighters retire after 30 years at age 48 and collect a pension (worth upwards of $200k per year) for over 30 years. This falls into the same category as #1.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
I'd call that irresponsible, not obscene, personally. That wasn't what I felt the other posters were referring to as obscene though.
No, that's pretty much it. Well, it depends - I can't say for sure what % $76k a month is, compared to his annual salary? But my thoughts, in random order:
The annual salary of the other guy with a $600k/year pension mentioned in the article meant his pension was less than 15% of his employed compensation. You can extrapolate for the other cases if you'd like, but I'd wager his salary was also substantial.
- nobody should get a pension equal to 100% of their max income while working.
Why not?
- pensions need to be better funded, and better taken care of. Unfortunately, our local and state pensions are in the red because of overly aggressive assumptions on how much the fund would be making - yet they don't cut pensions when the funds fall short by a few %. What that means is: crumbling schools and crumbling roads. I mean, this is ridiculous. Don't we know better by now?
Sounds like a problem with the funding of the pensions, and the way your local and state pension shortfalls are made-up. Not sure stealing the compensation people signed up for is the correct answer though. That'd be a bit like your employer taking your previous pay back from you because they didn't have a good year. A pension is part of people's compensation. Cutting it etc is a method of taking the pay they were contracted for away from them after-the-fact (they already worked for that compensation and now you want to take it away..).
- I guess we do know better, because many (if not most) public agencies have 2-tier pension systems where newer employees have much less generous pensions, have to wait longer, get less, etc. But we will still go broke on the old ones.
Yep, some places set up pension systems better than others...
- There is no reason to collect a pension for longer than you were actually working. Many sheriff, police, and firefighters retire after 30 years at age 48 and collect a pension (worth upwards of $200k per year) for over 30 years. This falls into the same category as #1.
Why not?
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
This. I am a member of a public pension and it is managed by a 3rd party, not by my employer. My employer has to pay a certain percentage into it every year, along with the percentage I have to put in. My employer has to put in 1% more than I put in. The amount that I and my employer contribute is reviewed annually by the fund to ensure that everything is on target for my eventual retirement, as well as ensuring the health of the plan for current retirees. The contribution rate actually went down by 1% for 2018 due to the recent years market run up. It could easily go up a couple of % points next year. My total compensation package is still less than what my job goes for in the private sector (I am trading off work life balance for higher compensation, I am not complaining about this), so any arguments about public sector workers being over compensated, at least for those in the professions, is simply not correct. My eventual pension payout looks like it pretty much follows the 4% rule.
When I hear about municipal pensions being cut after the fact to employees like police and firemen, it makes my blood boil. The blame is squarely on the shoulders of the municipalities, not on the workers, but oh how easy it is to vilify the workers for their "gold plated pensions" sucking away resources to school children.
It isn't ok for the private sector to withhold compensation because a corporation would rather spend the money on new infrastructure, it shouldn't be ok for the public sector to do the same thing.
Perhaps something like Sarbanes–Oxley needs to be expanded to incorporate municipal and state financial accounting.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
This. I am a member of a public pension and it is managed by a 3rd party, not by my employer. My employer has to pay a certain percentage into it every year, along with the percentage I have to put in. My employer has to put in 1% more than I put in. The amount that I and my employer contribute is reviewed annually by the fund to ensure that everything is on target for my eventual retirement, as well as ensuring the health of the plan for current retirees. The contribution rate actually went down by 1% for 2018 due to the recent years market run up. It could easily go up a couple of % points next year. My total compensation package is still less than what my job goes for in the private sector (I am trading off work life balance for higher compensation, I am not complaining about this), so any arguments about public sector workers being over compensated, at least for those in the professions, is simply not correct. My eventual pension payout looks like it pretty much follows the 4% rule.
When I hear about municipal pensions being cut after the fact to employees like police and firemen, it makes my blood boil. The blame is squarely on the shoulders of the municipalities, not on the workers, but oh how easy it is to vilify the workers for their "gold plated pensions" sucking away resources to school children.
It isn't ok for the private sector to withhold compensation because a corporation would rather spend the money on new infrastructure, it shouldn't be ok for the public sector to do the same thing.
Perhaps something like Sarbanes–Oxley needs to be expanded to incorporate municipal and state financial accounting.
This may or may not apply to your pension situation, but it does apply to some of the most egregiously short on funds pension systems. This includes some pension systems for police and firefighters.
The main issue I have a problem with is when unionized public employees contribute substantially to elected officials' campaigns and then receive actuarilly unsound guaranteed returns for the contributions required by the covered employees. In my book, it is out and out corruption and is one of the main sources of the squeezes we see today. The elected officials are long gone and taxpayers that were not even alive at the time are on the hook for the excessive pensions.
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The highest-paid public employee in every state
https://www.msn.com/en-us/money/careersandeducation/the-highest-paid-public-employee-in-every-state/ss-BBK9Pyd
Spoiler: the majority are college coaches.
Pensions are great, union work is great and government work is great. I highly suggest people find a place where they can experience the greatness.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
I'd call that irresponsible, not obscene, personally. That wasn't what I felt the other posters were referring to as obscene though.
No, that's pretty much it. Well, it depends - I can't say for sure what % $76k a month is, compared to his annual salary? But my thoughts, in random order:
- nobody should get a pension equal to 100% of their max income while working.
- pensions need to be better funded, and better taken care of. Unfortunately, our local and state pensions are in the red because of overly aggressive assumptions on how much the fund would be making - yet they don't cut pensions when the funds fall short by a few %. What that means is: crumbling schools and crumbling roads. I mean, this is ridiculous. Don't we know better by now?
- I guess we do know better, because many (if not most) public agencies have 2-tier pension systems where newer employees have much less generous pensions, have to wait longer, get less, etc. But we will still go broke on the old ones.
- There is no reason to collect a pension for longer than you were actually working. Many sheriff, police, and firefighters retire after 30 years at age 48 and collect a pension (worth upwards of $200k per year) for over 30 years. This falls into the same category as #1.
How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
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One very important thing that I notice which is in place in Canada, but doesn't appear to be in the US is that there are upper limits to pensionable earnings for defined benefit pensions, this is because pension contributions are pre tax, and are kept in line with RRSP contribution limits that everyone has access to.
RRSP contribution limits are 18% of eligible earnings, up to a maximum contribution of about $26K ($145k gross earning). For people such as myself who are in a defined benefit pension plan, my RRSP room is reduced in line with the contributions I and my employer make to my pension plan. I can and do, make up the difference in my own retirement savings if I so choose.
Are the US public pensions not somehow linked to the 401K program? Since people could possibly get a pension of $76k/month, it seems limitless which seems illogical.
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One very important thing that I notice which is in place in Canada, but doesn't appear to be in the US is that there are upper limits to pensionable earnings for defined benefit pensions, this is because pension contributions are pre tax, and are kept in line with RRSP contribution limits that everyone has access to.
RRSP contribution limits are 18% of eligible earnings, up to a maximum contribution of about $26K ($145k gross earning). For people such as myself who are in a defined benefit pension plan, my RRSP room is reduced in line with the contributions I and my employer make to my pension plan. I can and do, make up the difference in my own retirement savings if I so choose.
Are the US public pensions not somehow linked to the 401K program? Since people could possibly get a pension of $76k/month, it seems limitless which seems illogical.
Nope. They're different.
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The main issue I have a problem with is when unionized public employees contribute substantially to elected officials' campaigns and then receive actuarilly unsound guaranteed returns for the contributions required by the covered employees. In my book, it is out and out corruption and is one of the main sources of the squeezes we see today. The elected officials are long gone and taxpayers that were not even alive at the time are on the hook for the excessive pensions.
How is it any different then say an oil company contributing to a campaign and then having favourable regulations passed. Or rich people contributing and then getting a tax break.
So long as the ability to raise large funds matters to getting elected special interests will always have an outsized influence on politicians. There's no reason public sector unions shouldn't have the same rights to influence politicians that corporations do. The fix is to make fund-raising less important to getting elected, but that's a hard nut to crack.
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One very important thing that I notice which is in place in Canada, but doesn't appear to be in the US is that there are upper limits to pensionable earnings for defined benefit pensions, this is because pension contributions are pre tax, and are kept in line with RRSP contribution limits that everyone has access to.
RRSP contribution limits are 18% of eligible earnings, up to a maximum contribution of about $26K ($145k gross earning). For people such as myself who are in a defined benefit pension plan, my RRSP room is reduced in line with the contributions I and my employer make to my pension plan. I can and do, make up the difference in my own retirement savings if I so choose.
Are the US public pensions not somehow linked to the 401K program? Since people could possibly get a pension of $76k/month, it seems limitless which seems illogical.
Nothing is linked to anything, basically.
The income restrictions on IRAs are lifted if you aren't covered by a workplace retirement plan.
Some pension-eligible employees are excluded from Social Security because of the way their pensions are structured.
Beyond that ... *shrug*
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
Not knowing where you live, what website it is you were looking at and searching on, etc, I can't comment on your data other than to say "so what?" Almost every pension system I've heard of for public employees like cops etc pay out on a percentage of pay times years of service, resulting in a 30 year retirement paying out ~50-75% of the working pay... and require the employee getting the pension to put 8-15% of their pay into that retirement system for all those years. If you were earning enough to have a 50% pension payout $200k, you'd be contributing ~$40k towards that pension by the final year yourself. When you account for the significant forced savings they have to do in order to get the pensions, the payout sure looks a lot smaller..
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
Wow, is this in a big city? What would their annual salaries have been?
Those examples are getting twice the pension that Paul Ryan will qualify for in a couple years. (Of course, I have little doubt they also worked far more days in their careers than Ryan).
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
Not knowing where you live, what website it is you were looking at and searching on, etc, I can't comment on your data other than to say "so what?" Almost every pension system I've heard of for public employees like cops etc pay out on a percentage of pay times years of service, resulting in a 30 year retirement paying out ~50-75% of the working pay... and require the employee getting the pension to put 8-15% of their pay into that retirement system for all those years. If you were earning enough to have a 50% pension payout $200k, you'd be contributing ~$40k towards that pension by the final year yourself. When you account for the significant forced savings they have to do in order to get the pensions, the payout sure looks a lot smaller..
IIRC, was putting 11% in (mandatory) -- leaving salary/contribution rates stagnant over a 30 year period and a 7% rate of return, 11% invested would've given me 44% of my salary at a 4% withdrawal rate. Retiring at 50% salary would require a $51/month (1.2%) employer contribution during the accumulation phase.
A normal 401k with a 3% employer match would result in 57% of my salary in retirement.
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Pensions are great, union work is great and government work is great. I highly suggest people find a place where they can experience the greatness.
As someone who experienced the greatness first hand, I say a big "Amen".
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IIRC, was putting 11% in (mandatory) -- leaving salary/contribution rates stagnant over a 30 year period and a 7% rate of return, 11% invested would've given me 44% of my salary at a 4% withdrawal rate. Retiring at 50% salary would require a $51/month (1.2%) employer contribution during the accumulation phase.
A normal 401k with a 3% employer match would result in 57% of my salary in retirement.
Great illustration. The funding shortfall is typically found in a failure of the government office to meet its funding demands year or year, and even worse, borrowing from pension funds. But again, what a wonderfully divisive narrative it is to blame the police, firemen and teachers for their greedy entitlements stealing from your children's education. If you can find a couple of high earning, high profile employees with a high pension to wave about as examples, all the better.
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The main issue I have a problem with is when unionized public employees contribute substantially to elected officials' campaigns and then receive actuarilly unsound guaranteed returns for the contributions required by the covered employees. In my book, it is out and out corruption and is one of the main sources of the squeezes we see today. The elected officials are long gone and taxpayers that were not even alive at the time are on the hook for the excessive pensions.
Exactly. It also reminds me of this entry to the "The Best Post I Saw Today on MMM".
https://forum.mrmoneymustache.com/welcome-to-the-forum/the-best-post-i-saw-today-on-the-mr-money-mustache-forums-was/msg1913472/#msg1913472
Quote:
I think that the source of resentment is more about the perception that public service unions get sweetheart deals because they are in effect negotiating with themselves, in that the politicians are highly motivated to make the public service unions happy.
The foundation for fair negotiations is that both parties should be motivated to protect their own interests. It should be adversarial. In the model of public service union negotiations, the politicians arent really the ones who are on the hook for the expense, so they aren't really negotiating on behalf of the taxpayers, leaving the taxpayer to pay the bill when they had no voice in the negotiation.
This disconnect in the context of public sector unions was obvious even to Franklin Roosevelt who said: “The process of collective bargaining, as usually understood, cannot be transplanted into the public service.”
The costs are usually far down the road, so the politicians who negotiate the deal arent going to pay the political price later when it all falls apart. Look at the tremendous unfunded / underfunded state and municipal pension / healthcare issue that the country faces.
So in the case of public servants, i think the fact is that people understand that they have to pay fr that largesse in the form of higher taxes and fees, etc. Contrast that with someone who may have a fantastic private sector job/pension. Folks might be envious, but at least they arent the ones paying the bill, or at least they arent forced to pay the bill.
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
Wow, is this in a big city? What would their annual salaries have been?
Those examples are getting twice the pension that Paul Ryan will qualify for in a couple years. (Of course, I have little doubt they also worked far more days in their careers than Ryan).
This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Transparent California is the website.
As I said up above, the typical years of service for these retirees is 27-29 years. It's listed on the website, along with the year they retired.
So yes, there are people who have been pensioners for a couple of decades, who are being paid in part by taxes of people who weren't born when the deals were made.
I guess when the city defaults and goes bankrupt, it'll work itself out.
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
That makes the federal pensions look like complete crap, to be honest. Were you paying in 2% throughout your working life?
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
That makes the federal pensions look like complete crap, to be honest. Were you paying in 2% throughout your working life?
7%
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
How much of your pay do you have to contribute?
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
That makes the federal pensions look like complete crap, to be honest. Were you paying in 2% throughout your working life?
7%
Only 7%! Amazing. I pay more than that in payroll tax, get a fraction of that benefit in SS at a older age, and "they" want to cut that!
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
That makes the federal pensions look like complete crap, to be honest. Were you paying in 2% throughout your working life?
7%
Only 7%! Amazing. I pay more than that in payroll tax, get a fraction of that benefit in SS at a older age, and "they" want to cut that!
Ok, not such a major difference then. Much more deferred salary paid in in exchange for a much higher payout as a percent of salary than the federal pension.
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The pension itself doesn't bother me. That appears to be part of their hire contract so their skill set must have justified giving such great benefits.
What does bother me is that they didn't fund it! They make promises they can't guarantee without concern because it isn't their money, it's the taxpayers, and they will be out of office before the bill arrives.
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This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Do they get paid by the hour or is there some kind of "base" salary before OT or other pay-boosters are factored in?
My CalPERS pension = (Years of Service) * Benefit factor (2-2.5% Based on Age 55-63) * Final Compensation
...so if you worked 40 years and retired at 63, you'd get 100% of your present salary, plus social security.
That makes the federal pensions look like complete crap, to be honest. Were you paying in 2% throughout your working life?
7%
Only 7%! Amazing. I pay more than that in payroll tax, get a fraction of that benefit in SS at a older age, and "they" want to cut that!
Ok, not such a major difference then. Much more deferred salary paid in in exchange for a much higher payout as a percent of salary than the federal pension.
HUGE difference vs SS! See my post above, which explains why it happens:
The main issue I have a problem with is when unionized public employees contribute substantially to elected officials' campaigns and then receive actuarilly unsound guaranteed returns for the contributions required by the covered employees. In my book, it is out and out corruption and is one of the main sources of the squeezes we see today. The elected officials are long gone and taxpayers that were not even alive at the time are on the hook for the excessive pensions.
Exactly. It also reminds me of this entry to the "The Best Post I Saw Today on MMM".
https://forum.mrmoneymustache.com/welcome-to-the-forum/the-best-post-i-saw-today-on-the-mr-money-mustache-forums-was/msg1913472/#msg1913472
Quote:
I think that the source of resentment is more about the perception that public service unions get sweetheart deals because they are in effect negotiating with themselves, in that the politicians are highly motivated to make the public service unions happy.
The foundation for fair negotiations is that both parties should be motivated to protect their own interests. It should be adversarial. In the model of public service union negotiations, the politicians arent really the ones who are on the hook for the expense, so they aren't really negotiating on behalf of the taxpayers, leaving the taxpayer to pay the bill when they had no voice in the negotiation.
This disconnect in the context of public sector unions was obvious even to Franklin Roosevelt who said: “The process of collective bargaining, as usually understood, cannot be transplanted into the public service.”
The costs are usually far down the road, so the politicians who negotiate the deal arent going to pay the political price later when it all falls apart. Look at the tremendous unfunded / underfunded state and municipal pension / healthcare issue that the country faces.
So in the case of public servants, i think the fact is that people understand that they have to pay fr that largesse in the form of higher taxes and fees, etc. Contrast that with someone who may have a fantastic private sector job/pension. Folks might be envious, but at least they arent the ones paying the bill, or at least they arent forced to pay the bill.
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The person in question was paid $1 million per year ($83k/month) in salary at the time of his retirement, so he is getting 90% of his final salary as pension. He worked 38 years at OHSU, per Wikipedia. Whether the president of OHSU should be paid $1m a year is another question, but his pension math checks out.
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So the reason Oregon is going bankrupt with pension costs (from the article) is that the calculate the value of employees pensions based on imaginary investment accounts with no actual money in them, where they assume that the employee get the regular returns of the stock market.... unless the stock market return for the year was less than 8%, in which case they get 8%.
So they get all the upside of the stock market, but no downside.
Since 1980, the S&P 500's CAGR, before inflation, has been 12% (a bit above historical averages).
Since 1980, a Oregon public employee's pension value has been growing at a CAGR of 17%.
It's really hard to avoid going broke if you're locked into having your employee's retirement savings grow at 17%/year.
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Put another way, if I invested $10k in the stock market in 1980, it would have grown to $660,000 today (in nominal dollars). If an oregon state or local employee contributed $10k to their pension fund in 1980, it is being treated at $3.8M in pretend retirement savings for the purpose of calculating their pension today.
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I don’t understand why this gets beat to death so bad in the media. I work as a public employee in Oregon. It is now a 3 tier system, the tier always discussed is tier one (the most generous.) anyone who began employment after 2001(I think) was then tier two, anyone who began employment after 2003(ish) are tier 3.
Lawmakers have tried over and over to take away the benefits promised to tier 1 and 2 employees and the courts have repeatedly ruled that you cannot take away benefits that were promised to these employees. Those that continue complaining about it... I don’t understand what you want done?
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I have CalSTRS. I pay just under 10% per paycheck and my employer contributes just over 10%. If I retire at 55 after 31 years of service, I'll get about 30% of my pay for life. If I work until 62, it's closer to 50% of my pay. No overtime, hourly, or stipend pay is calculated into that, so I can't just teach sumner school, be department head, and teach Saturday school my last year and get a crazy windfall; it's based off our base salary on the salary schedule only. People younger than me get less of a deal and hit 50%-ish at 64. I am not eligible for social security, even though I contributed to it for a while, and I can't collect any of my husband's social security.
Everyone at my work also contributes to a 403(b), though the amount varies. We are well aware we won't be getting anywhere near 100% of our pay. We also know pensions have been abolished in other states, so while our personal contributions are safe, the growth on them and our employer's contributions on our behalf could disappear with one session of the state congress. I also have a 457 and am trying to encourage my colleagues to do the same.
I think my pension program is great, honestly, but it certainly doesn't sound as exciting as some of the pensions mentioned here!
Considering the 60+ hours a week we teachers put in while only getting compensated for 40 and the sumner work we rarely get paid for, I see my employer's contribution to the pension fund as fair. I like that I am forced to contribute a good chunk of my paycheck towards my future.
I think it would be wise for employers to have an opt-out system for 401(k) contributions rather than making people opt-in, but I suppose that's a topic for another thread.
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http://www.oregonlive.com/politics/index.ssf/2018/04/national_spotlight_cast_on_per.html
Every Oregon state employee knows oregonlive despises the Oregon Pers problems. They are not friendly to the pets problem in anyway... but I’ll just leave this here.
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Are you a tier 1 employee Murse? I ask only because some of your responses seem like you're interpreting this discussion as a personal attack and that certainly wasn't intended.
More generally you asked why people keep bringing this up. As a person outside the state* this was the first time I'd heard about the Oregon pension system's messed up way of calculating the value of pension contributions. Sure in your state they finally realized how hard it was to keep up with imaginary investment accounts returning a CAGR of 17% and changed the system for new employees, but because your state supreme court has held that Oregonians who weren't even born yet are obligated to continue paying employees under the old unsustainable system, it'll be another generation before the state is out from under the consequences of that decision.
So reporting the story to a national audience is useful because, at least theoretically, it makes it less likely other states will similar poor decisions in the future.
Because "let's make it so our employees participate in market gains but protect them from market losses" is very easy idea to make sound reasonable if you don't understand the consequences of that idea.
Edit: struck through some text that is really none of my business.
*Darn, now I've outed myself as living in one of only 49 remaining states. My veil of anonymity gets thinner every day.
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
This data is useless without context.
What were their years of service? What was their rank when they retired? What's the median retirement pay for policy in your city? The standard deviation?
Basically, are you looking at an edge case (i.e., retired chief which has a median national salary between $97 - 109k) the retirement pay of your typical beat cop (median pay around $53k)?
In MA, the Boston Globe prints the highest state salaries each year. Invariably, there are dozens of State Troopers on the list making $200k-$250k*. They make this largely by working OT sitting on construction details (i.e., sitting in their cars on their smartphones with lights flashing). Several governors have tried to curb the use of police for these details, arguing that it can be done by non-cop personnel/non-patrol car means, and there is always a huge pushback from the police union, and of course, nothing gets done. Bottom line for me is OT should not be a basis for anyone's pension. What these guys (and other state employees) do is work shitloads of OT in the final few years of their careers to jack up their high-3 average salary (the basis for their pension), and walk away with pensions that far exceed their actual salaries while working. It's a terrible system that invites gaming the system/abuses.
* the majority of non-cops tend to be school superintendents and town managers.
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My first act as king would be to ban all public sector pensions. There's no defending all of the nonsense and impending fiscal ruin these have wrought. And when a real party in interest—the taxpaying public—never has a seat at the bargaining table, the deal isn't fair.
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Lawmakers have tried over and over to take away the benefits promised to tier 1 and 2 employees and the courts have repeatedly ruled that you cannot take away benefits that were promised to these employees. Those that continue complaining about it... I don’t understand what you want done?
Many of the states with these kinds of pension systems refuse to raise the revenue required to fund them. That's one of the chief complaints.
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Lawmakers have tried over and over to take away the benefits promised to tier 1 and 2 employees and the courts have repeatedly ruled that you cannot take away benefits that were promised to these employees. Those that continue complaining about it... I don’t understand what you want done?
Many of the states with these kinds of pension systems refuse to raise the revenue required to fund them. That's one of the chief complaints.
What you say may be true of other states but Oregon has attempted to raise revenues multiple times and been shot down by voters. Just last year increasing taxes on large corporations was voted down.
To answer a question from above I am a tier 3 employee. The calculation for my pay is 1.8 percent x years of service x final average salary (highest salary averaged over a 3 year period) this is the more generous calculation for tier 3 seeing as I am considered police and fire. This means after 25 years I would get 45% of my final average 3 years salary.
My issue with these complaints is that the first solution everyone brings up is “stop this madness.” Well it has already been stopped, and nothing more can be done. After people are informed the courts have ruled you can’t touch the tier 1/2 benefits the next solution purposed is “well take away from current employees to make up for past promises.” This is unfair to current employees/future employees. If it happened the state would begin to have even more of a recruiting problem and OT would be even more available. Personally if my benefits were slashed, I would be fine as I easily would be able to find different work, likely for a 10-20% pay increase.
I agree, it is a shame the promises were made in the first place. However “we” (as in the previous generation) made our bed, now we (IE current taxpayers/government budgets) must lay in it.
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After people are informed the courts have ruled you can’t touch the tier 1/2 benefits the next solution purposed is “well take away from current employees to make up for past promises.” This is unfair to current employees/future employees.
+1! Right now the old tier one system is already acting as a transfer of wealth from poorer young people to comparatively more affluent older people. Trying to reduce the "average" pension benefits by cutting the benefits of new employees even more to be able to afford the extremely generous benefits being given to older employees would make this even worse.
And like you said, in the end you do have to pay market rates for new employees, otherwise you won't be able to hire new employees, regardless of whether older employees are effectively getting far above market rate compensation.
I agree, it is a shame the promises were made in the first place. However “we” (as in the previous generation) made our bed, now we (IE current taxpayers/government budgets) must lay in it.
Well I think this is another reason pension shortfalls get discussed at such length. In no arena other than government can one set of people make a legally binding commitment on behalf of another set people who have not yet even been born. It's a weird problem, and I don't see any straightforward solution. But it is a problem.
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Oh absolutely. I was just using the single time point comparison to illustrate how big a difference that extra 5%/year on contributions (whether employer or employee) makes over a career, since Oregon employees retiring now can decide to either take a pension based on their salary at the end of their career, or based on the balance of their hypothetical retirement account which goes up with the market, but never goes down with the market.
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Lawmakers have tried over and over to take away the benefits promised to tier 1 and 2 employees and the courts have repeatedly ruled that you cannot take away benefits that were promised to these employees. Those that continue complaining about it... I don’t understand what you want done?
Many of the states with these kinds of pension systems refuse to raise the revenue required to fund them. That's one of the chief complaints.
Yep, no one (besides the union members themselves) wants to pay higher taxes to fund special, extremely generous pensions and healthcare benefits that only a special benighted minority receive, especially given the generally low quality of services provided by state and local governments and the entrenched corruption.
Would you agree to pay more taxes to fund extremely generous pensions for corporate middle-managers? I think not, but it might as well be the same thing.
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Lawmakers have tried over and over to take away the benefits promised to tier 1 and 2 employees and the courts have repeatedly ruled that you cannot take away benefits that were promised to these employees. Those that continue complaining about it... I don’t understand what you want done?
Many of the states with these kinds of pension systems refuse to raise the revenue required to fund them. That's one of the chief complaints.
Yep, no one (besides the union members themselves) wants to pay higher taxes to fund special, extremely generous pensions and healthcare benefits that only a special benighted minority receive, especially given the generally low quality of services provided by state and local governments and the entrenched corruption.
Would you agree to pay more taxes to fund extremely generous pensions for corporate middle-managers? I think not, but it might as well be the same thing.
Of course no one wants to pay higher taxes ever. Everyone wants to receive the most possible for the smallest contribution possible. I work with the part of society no one wants to see for 10-20% less then my private sector equivalents receive. I don’t see any private sector employees up in arms about my low compensation.
I am accepting lower compensation for delayed compensation. The same as you do for your 401k. Studies show that the average Oregon state employees total compensation package equivalent to 97% of what a similar employee would make in the private sector (including all benefits/pay differences.)
If you want to rid me of my benefits then you must bring my pay to competitive market rates. Probably higher then market rates because of the population I work with. Honestly, if state employment is such a gravy train you would think we wouldn’t have staffing shortages.
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After people are informed the courts have ruled you can’t touch the tier 1/2 benefits the next solution purposed is “well take away from current employees to make up for past promises.” This is unfair to current employees/future employees.
+1! Right now the old tier one system is already acting as a transfer of wealth from poorer young people to comparatively more affluent older people. Trying to reduce the "average" pension benefits by cutting the benefits of new employees even more to be able to afford the extremely generous benefits being given to older employees would make this even worse.
And like you said, in the end you do have to pay market rates for new employees, otherwise you won't be able to hire new employees, regardless of whether older employees are effectively getting far above market rate compensation.
I agree, it is a shame the promises were made in the first place. However “we” (as in the previous generation) made our bed, now we (IE current taxpayers/government budgets) must lay in it.
Well I think this is another reason pension shortfalls get discussed at such length. In no arena other than government can one set of people make a legally binding commitment on behalf of another set people who have not yet even been born. It's a weird problem, and I don't see any straightforward solution. But it is a problem.
I agree, it would be nice not to have this problem at all. The damage has been done and the state (and citizens) are going to have to pay the price. The choices are to raise taxes or cut services. So far the taxpayers have chose to cut services.
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Lawmakers have tried over and over to take away the benefits promised to tier 1 and 2 employees and the courts have repeatedly ruled that you cannot take away benefits that were promised to these employees. Those that continue complaining about it... I don’t understand what you want done?
Many of the states with these kinds of pension systems refuse to raise the revenue required to fund them. That's one of the chief complaints.
Yep, no one (besides the union members themselves) wants to pay higher taxes to fund special, extremely generous pensions and healthcare benefits that only a special benighted minority receive, especially given the generally low quality of services provided by state and local governments and the entrenched corruption.
Would you agree to pay more taxes to fund extremely generous pensions for corporate middle-managers? I think not, but it might as well be the same thing.
Of course no one wants to pay higher taxes ever. Everyone wants to receive the most possible for the smallest contribution possible. I work with the part of society no one wants to see for 10-20% less then my private sector equivalents receive. I don’t see any private sector employees up in arms about my low compensation.
I am accepting lower compensation for delayed compensation. The same as you do for your 401k. Studies show that the average Oregon state employees total compensation package equivalent to 97% of what a similar employee would make in the private sector (including all benefits/pay differences.)
If you want to rid me of my benefits then you must bring my pay to competitive market rates. Probably higher then market rates because of the population I work with. Honestly, if state employment is such a gravy train you would think we wouldn’t have staffing shortages.
1. I don't get a 401(k) match—lots of people don't. The people who do have it don't get that match contributed by taxpayers either.
2. Most government employees earn more than their private sector counterparts. https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52637-federalprivatepay.pdf
3. Most government employees overestimate their worth on the market. Just because you work for the government doesn't mean you took a pay cut—many would not be able to hack it. Unless you previously had a lucrative private sector job that you voluntarily left, you didn't exactly "take a pay cut."
4. Competitive pay packages are only an issue for the small sliver of folks with marketable skills. If you stop offering pensions, what's the surly DMV lady gonna do, go work as a Wal-Mart greeter?
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I’m not picking a side in the previous post but I have one thing to add. Dentists at the VA earn less than private practice but more than similar public health work and then the VA claims their dentists make less than average (true) but dishonest when you compare to the most similar available jobs.
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If you want to rid me of my benefits then you must bring my pay to competitive market rates. Probably higher then market rates because of the population I work with. Honestly, if state employment is such a gravy train you would think we wouldn’t have staffing shortages.
But I don't think anyone is suggesting removing of cutting your benefits, are they?
We are talking about the problems with the benefits being given to much more senior employees who managed to lock themselves into a sweetheart deal where they are receiving far above competitive market rates.
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Yep, no one (besides the union members themselves) wants to pay higher taxes to fund special, extremely generous pensions and healthcare benefits that only a special benighted minority receive, especially given the generally low quality of services provided by state and local governments and the entrenched corruption.
Would you agree to pay more taxes to fund extremely generous pensions for corporate middle-managers? I think not, but it might as well be the same thing.
And when corporations get tax cuts, do you also think of that as you having to pay more taxes to support empolyees of those companies?
Tax breaks for employer paid health care was 143.8B, and 57.4B for pensions a few years ago (2016). So isn't it exactly the same thing, you have to pay more taxes to support the healthcare/pensions of people who work at those companies. How/why is it different when we talk about public sector workers pension/healthcare?
http://www.pewresearch.org/fact-tank/2016/04/06/the-biggest-u-s-tax-breaks/
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Yep, no one (besides the union members themselves) wants to pay higher taxes to fund special, extremely generous pensions and healthcare benefits that only a special benighted minority receive, especially given the generally low quality of services provided by state and local governments and the entrenched corruption.
Would you agree to pay more taxes to fund extremely generous pensions for corporate middle-managers? I think not, but it might as well be the same thing.
And when corporations get tax cuts, do you also think of that as you having to pay more taxes to support empolyees of those companies?
Tax breaks for employer paid health care was 143.8B, and 57.4B for pensions a few years ago (2016). So isn't it exactly the same thing, you have to pay more taxes to support the healthcare/pensions of people who work at those companies. How/why is it different when we talk about public sector workers pension/healthcare?
http://www.pewresearch.org/fact-tank/2016/04/06/the-biggest-u-s-tax-breaks/
1. A large portion of the corporate income tax is borne by workers. http://www.people.hbs.edu/ffoley/labcapshr.pdf As a wage slave, the corporate income tax cut was like a tax cut for me.
2. A tax cut for private spending that replaces what would otherwise be public spending (employer-paid healthcare) is entirely different than a tax hike to pay for unreasonably generous benefits which accrue only to a small, politically-favored class (state and local pensions). The former reduces the obligations of the fisc and therefore the tax deduction is justified (to an extent). The latter is simply redistributing wealth from a large group of citizens to a much smaller group of citizens who have more political clout.
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1. A large portion of the corporate income tax is borne by workers. http://www.people.hbs.edu/ffoley/labcapshr.pdf As a wage slave, the corporate income tax cut was like a tax cut for me.
Did your employer share their tax savings with you?
I'm highly skeptical of those conclusions. As an employer, wages and taxes are very similar--both are expenses. And employers like to minimize expenses. Wages and benefits (except for minimum wage) are mostly set by the free market.* Employers as a rule simply don't pay more than they think they have to to attract and retain talent. That's true regardless of how profitable the company is.
I personally would like to see corporate income taxes set at zero. Yes zero. And then simply tax the money when it comes out of the corporation. But I don't believe for a second corporations pass taxes onto their employees.
*sometimes there are prevailing wage rules, union rules, etc. but even those still have some market forces behind them.
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1. A large portion of the corporate income tax is borne by workers. http://www.people.hbs.edu/ffoley/labcapshr.pdf As a wage slave, the corporate income tax cut was like a tax cut for me.
Did your employer share their tax savings with you?
I'm highly skeptical of those conclusions. As an employer, wages and taxes are very similar--both are expenses. And employers like to minimize expenses. Wages and benefits (except for minimum wage) are mostly set by the free market.* Employers as a rule simply don't pay more than they think they have to to attract and retain talent. That's true regardless of how profitable the company is.
I personally would like to see corporate income taxes set at zero. Yes zero. And then simply tax the money when it comes out of the corporation. But I don't believe for a second corporations pass taxes onto their employees.
*sometimes there are prevailing wage rules, union rules, etc. but even those still have some market forces behind them.
It's a little more subtle and indirect than that. https://www.kansascityfed.org/QeLUe/Publicat/RegionalRWP/RRWP07-01.pdf
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I personally know 0 people who got raises from their company as a result of corporate tax cuts. For a completely useless (though likely representative of a good portion of the country if I had to guess) random observation.
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I've been hearing about different companies increasing due to the tax cuts, but I can't remember all of them off the top of my head. Walmart maybe, or Target. It might prevent many more people from losing their jobs. It's putting a lot of extra money in most people's pockets to feed into the consumer economy, so that should create more jobs as well. I've got about $180/mo extra on my paycheck from the tax cut as an upper middle class earner.
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I've been hearing about different companies increasing due to the tax cuts, but I can't remember all of them off the top of my head. Walmart maybe, or Target. It might prevent many more people from losing their jobs. It's putting a lot of extra money in most people's pockets to feed into the consumer economy, so that should create more jobs as well. I've got about $180/mo extra on my paycheck from the tax cut as an upper middle class earner.
Companies are going to tout pay raises to raise PR, and some might claim it stems from the tax cuts regardless of the true reason(s). Walmart did as much while simultaneously closing dozens of its Sam's Club stores. At the same time companies that don't raise wages really don't get much publicity.
A more unbiased metric would be to see if wages for hourly employees and nominal wages go up appreciably. So far that data hasn't been very encouraging.
https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx?panel=1 (https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx?panel=1)
Those metrics haven't improved since early 2016. One could argue that the benefits are ahead as corporations realize their tax savings and pass them on to workers. What we've seen so far is an increase (up 6% for Q4-2017) in stock buybacks.
Of course the elephant in the room is whether the increased federal debt from these tax cuts are worth their effects.
..oh, and since we are sharing anedotes - my salary has not changed, as I am under a 2 year contract. My tax bill also remained the same.
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In MA, the Boston Globe prints the highest state salaries each year. Invariably, there are dozens of State Troopers on the list making $200k-$250k*. They make this largely by working OT sitting on construction details (i.e., sitting in their cars on their smartphones with lights flashing). Several governors have tried to curb the use of police for these details, arguing that it can be done by non-cop personnel/non-patrol car means, and there is always a huge pushback from the police union, and of course, nothing gets done. Bottom line for me is OT should not be a basis for anyone's pension. What these guys (and other state employees) do is work shitloads of OT in the final few years of their careers to jack up their high-3 average salary (the basis for their pension), and walk away with pensions that far exceed their actual salaries while working. It's a terrible system that invites gaming the system/abuses.
* the majority of non-cops tend to be school superintendents and town managers.
This is why people hate pensions. And we haven't even discussed the double dipping crap ("retiring" to get pension and then getting hired back on and simultaneously collecting pension and a salary).
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If you want to rid me of my benefits then you must bring my pay to competitive market rates. Probably higher then market rates because of the population I work with. Honestly, if state employment is such a gravy train you would think we wouldn’t have staffing shortages.
But I don't think anyone is suggesting removing of cutting your benefits, are they?
We are talking about the problems with the benefits being given to much more senior employees who managed to lock themselves into a sweetheart deal where they are receiving far above competitive market rates.
It seems to me that we have started discussing in general the pension/government work gravy train vs the poor corporations/private citizens having to pay taxes for it. Again I agree with everything you are saying, it is a shame that in the more senior employees were promised such generous pensions. I am simply arguing that gravy train is over, and the private sector in many cases can and does compensate more then the public sector.
To reply to GU: I agree, many government jobs are not comparable to private sector work but there are professional employees that work for the government.
For example- I am a registered nurse and I work with inmates for 10-20% less then what my private sector equivalents would make. I know this because I was offered 15% more cash for going to a large chain clinic. I would of received better health insurance but less time off work and also a 6% match in my 401k (instead of a pension that accrues.) I chose to stay with my current job because I am a mustachian and value my extra week of vacation time highly, also I didn’t want to give up the little seniority I have earned.
Secondly an example I just discovered last night when reading through a sister government entities contract (same Union) there nurses just received a 8% pay bump starting January 1st 2018. Our entity and theirs have literally always had the same pay for working with similar populations. I imagine I will be stuck at my pay rate until the next contract is done (1.5 years.) I point this out as further proof that there are circumstances where public sector employees make substantially less then market for years at a time.
As a third point my shift differentials are 1.85-2.25$/hour, outside clinics/hospitals can pay up to 15-20% in shift differentials.
Again, I do agree that many in the government can be paid above market rate (office assistants for example can make up to 22$/hour.) To say “public sector employees are overcompensated” is a blanket statement that just isn’t true.
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In MA, the Boston Globe prints the highest state salaries each year. Invariably, there are dozens of State Troopers on the list making $200k-$250k*. They make this largely by working OT sitting on construction details (i.e., sitting in their cars on their smartphones with lights flashing). Several governors have tried to curb the use of police for these details, arguing that it can be done by non-cop personnel/non-patrol car means, and there is always a huge pushback from the police union, and of course, nothing gets done. Bottom line for me is OT should not be a basis for anyone's pension. What these guys (and other state employees) do is work shitloads of OT in the final few years of their careers to jack up their high-3 average salary (the basis for their pension), and walk away with pensions that far exceed their actual salaries while working. It's a terrible system that invites gaming the system/abuses.
* the majority of non-cops tend to be school superintendents and town managers.
This is why people hate pensions. And we haven't even discussed the double dipping crap ("retiring" to get pension and then getting hired back on and simultaneously collecting pension and a salary).
For clarification, are you talking about an employee retiring and then getting re-hired under the same department/company, or are you saying that someone who is earning a pension should not be permitted to work anywhere?
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In MA, the Boston Globe prints the highest state salaries each year. Invariably, there are dozens of State Troopers on the list making $200k-$250k*. They make this largely by working OT sitting on construction details (i.e., sitting in their cars on their smartphones with lights flashing). Several governors have tried to curb the use of police for these details, arguing that it can be done by non-cop personnel/non-patrol car means, and there is always a huge pushback from the police union, and of course, nothing gets done. Bottom line for me is OT should not be a basis for anyone's pension. What these guys (and other state employees) do is work shitloads of OT in the final few years of their careers to jack up their high-3 average salary (the basis for their pension), and walk away with pensions that far exceed their actual salaries while working. It's a terrible system that invites gaming the system/abuses.
* the majority of non-cops tend to be school superintendents and town managers.
This is why people hate pensions. And we haven't even discussed the double dipping crap ("retiring" to get pension and then getting hired back on and simultaneously collecting pension and a salary).
For clarification, are you talking about an employee retiring and then getting re-hired under the same department/company, or are you saying that someone who is earning a pension should not be permitted to work anywhere?
Though, I've seen this play out with underpaid government employees, usually support staff, who are very valuable to the office from which they retiring after 30 or so years. So the office might hire them back PT or FT, different title but same role basically. I understand why people dislike double dipping but it's hard for me to have a problem with talented and under paid staff getting a lowish pension and lowish salary at the same time.
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In MA, the Boston Globe prints the highest state salaries each year. Invariably, there are dozens of State Troopers on the list making $200k-$250k*. They make this largely by working OT sitting on construction details (i.e., sitting in their cars on their smartphones with lights flashing). Several governors have tried to curb the use of police for these details, arguing that it can be done by non-cop personnel/non-patrol car means, and there is always a huge pushback from the police union, and of course, nothing gets done. Bottom line for me is OT should not be a basis for anyone's pension. What these guys (and other state employees) do is work shitloads of OT in the final few years of their careers to jack up their high-3 average salary (the basis for their pension), and walk away with pensions that far exceed their actual salaries while working. It's a terrible system that invites gaming the system/abuses.
* the majority of non-cops tend to be school superintendents and town managers.
This is why people hate pensions. And we haven't even discussed the double dipping crap ("retiring" to get pension and then getting hired back on and simultaneously collecting pension and a salary).
For clarification, are you talking about an employee retiring and then getting re-hired under the same department/company, or are you saying that someone who is earning a pension should not be permitted to work anywhere?
Though, I've seen this play out with underpaid government employees, usually support staff, who are very valuable to the office from which they retiring after 30 or so years. So the office might hire them back PT or FT, different title but same role basically. I understand why people dislike double dipping but it's hard for me to have a problem with talented and under paid staff getting a lowish pension and lowish salary at the same time.
In Oregon state after you begin recieving your pension you can only work up to 20 hours a week for the government otherwise they stop giving you pension payouts.
So let’s do some math, you put in 25 years, you now receive a pension worth 45% of your income, then you work part time at 20 hours per week (or 50% of income.) for a total of 95% income. I don’t understand the problem?
Unless you feel that you shouldn’t be allowed to receive a pension and while working at all? In which case I would like to ask you if retired veterans shouldn’t be allowed to work while recieving a pension?
Is this different from recieving a pension then working in the private sector? Or working for a different state government/the feds?
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In MA, the Boston Globe prints the highest state salaries each year. Invariably, there are dozens of State Troopers on the list making $200k-$250k*. They make this largely by working OT sitting on construction details (i.e., sitting in their cars on their smartphones with lights flashing). Several governors have tried to curb the use of police for these details, arguing that it can be done by non-cop personnel/non-patrol car means, and there is always a huge pushback from the police union, and of course, nothing gets done. Bottom line for me is OT should not be a basis for anyone's pension. What these guys (and other state employees) do is work shitloads of OT in the final few years of their careers to jack up their high-3 average salary (the basis for their pension), and walk away with pensions that far exceed their actual salaries while working. It's a terrible system that invites gaming the system/abuses.
* the majority of non-cops tend to be school superintendents and town managers.
This is why people hate pensions. And we haven't even discussed the double dipping crap ("retiring" to get pension and then getting hired back on and simultaneously collecting pension and a salary).
For clarification, are you talking about an employee retiring and then getting re-hired under the same department/company, or are you saying that someone who is earning a pension should not be permitted to work anywhere?
Though, I've seen this play out with underpaid government employees, usually support staff, who are very valuable to the office from which they retiring after 30 or so years. So the office might hire them back PT or FT, different title but same role basically. I understand why people dislike double dipping but it's hard for me to have a problem with talented and under paid staff getting a lowish pension and lowish salary at the same time.
In Oregon state after you begin recieving your pension you can only work up to 20 hours a week for the government otherwise they stop giving you pension payouts.
So let’s do some math, you put in 25 years, you now receive a pension worth 45% of your income, then you work part time at 20 hours per week (or 50% of income.) for a total of 95% income. I don’t understand the problem?
Unless you feel that you shouldn’t be allowed to receive a pension and while working at all? In which case I would like to ask you if retired veterans shouldn’t be allowed to work while recieving a pension?
I've encountered similar restrictions. One that seems almost universal is that you can't receive pension payouts while also contributing to that same pension plan, which makes sense.
Personally I don't have a problem with individuals doing what is best for them under the confines and rules of their particular employer. Where I grew up our county had a favorable pension plan for teachers but not the highest pay. It became common for teachers to leave after 20-25 years of service to teach at a neighboring system or private school where they could get better pay. It made sense for them because at that point they were not increasing their pension payouts. It sucked for the county though because they constantly lost their most experienced and talented teachers.
Just one of the many reasons why I dislike this hodge-podge of pension systems in our society.
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Yep, no one (besides the union members themselves) wants to pay higher taxes to fund special, extremely generous pensions and healthcare benefits that only a special benighted minority receive, especially given the generally low quality of services provided by state and local governments and the entrenched corruption.
Would you agree to pay more taxes to fund extremely generous pensions for corporate middle-managers? I think not, but it might as well be the same thing.
And when corporations get tax cuts, do you also think of that as you having to pay more taxes to support empolyees of those companies?
Tax breaks for employer paid health care was 143.8B, and 57.4B for pensions a few years ago (2016). So isn't it exactly the same thing, you have to pay more taxes to support the healthcare/pensions of people who work at those companies. How/why is it different when we talk about public sector workers pension/healthcare?
http://www.pewresearch.org/fact-tank/2016/04/06/the-biggest-u-s-tax-breaks/
1. A large portion of the corporate income tax is borne by workers. http://www.people.hbs.edu/ffoley/labcapshr.pdf As a wage slave, the corporate income tax cut was like a tax cut for me.
2. A tax cut for private spending that replaces what would otherwise be public spending (employer-paid healthcare) is entirely different than a tax hike to pay for unreasonably generous benefits which accrue only to a small, politically-favored class (state and local pensions). The former reduces the obligations of the fisc and therefore the tax deduction is justified (to an extent). The latter is simply redistributing wealth from a large group of citizens to a much smaller group of citizens who have more political clout.
As others have pointed out, the tax cuts aren't passed on to the employees.
For the second point, if I understand you, you're claiming that the tax cut to corporations is simply replacing public spending because if we didn't give those corporations tax breaks, they would cut those benefits and the employees would end up on some kind of public program and so we would be paying for it anyways. How exactly is this different for public sector thoug? Either they get the benefits from the job or they end up on the exact same public program, we pay for it in either case. It's exactly the same.
For the claim that the benefits are unreasonably generous, those were the benefits that were negotiated, isn't that the basis of the free market, the ability to negotiate your contract? And let's not forget they pay for those benefits by having a much lower salary then they would get in the private sector. So if we brought the benefits down to match the private sector, then surely their salary should be raised to also match the private sector, no?
As for the redistribution because of political clout, this is something the private sector does all the time. All the tax breaks that go to farmers, or oil companies, or which ever industry you pick. They are all redistributing wealth from the many to the few. And like public sector unions, the more political clout you have the bigger the redistribution will be in your favour. Maybe those with political clout are getting too much of the pie, but I can't see why we would think it's ok for say rich bankers to be able to redistribute wealth in their favour, but bar public sector workers from doing the same.
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In Oregon state after you begin recieving your pension you can only work up to 20 hours a week for the government otherwise they stop giving you pension payouts.
So let’s do some math, you put in 25 years, you now receive a pension worth 45% of your income, then you work part time at 20 hours per week (or 50% of income.) for a total of 95% income. I don’t understand the problem?
Unless you feel that you shouldn’t be allowed to receive a pension and while working at all? In which case I would like to ask you if retired veterans shouldn’t be allowed to work while recieving a pension?
Is this different from recieving a pension then working in the private sector? Or working for a different state government/the feds?
I think it probably depends?
I mean, in some cases you might be able to retire and then get hired back as a "contractor", so double-dipping.
"Smart people" (aka my spouse's old prof) retired from a state university and then got a job at a private university. (** This kind of thing happens all the time - public to private - when you look at retired military or public or state employees).
One of the old guys I see at the gym in the morning has 3 pensions I think? The military one, the post office one...maybe a third? I've lost track. He's got a bunch of health care coverage too and doesn't understand why both my spouse and I work. Um...
In any event, maybe we compare this to social security? If you earn too much while collecting Social Security (paid for by taxpayers), then they reduce your social security, right?
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In Oregon state after you begin recieving your pension you can only work up to 20 hours a week for the government otherwise they stop giving you pension payouts.
So let’s do some math, you put in 25 years, you now receive a pension worth 45% of your income, then you work part time at 20 hours per week (or 50% of income.) for a total of 95% income. I don’t understand the problem?
Unless you feel that you shouldn’t be allowed to receive a pension and while working at all? In which case I would like to ask you if retired veterans shouldn’t be allowed to work while recieving a pension?
Is this different from recieving a pension then working in the private sector? Or working for a different state government/the feds?
I think it probably depends?
I mean, in some cases you might be able to retire and then get hired back as a "contractor", so double-dipping.
"Smart people" (aka my spouse's old prof) retired from a state university and then got a job at a private university. (** This kind of thing happens all the time - public to private - when you look at retired military or public or state employees).
One of the old guys I see at the gym in the morning has 3 pensions I think? The military one, the post office one...maybe a third? I've lost track. He's got a bunch of health care coverage too and doesn't understand why both my spouse and I work. Um...
In any event, maybe we compare this to social security? If you earn too much while collecting Social Security (paid for by taxpayers), then they reduce your social security, right?
Explain to me why this would be considered 'wrong'.
As I see it, Option A is that a worker retires from a public sector job (in the traditional sense) and starts taking his pension. His employer still needs work done but doesn't (for whtever reason) hire a FTE, so he hires back his former worker as a contractor. It's good for the employer because the worker doesn't need training, and it's good for the worker because s/he makes more money and gets his/her pension.
Option B would be for the worker to retire and 'stay retired'. But the employer would still need to hire someone else.
I'm having a hard time understanding how this is anything but net neutral for me, Joe-Taxpayer or Jack-Shareholder. Either way one pension is being paid out and one contractor is being hired. Does it matter if its' the same person?
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For the claim that the benefits are unreasonably generous, those were the benefits that were negotiated, isn't that the basis of the free market, the ability to negotiate your contract? And let's not forget they pay for those benefits by having a much lower salary then they would get in the private sector. So if we brought the benefits down to match the private sector, then surely their salary should be raised to also match the private sector, no?
Well there are a couple of issues, but the biggest one is that negotiations over long term benefits provided to government employees suffer from a pretty extreme example of what is referred to in economics as a Principal-agent problem (https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem). The TL;DR version of this is that this is a problem that arises when one person makes decisions on behalf of another person or group of people, and the incentives of the person doing the deciding and the incentives of the person who the decision is being made for are in conflict.
In this case, the principal (the group of people the decisions are being made for) are the voters/tax-payers, particularly voter taxpayers who may not even be born yet. Their incentive is to receive a desired quality and quantity of government services, while paying no more than necessary to secure those services. In a normal contract negotiation, that would work out to paying market rates salaries to public employees.
However, the agent (the person making the decisions) is likely an elected official, or a person who reports to an elected official, at the time of the original negotiations. Their incentive is to A) avoid strikes, because that annoys people and looks bad, reducing their chances for re-election and B) be able to balance the budget or even cut spending (and taxes) while providing the desired quality and quantity of government services between now and their next election. From the agent's perspective, there is no cost to agreeing to generous future benefits packages for public sector employees because by then they'll have been out of office for decades, and strong incentives to agree, since it helps both to avoid strikes (objective A), and may allow them to lower spending, and either cut taxes or raise them less than would otherwise be required (objective B) if public sector employees are willing to forego even a small percent of market rate compensation now in return for big increases in benefits at retirement.
Which is a very long way of saying that no, just because public sector employee compensation is negotiated between public sector employees and elected officials, that doesn't mean we can automatically conclude that all public sector employees receive compensation equivalent to what they would receive in the private sector. It also doesn't mean we can automatically conclude they receive compensation above what they would receive in the private sector. It just means we need to collect other forms of data before we can make a conclusion for any given group of employees.
And like Murse has pointed out a couple of times in this thread, even in cases when the average public sector employee in a given state is receiving above market compensation, that doesn't mean that there aren't many other jobs on the public payroll in that same state which are either paying exactly market rates, or paying below market rates and hence remaining unfilled.
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... I was too young to start receiving my pension yet (42) but if I had been collecting it my new part time temporary non-pension earning contract gig would not have been considered couple-dipping. If I was hired back as a full time employee my pension would have been stopped and If go back to being a regular non-retired employee. I might even have had to pay back any of the pension benefits I had already been paid.
I just like spartana's (unintentional?) term "couple-dipping"
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For the claim that the benefits are unreasonably generous, those were the benefits that were negotiated, isn't that the basis of the free market, the ability to negotiate your contract? And let's not forget they pay for those benefits by having a much lower salary then they would get in the private sector. So if we brought the benefits down to match the private sector, then surely their salary should be raised to also match the private sector, no?
Well there are a couple of issues, but the biggest one is that negotiations over long term benefits provided to government employees suffer from a pretty extreme example of what is referred to in economics as a Principal-agent problem (https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem). The TL;DR version of this is that this is a problem that arises when one person makes decisions on behalf of another person or group of people, and the incentives of the person doing the deciding and the incentives of the person who the decision is being made for are in conflict.
In this case, the principal (the group of people the decisions are being made for) are the voters/tax-payers, particularly voter taxpayers who may not even be born yet. Their incentive is to receive a desired quality and quantity of government services, while paying no more than necessary to secure those services. In a normal contract negotiation, that would work out to paying market rates salaries to public employees.
However, the agent (the person making the decisions) is likely an elected official, or a person who reports to an elected official, at the time of the original negotiations. Their incentive is to A) avoid strikes, because that annoys people and looks bad, reducing their chances for re-election and B) be able to balance the budget or even cut spending (and taxes) while providing the desired quality and quantity of government services between now and their next election. From the agent's perspective, there is no cost to agreeing to generous future benefits packages for public sector employees because by then they'll have been out of office for decades, and strong incentives to agree, since it helps both to avoid strikes (objective A), and may allow them to lower spending, and either cut taxes or raise them less than would otherwise be required (objective B) if public sector employees are willing to forego even a small percent of market rate compensation now in return for big increases in benefits at retirement.
Which is a very long way of saying that no, just because public sector employee compensation is negotiated between public sector employees and elected officials, that doesn't mean we can automatically conclude that all public sector employees receive compensation equivalent to what they would receive in the private sector. It also doesn't mean we can automatically conclude they receive compensation above what they would receive in the private sector. It just means we need to collect other forms of data before we can make a conclusion for any given group of employees.
And like Murse has pointed out a couple of times in this thread, even in cases when the average public sector employee in a given state is receiving above market compensation, that doesn't mean that there aren't many other jobs on the public payroll in that same state which are either paying exactly market rates, or paying below market rates and hence remaining unfilled.
I find incompetence is usually a more likely explanation over malevolence. That doesn't necessarily negate anything you said, by the way. Back in the 1970s when these agreements were being negotiated, bonds were paying 6%+ , there was high inflation, and stocks were crap. No one had done a "Trinity Study" because the data didn't exist and computers were an exotic thing. If you didn't have a guaranteed floor of 8%--or so it seemed at the time--you were going to be eating Alpo in your retirement. That seemed like a perfectly reasonable request at the time. In fact, that's the same reasoning why you get an 8% bump in benefits for each year you defer Social Security and why Peter Lynch used to recommend a 7% withdrawal rate. At the time, that seemed completely reasonable, although now we know that's the case.
And sure, some of the problem is due to cowardly politicians making the easy decision instead of the right decision, but a lot of it is simply people making decisions on what they thought made sense at the time.
Re: Public vs. private sector wages. This is kind of a hard one when you unpeal it. How much does a private sector fireman make? Lots of jobs public sector jobs don't really compare to the private sector. You have vague stuff like "administrator." Speaking of which, my wife was an administrator in the public sector. Turns out her skills were worth about double in the private sector, which she found out almost entirely by accident.
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Re: Public vs. private sector wages. This is kind of a hard one when you unpeal it. How much does a private sector fireman make? Lots of jobs public sector jobs don't really compare to the private sector. You have vague stuff like "administrator." Speaking of which, my wife was an administrator in the public sector. Turns out her skills were worth about double in the private sector, which she found out almost entirely by accident.
Yeah this is a hard one. Even for jobs that exist in both the public and private selectors, there are lots of things that different people are going to put different weights on, from job security to deferred comp (like a pension), to flexible or shorter hours.
People with the same training as me who went into the private sector at about the same time I went into the public sector are making about 50% more right now, but are also at risk of substantial layoffs right now. I wouldn't trade places with them. But it's also quite possible they wouldn't trade places with me.
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Federal employees earned 80 percent more in 2016 compared to private sector workers. Federal wages have grown significantly higher than the private sector in the past 15 years.
Add benefits such as health care and retirement, federal employees have an even bigger advantage than private sector workers. Average federal worker compensation reached $127,259 in 2016, while the private sector topped out at $70,764 — or $56,495 lower. The gap is widening.
(https://1yxsm73j7aop3quc9y5ifaw3-wpengine.netdna-ssl.com/wp-content/uploads/2017/09/federal_compensation.jpg)
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I've been hearing about different companies increasing due to the tax cuts, but I can't remember all of them off the top of my head. Walmart maybe, or Target. It might prevent many more people from losing their jobs. It's putting a lot of extra money in most people's pockets to feed into the consumer economy, so that should create more jobs as well. I've got about $180/mo extra on my paycheck from the tax cut as an upper middle class earner.
Companies are going to tout pay raises to raise PR, and some might claim it stems from the tax cuts regardless of the true reason(s).
..oh, and since we are sharing anedotes - my salary has not changed, as I am under a 2 year contract. My tax bill also remained the same.
Well if you don't want to believe it, that is fine. The fact that a company would close stores that weren't profitable in irrelevant. There are also many other companies that are passing bonuses or higher pay on to their workers as a result of the tax cuts. There are too many to list, so here is a small sample:
https://www.foxbusiness.com/markets/tax-reform-windfall-these-companies-are-hiking-pay-delivering-bonuses
Most people got a nice tax cut. The people who didn't were usually living in high tax states and getting a massive deduction on their federal taxes and therefore weren't paying their fair share to the federal government.
Not only is the tax cut giving most people extra money on their paychecks, but it's feeding more money into the economy, creating more jobs, raising wages, and for people invested in the stock market, such as people reading this forum, it was resulted in a run up in the stock market ever since Trump was elected because he ran on tax cuts, so they were priced into the market rise that we were enjoying before they were actually passed into law. If you don't want the huge gains in your investments, feel free to donate them to charity. lol
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Part of that most recent increase you're seeing in federal total compensation since 2010 may be explained the the shrinking number of total federal employees since the end of the most recent recession:
(http://si.wsj.net/public/resources/images/BN-FL052_fedsha_G_20141107102453.jpg)
The federal government tends to shrink its headcount by attrition and freezing new hiring rather than targeted layoffs, and people in less senior/lower paid positions turn over faster than people in higher paid positions, so when the feds decide to reduce their labor force size the average compensation of their remaining workers is going to go up significantly.
The other part of your argument is that, assuming market rate compensation, we'd expect roughly equal pay for public sector and private sector workers, but I don't see any reason to assume that would be the case since the skill set mix is going to be different between the two groups. My guess is that public sector jobs are responsible for employing a substantially larger proportion of all lawyers (generally reasonably well paid) than of all fast food workers (very low pay) or of all pro athletes (very high pay). Depending on the exact representation of those three skill sets -- plus thousands of others -- you could expect public sector workers to, on average, make more or less than the average private sector wage without anyone working at below or above market wage.
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I've been hearing about different companies increasing due to the tax cuts, but I can't remember all of them off the top of my head. Walmart maybe, or Target. It might prevent many more people from losing their jobs. It's putting a lot of extra money in most people's pockets to feed into the consumer economy, so that should create more jobs as well. I've got about $180/mo extra on my paycheck from the tax cut as an upper middle class earner.
Companies are going to tout pay raises to raise PR, and some might claim it stems from the tax cuts regardless of the true reason(s).
..oh, and since we are sharing anedotes - my salary has not changed, as I am under a 2 year contract. My tax bill also remained the same.
Well if you don't want to believe it, that is fine. The fact that a company would close stores that weren't profitable in irrelevant. There are also many other companies that are passing bonuses or higher pay on to their workers as a result of the tax cuts. There are too many to list, so here is a small sample:
https://www.foxbusiness.com/markets/tax-reform-windfall-these-companies-are-hiking-pay-delivering-bonuses
Most people got a nice tax cut. The people who didn't were usually living in high tax states and getting a massive deduction on their federal taxes and therefore weren't paying their fair share to the federal government.
Not only is the tax cut giving most people extra money on their paychecks, but it's feeding more money into the economy, creating more jobs, raising wages, and for people invested in the stock market, such as people reading this forum, it was resulted in a run up in the stock market ever since Trump was elected because he ran on tax cuts, so they were priced into the market rise that we were enjoying before they were actually passed into law. If you don't want the huge gains in your investments, feel free to donate them to charity. lol
you cut out the substance of my post, which is that the latest data does not show a wage increase relative to the before the tax cuts, while there has been a substantial increase in stock buybacks.
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Part of that most recent increase you're seeing in federal total compensation since 2010 may be explained the the shrinking number of total federal employees since the end of the most recent recession:
I see no evidence. The upward climb has been pretty steady going back to 2000 in the graph that I posted and continued to 2010 and beyond. If you ignore the previous years in your graph and look at 2001 to current to match up with my graph, there's very little change in federal employment now vs. what it was in 2001. Compare that to the significant increase in federal worker compensation over the same time span on my graph.
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Well there are a couple of issues, but the biggest one is that negotiations over long term benefits provided to government employees suffer from a pretty extreme example of what is referred to in economics as a Principal-agent problem (https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem). The TL;DR version of this is that this is a problem that arises when one person makes decisions on behalf of another person or group of people, and the incentives of the person doing the deciding and the incentives of the person who the decision is being made for are in conflict.
This is an issue with everything an elected politician does, they will do what's best for themselves and that doesn't always line up with what's best for the public. It's not unique to public sector workers, yet they seem to be singled out. I mean we can look at all the benefits farmers get from the government and conclude they get a bunch of unreasonable benefits that are paid for by taxing everyone.
I'm not saying what public sector workers have negotiated is fair or right, but I do object to the idea that they have to play by a different set of rules then the private sector who do exactly the same thing and use their political clout to maximize their own benefits.
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Part of that most recent increase you're seeing in federal total compensation since 2010 may be explained the the shrinking number of total federal employees since the end of the most recent recession:
I see no evidence. The upward climb has been pretty steady going back to 2000 in the graph that I posted and continued to 2010 and beyond. If you ignore the previous years in your graph and look at 2001 to current to match up with my graph, there's very little change in federal employment now vs. what it was in 2001. Compare that to the significant increase in federal worker compensation over the same time span on my graph.
Speaking of your graph - could you please share your source? It's very unclear to me what is being compared, as the private sector encompasses far more people and far more segments than the federal workforce.
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Federal employees earned 80 percent more in 2016 compared to private sector workers. Federal wages have grown significantly higher than the private sector in the past 15 years.
Add benefits such as health care and retirement, federal employees have an even bigger advantage than private sector workers. Average federal worker compensation reached $127,259 in 2016, while the private sector topped out at $70,764 — or $56,495 lower. The gap is widening.
(https://1yxsm73j7aop3quc9y5ifaw3-wpengine.netdna-ssl.com/wp-content/uploads/2017/09/federal_compensation.jpg)
Is this graph comparing people doing the same jobs? If not, I'd say much more context is needed. I am just picturing office workers (public) to burger flippers and cashiers (private).
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Well there are a couple of issues, but the biggest one is that negotiations over long term benefits provided to government employees suffer from a pretty extreme example of what is referred to in economics as a Principal-agent problem (https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem). The TL;DR version of this is that this is a problem that arises when one person makes decisions on behalf of another person or group of people, and the incentives of the person doing the deciding and the incentives of the person who the decision is being made for are in conflict.
This is an issue with everything an elected politician does, they will do what's best for themselves and that doesn't always line up with what's best for the public. It's not unique to public sector workers, yet they seem to be singled out. I mean we can look at all the benefits farmers get from the government and conclude they get a bunch of unreasonable benefits that are paid for by taxing everyone.
Well there are a couple of issues with public sector compensation that aren't common to all government spending, but they are shared by other types of government decision making where politicians can trade spending long in the future -- often by people who haven't been born or at least aren't old enough to vote -- for political benefits during their term in office. So I'd put excessive deficit spending and increases in entitlement spending (social security/medicare) without associated tax increases that are large enough to pay for them into the same category of government decisions distorted by the principal-agent problem as negotiating public sector employee compensation.
Farm subsidies are a bit different in that in some cases they pretty clearly are government spending that is driven by political expediency, the benefits they create (increased votes from certain constituencies) and detriments they create (increased spending that requires either cutting other spending, or raising taxes* which ultimately produces a loss of vote) both impact the same politicians. If their are more votes gained than votes lost they may still happen, but the benefits and costs impact the people making the decisions.
*Or increasing the deficit which, as describe above, IS one of the problems where the principal-agent issue is strongly at play.
I'm not saying what public sector workers have negotiated is fair or right, but I do object to the idea that they have to play by a different set of rules then the private sector who do exactly the same thing and use their political clout to maximize their own benefits.
I'm not sure I follow what you mean here. The private sector doesn't have the same problem because in that case the principal's are stockholders, who have found more effective ways to align the interests of their agents (CEOs and managers) with their own interests as shareholders, such as tying compensation to share price, or granting lots of options to executives which are only valuable if the company's own value continues to increase. And efficient stock markets do a much better job of penalizing companies for taking on long term unfunded liabilities to pay above market wages than voters manage with elected officials as well as penalizing companies that aren't willing to pay market rate waged to secure employees with the necessary skill sets to sustain the business.
Now that system does break down sometimes, for example in determining the pay of CEOs themselves. And as a society we spend a lot more incentive pay and stock options for CEOs than we do on salaries for elected officials, so the systems for aligning the interests of the management negotiating private sector pay with the interests of shareholders who don't want to pay employees more than market rate doesn't come cheaply. And I'm not arguing that the free market solution adopted in the private sector would work for the types of things we need government (and government employees) to do. But I don't think it is accurate to say this particular problem is equally prevalent in the private and public sectors.
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Regarding my double dipping comment, no I dont have an issue with someone retiring and then working elsewhere while collecting their pension. The issue is when someone retires and gets their pension and then gets rehired at basically the same role in the same place. It was rampant in my area for a while and still might be. It was widely understood to be gaming the system and got a lot of press coverage. The system should be reformed and in many places it has been. Since pensions are "for life" they shouldn't be started until you are truly done working at that job. Starting them as early as many do exacerbates the deficits that so many people complain about and provide unjust enrichment to those double dipping. If you're still doing the job you aren't retired and shouldn't be collecting that pension. There are many other problems with double dipping but that's the primary one. Here is one of many many articles about the practice.
https://www.google.com/amp/www.nj.com/articles/16904736/double-dipping_make_suckers_out_of_taxpayers_edito.amp
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Regarding my double dipping comment, no I dont have an issue with someone retiring and then working elsewhere while collecting their pension. The issue is when someone retires and gets their pension and then gets rehired at basically the same role in the same place. It was rampant in my area for a while and still might be. It was widely understood to be gaming the system and got a lot of press coverage. The system should be reformed and in many places it has been. Since pensions are "for life" they shouldn't be started until you are truly done working at that job. Starting them as early as many do exacerbates the deficits that so many people complain about and provide unjust enrichment to those double dipping. If you're still doing the job you aren't retired and shouldn't be collecting that pension. There are many other problems with double dipping but that's the primary one. Here is one of many many articles about the practice.
https://www.google.com/amp/www.nj.com/articles/16904736/double-dipping_make_suckers_out_of_taxpayers_edito.amp
What I'm still not understanding is how these practices are hurting me as a taxpayer. As I understand it, the government is paying out a pension either way, and it is hiring a person to do a job either way. This seems to be a legal way for some individuals to enrich themselves. Unless there's a cost, I don't see what is worth getting upset about.
The real issue seems to be the life-time nature of pensions. Given that we've decided pensions should never 'run out' (particularly at the end of one's life) we have this problem of vastly unequal lifetime distributions. If someone works a job for 25 years and retires in their 40s, s/he could collect benefits for 50 years, or twice the length of his/her working career. Another could work the same amount at the same job but start at age 42 and retire at 67. That person might only get a decade of benefits (or much less). Vastly different lifetime compensation for the same amount of work.
Many pensions try to remedy this by requiring the individual to be a certain age (e.g. 55 years old) before taking a pension. But that doesn't preclude the individual from working a second job, and it seems enormously unfair to the individual to tell him/her "you can't work because you already have a pension". Under such circumstances what's the proper thing to do? Prohibit them from working? Prevent them from retiring? Obviously both are absurd suggestions.
To me, the problem is with offering lifetime pensions at all. FWIW this was a core rational behind IRAs and 401(k) plans when they were proposed.
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Federal employees earned 80 percent more in 2016 compared to private sector workers. Federal wages have grown significantly higher than the private sector in the past 15 years.
Add benefits such as health care and retirement, federal employees have an even bigger advantage than private sector workers. Average federal worker compensation reached $127,259 in 2016, while the private sector topped out at $70,764 — or $56,495 lower. The gap is widening.
(https://1yxsm73j7aop3quc9y5ifaw3-wpengine.netdna-ssl.com/wp-content/uploads/2017/09/federal_compensation.jpg)
This chart is useless without context. The context is that only two percent of all employed people in the United States work for the federal government and that trend has been going down,
(https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/blogs/the-fix/files/2015/01/GovPercent_Fed.png&w=1484)
Furthermore, more federal employees have a bachelors degree (https://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/reports-publications/profile-of-federal-civilian-non-postal-employees/) (and and average of 13.51 years experience in their jobs) or a masters degree (https://www.govexec.com/pay-benefits/2014/03/highly-educated-federal-workforce-two-charts/80236/) compared to the broader labor market. Another way of summarizing the chart that you posted is, "Highly educated employees with lots of experience in their jobs get paid more than an unclear selection of the 'private sector'"
Yes, Federal employees are much better educated as a group than the general workforce.
Not to mention that 'average' is often extremely misleading. What we would want to look at is 'median' wage, plus the context of education, etc.
A fair amount of government employees are also scientists, and many of them do research that has no real comparable market in the private sector. Academia would be the proper comparison of salary for that group, but that isn't the private market either.
Generally, my understanding is that admin and support staff are paid notably better than their equivalents in the private sector, and a lot of the higher level positions (again, these require more advanced degrees) are paid comparably to or less than the private sector, with the pension benefits making up the difference.
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DreamFIRE, the U.S. population has increased. Is it not reasonable to expect that in absolute terms the number of government employees may go up slightly (especially in decennial census years) even if the relative proportion of the workforce employed by a government entity has decreased? wenchsenior and panda adequately addressed how the sectors' compositions are vastly different so no need to further touch on that.
Nereo, I'm with you on eliminating pensions as an avenue provided those that have one would get a boost (I realize it can't be exactly monetarily equal otherwise you don't solve anything) to their 401k match or salary increase, of which I am very dubious about. So rather than face that unknown, those with pensions dig in their heels to hold onto what they have. That's a tough nut to crack. FWIW, I do think the current (not the CSRS pension or the initial FERS) federal FERS pension is incredibly sustainable, even moving forward in our "over-valued" markets and slower growth economy, and think it could be a good model to implement elsewhere.
I am optimistic about the funding of plans in general moving forward - I do realize they are generally too slow to adapt as needed but a lot of pensions hailed from a time where baby boomer parents were having on average 4 children. Average life expectancy from birth was near the S.S./retirement age and the pension payout reflected those parameters. That fertility rate was obviously not sustainable and quickly declined as life expectancy increased but the pensions stayed or did not change enough. Now we're in more of a slower growth period demographically speaking and with certain plans pushing states to the brink, they are being forced to change. It's a shame it didn't happen earlier as it needed to for some plans but it's going in the right direction.
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Nereo, I'm with you on eliminating pensions as an avenue provided those that have one would get a boost (I realize it can't be exactly monetarily equal otherwise you don't solve anything) to their 401k match or salary increase, of which I am very dubious about. So rather than face that unknown, those with pensions dig in their heels to hold onto what they have. That's a tough nut to crack. FWIW, I do think the current (not the CSRS pension or the initial FERS) federal FERS pension is incredibly sustainable, even moving forward in our "over-valued" markets and slower growth economy, and think it could be a good model to implement elsewhere.
Don't get me wrong - if I had a pension that I was vested in I'd fight like hell to keep it too. And in my mid-30s, if I had been accruing time within a pension system I would be using that as part of my FI/RE plan, probably making a career change so I could maximize the pension payouts while earning additional income somewhere else for a few years.
I also am skeptical that a sudden elimination would correspond to an equally large increase in salary and/or 401(k) matching. Given how corporations have spent their tax-savings it seems likely that workers would receive only a modest increase of the company savings from paying out fewer benefits. I'm also enough of a realist to know that few take advantage of their own retirement accounts as they should - the number of people who don't participate at all in their 401(k)s, even when a match is offered - is astounding to me.
It's an interesting (in a bad way) conundrum, where pensions aren't considered a good thing by many, self-driven retirement accounts are being drastically under-utilized, and SS.. well there's a reason its referred to as the 'third rail' of politics.
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Nereo, I'm with you on eliminating pensions as an avenue provided those that have one would get a boost (I realize it can't be exactly monetarily equal otherwise you don't solve anything) to their 401k match or salary increase, of which I am very dubious about. So rather than face that unknown, those with pensions dig in their heels to hold onto what they have. That's a tough nut to crack. FWIW, I do think the current (not the CSRS pension or the initial FERS) federal FERS pension is incredibly sustainable, even moving forward in our "over-valued" markets and slower growth economy, and think it could be a good model to implement elsewhere.
Don't get me wrong - if I had a pension that I was vested in I'd fight like hell to keep it too. And in my mid-30s, if I had been accruing time within a pension system I would be using that as part of my FI/RE plan, probably making a career change so I could maximize the pension payouts while earning additional income somewhere else for a few years.
I also am skeptical that a sudden elimination would correspond to an equally large increase in salary and/or 401(k) matching. Given how corporations have spent their tax-savings it seems likely that workers would receive only a modest increase of the company savings from paying out fewer benefits. I'm also enough of a realist to know that few take advantage of their own retirement accounts as they should - the number of people who don't participate at all in their 401(k)s, even when a match is offered - is astounding to me.
It's an interesting (in a bad way) conundrum, where pensions aren't considered a good thing by many, self-driven retirement accounts are being drastically under-utilized, and SS.. well there's a reason its referred to as the 'third rail' of politics.
Definitely, I'm fine with change or at least open to exploring improvements but not grandfathering retirement benefits is a non-starter IMO.
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Sorry, I really don't get why this is a special public sector problem due to the undue political influence of unions. This whole story mirrors what happened in private pensions years ago: companies offered generous pension benefits; they then made unrealistic assumptions about how fast their investments would grow (which allowed them to contribute less money out of the corporate coffers); when the market was sucky for the long term and many workers retired, many pensions were underfunded and unable to meet the guaranteed payouts. That's why Congress passed ERISA (which imposed restrictions on the assumptions companies could make), that's why the PGBC was created. And even with that, you still see companies making aggressive assumptions about future growth, because it allows them to retain more cash, and you still see waves of companies unable to meet their pension obligations when hard times hit. The only difference between them and the public sector is that the companies are allowed to go bankrupt and ditch their pension obligations, while Oregon has been required to live up to its commitments.
And double-dipping? Please. My dad worked @20 years for a company that then split. A few years later, he retired from that company and began drawing a pension. But he went to work for the other formerly-related company, thus making the same salary + drawing a pension. And the best part is that his years of service at the old company also counted toward years of service at the new company in calculating the pension he was entitled to there. What's that, triple-dipping? And he wasn't exactly at the upper management level, either, with some super-special sweetheart deal.
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Sorry, I really don't get why this is a special public sector problem due to the undue political influence of unions. This whole story mirrors what happened in private pensions years ago: companies offered generous pension benefits; they then made unrealistic assumptions about how fast their investments would grow (which allowed them to contribute less money out of the corporate coffers); when the market was sucky for the long term and many workers retired, many pensions were underfunded and unable to meet the guaranteed payouts. That's why Congress passed ERISA (which imposed restrictions on the assumptions companies could make), that's why the PGBC was created. And even with that, you still see companies making aggressive assumptions about future growth, because it allows them to retain more cash, and you still see waves of companies unable to meet their pension obligations when hard times hit. The only difference between them and the public sector is that the companies are allowed to go bankrupt and ditch their pension obligations, while Oregon has been required to live up to its commitments.
And double-dipping? Please. My dad worked @20 years for a company that then split. A few years later, he retired from that company and began drawing a pension. But he went to work for the other formerly-related company, thus making the same salary + drawing a pension. And the best part is that his years of service at the old company also counted toward years of service at the new company in calculating the pension he was entitled to there. What's that, triple-dipping? And he wasn't exactly at the upper management level, either, with some super-special sweetheart deal.
Taxpayers don't have to pay for the shortfalls of private pension schemes offered by companies. That's a monumental difference. Cmon now, you're smart enough to understand that.
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Apparently no one has understood the tax incidence of the corporate income tax point I made earlier. *sigh*
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
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Imagine a business model where every employee, from the janitor up to the most senior management, in addition to carrying a cost of current salary and benefits, also brings with it a gigantic multi-million dollar fixed cost in the form pension and retiree healthcare costs. Oh, and let's make it up difficult or impossible to get rid of mediocre or poor performing employees. Sound like a good business model you would negotiate? Want to be on the hook for that? Because that's what public sector pensions are.
LOL at your "negotiated" pensions. It's extortion, plain and simple.
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Sorry, I really don't get why this is a special public sector problem due to the undue political influence of unions. This whole story mirrors what happened in private pensions years ago: companies offered generous pension benefits; they then made unrealistic assumptions about how fast their investments would grow (which allowed them to contribute less money out of the corporate coffers); when the market was sucky for the long term and many workers retired, many pensions were underfunded and unable to meet the guaranteed payouts. That's why Congress passed ERISA (which imposed restrictions on the assumptions companies could make), that's why the PGBC was created. And even with that, you still see companies making aggressive assumptions about future growth, because it allows them to retain more cash, and you still see waves of companies unable to meet their pension obligations when hard times hit. The only difference between them and the public sector is that the companies are allowed to go bankrupt and ditch their pension obligations, while Oregon has been required to live up to its commitments.
Public sector pensions aren't subject to the same restrictions about what assumptions they can make about future growth as private sector pensions because they aren't subject to ERISA. In addition (or maybe as part of ERISA, I'm not clear on the history) the accounting standards for how pension liabilities were reported on corporate balance sheets also changed to make it easier for investors to see when management was paying games with deferring expenses into the future through pension obligations, which helped to bring the interests of management and investors into closer alignment.
That said, I am in complete agreement with you that prior to ERISA, the PGBC, and the changes in accounting standards for pension obligations, private sector pensions had a lot more of the same problems that public sector pensions are facing now.
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed? On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).
I think your callous point about what not caring what was negotiating misses an important point; often the employee was not the one doing the negotiation, and he or she took the job based in part on the benefits promised in good faith. What you are basically suggesting is that we ignore contracts made to one party in good faith because you do not care for how other entities negotiated them. In short you want to ignore the rule of law.
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DreamFIRE, the U.S. population has increased. Is it not reasonable to expect that in absolute terms the number of government employees may go up slightly (especially in decennial census years) even if the relative proportion of the workforce employed by a government entity has decreased?
I never said the number of government jobs went up or down, either one. I commented on the part of maizman's chart that lined up with mine was relatively flat. You shouldn't compare a chart going back decades with one going back a much shorter time frame unless you isolate the longer period's chart to the time frame reflected on the chart with the shorter time frame. It was the pay and total compensation that has been going up.
The chart speaks for itself. Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
I'm surprised people don't understand it in one respect, but at the same time, I'm not surprised.
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Yes that makes sense. I know a cop who just retired at 52 with a full pension. While I've been saving 70%+ of my income for years, I still won't have it as good as him. Being a cop is usually not that physically demanding. This guy is like a spring chicken. Firefighters, that's another matter.
I think all pensions should be changed into a system similar to Social Security that most private sector workers are stuck with, and offer a 401K type plan with a "partial" match up to 4% of salary. This has gone on way too long. In my state, taxes have been increased 65% to pay for state pensions & retiree healthcare, and they want even more! The rest of us have to keep working longer for less take home pay so the government workers can keep retiring in their 50's with generous pensions and healthcare benefits. It's crazy!
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Yes that makes sense. I know a cop who just retired at 52 with a full pension. While I've been saving 70%+ of my income for years, I still won't have it as good as him. Being a cop is usually not that physically demanding. This guy is like a spring chicken. Firefighters, that's another matter.
I think all pensions should be changed into a system similar to Social Security that most private sector workers are stuck with, and offer a 401K type plan with a "partial" match up to 4% of salary. This has gone on way too long. In my state, taxes have been increased 65% to pay for state pensions & retiree healthcare, and they want even more! The rest of us have to keep working longer for less take home pay so the government workers can keep retiring in their 50's with generous pensions and healthcare benefits. It's crazy!
That's funny. Our firefighters spent 1/3 of their shift sleeping and the other 2/3 washing fire trucks and BBQing.
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed? On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).
This is how civilian federal pensions work. You have to meet a combo of years worked and age requirements to draw a pension, and then it is docked a certain percentage per year until you meet the full requirement 'combo' of minimum age and/or years worked. For example, my husband just became eligible to take his pension at age 56 (minimum retirement age), but it would be docked 30% if he took it. Not to mention that it wouldn't be very big if he took it now, because it scales up with years served. The soonest he can take it without penalty is age 60 if he has at least 20 years of service.
It's fine to screw around with those formulas to make them a bit stricter, but it isn't like restricting access to pensions is an unknown concept.
This is why those stupid memes about members of Congress retiring with "THEIR SALARY AND FREE HEALTH CARE FOR LIFE OMG" make me laugh. Congress has very good benefits for sure, but nowhere near as great as the angry public fantasizes that they do.
ETA: This thread got me thinking
1) that I suspect pensions will eventually go by the wayside in favor of 401K plans (hopefully well administered, like the federal one). Ideally, you would want automatic enrollment up to the match, with opt out provision being the default.
2) I could also see potentially setting up pension restrictions such that they would be reduced based on some amount of earned income over a baseline, which would encourage people to wait to take them until they really were retired or mostly retired.
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed? On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).
I think your callous point about what not caring what was negotiating misses an important point; often the employee was not the one doing the negotiation, and he or she took the job based in part on the benefits promised in good faith. What you are basically suggesting is that we ignore contracts made to one party in good faith because you do not care for how other entities negotiated them. In short you want to ignore the rule of law.
Thinking out loud here, how is this any different than social security?
If I retire at 67 and die at 67.5, then I basically lose out on all that social security.
I know (think?) some pensions, like social security, have survivor benefits, yes? But let's say you aren't married and don't have minor children...then, it's basically all gone. No? Probably depends on the pension.
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Yes that makes sense. I know a cop who just retired at 52 with a full pension. While I've been saving 70%+ of my income for years, I still won't have it as good as him. Being a cop is usually not that physically demanding. This guy is like a spring chicken. Firefighters, that's another matter.
I think all pensions should be changed into a system similar to Social Security that most private sector workers are stuck with, and offer a 401K type plan with a "partial" match up to 4% of salary. This has gone on way too long. In my state, taxes have been increased 65% to pay for state pensions & retiree healthcare, and they want even more! The rest of us have to keep working longer for less take home pay so the government workers can keep retiring in their 50's with generous pensions and healthcare benefits. It's crazy!
That's funny. Our firefighters spent 1/3 of their shift sleeping and the other 2/3 washing fire trucks and BBQing.
come on out to Calif or any western state during wildfire season (which in the SW states is year round) and I think you'll see firefighters in a different light.
As for public pensions - not all are unionized. My weird little agency wasn't.
Agreed. Also, there's also a much higher risk of cancer for firefighters.
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The chart speaks for itself. Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
I'm surprised people don't understand it in one respect, but at the same time, I'm not surprised.
When we were asking about the chart, we were being polite. Objectively it's a poorly made chart. If any of my students tried to turn that in, they'd either get no credit or a 're-do'. For starters, the data source is not given. Second, as others have pointed out 'average' is at best ambiguous. Which average? the mean? median? mode? How was total compensation calculated? Which job's are used in the analysis (i.e. what is the inference space)? Then there's the omre nit-picky stuff like "what are the estimates of variance?" and 'where the hell is figure 1"?
Most of us here are genuinely interested in hearing various arguments, particularly when they are backed up with good data. But this isn't that.
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed? On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).
I think your callous point about what not caring what was negotiating misses an important point; often the employee was not the one doing the negotiation, and he or she took the job based in part on the benefits promised in good faith. What you are basically suggesting is that we ignore contracts made to one party in good faith because you do not care for how other entities negotiated them. In short you want to ignore the rule of law.
Thinking out loud here, how is this any different than social security?
If I retire at 67 and die at 67.5, then I basically lose out on all that social security.
I know (think?) some pensions, like social security, have survivor benefits, yes? But let's say you aren't married and don't have minor children...then, it's basically all gone. No? Probably depends on the pension.
Yes, the federal one is structured to pay 50% benefits to a qualifying spouse or in some cases, dependent children. Not sure if there are restrictions on how long the kid gets it, absent a surviving spouse. Maybe until 21? Not my circus, so I never looked this detail up. You take a 10% overall cut to pension from the start if you opt for the survivor option. If you opt for no survivor option, the pension stops upon your death.
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
Are you suggesting using the total combined income all workers instead? That's totally illogical. By using average, it doesn't matter how many people, because you're using, well, the average. Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well. What we are left with is an average of all workers, regardless of the quantity of those workers. That is my point. It's pretty simple really.
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Thinking out loud here, how is this any different than social security?
If I retire at 67 and die at 67.5, then I basically lose out on all that social security.
I know (think?) some pensions, like social security, have survivor benefits, yes? But let's say you aren't married and don't have minor children...then, it's basically all gone. No? Probably depends on the pension.
I suppose this comes down to whether you consider SS to be the same as a pension. On one hand both provide income ostensibly for senior citizens and those that can no longer work. Both use wages taken from workers' paychecks as a means of funding distributions.
However, SS is designed to cover as many people as possible. Unlike pensions, SS isn't tied to a single job. Likewise, payouts are backed by the federal government and not to any private company or local government.Unlike most pensions you qualify for SS after working as few as 10 years in your entire life (earning the requisite 40 credits). This is true even if you are self-employed. While higher earners get more SS benefits in absolute terms, lower income individuals get more as a percentage of their lifetime income - something that's rarely (if ever) seen in the pension world. And of course as has been pointed out here, if you work 20 years for one company and 20 for another one can earn two pensions for 40 years of service (often based on your salary during your best 3 or 5 years), whereas SS is calculated based on your average of your highest 35 earning years.
To me they seem like two very different beasts, designed for different social purposes. I'd love to see all pensions phased out completely, but I would like to see only moderate changes to SS.
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
Are you suggesting using the total combined income all workers instead? That's totally illogical. By using average, it doesn't matter how many people, because you're using, well, the average. Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well. What we are left with is an average of all workers, regardless of the quantity of those workers. That is my point. It's pretty simple really.
:head:desk:
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
Are you suggesting using the total combined income all workers instead? That's totally illogical. By using average, it doesn't matter how many people, because you're using, well, the average. Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well. What we are left with is an average of all workers, regardless of the quantity of those workers. That is my point. It's pretty simple really.
Nope, I'm saying to say that in order to look at trends over time, we need to be comparing workers who are doing the same kinds of jobs at each time point.
And if the total number of federal government workers is decreasing, the mix of jobs being done by the total population of federal government workers is also changing.
If you look at the average English language fluency in population of the European Union before and after the UK leaves the Union, you'll see a major downward trend, but that doesn't tell you anything about how english language fluency is actually changing.
If you look at average annual worker compensation at Amazon.com, you'll also see a major downward trend. But that doesn't mean people at Amazon were taking pay cuts, it means they have been hiring more and more warehouse workers, so the ratio of highly paid programmers to less well paid hourly workers has been changing over time.
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
Are you suggesting using the total combined income all workers instead? That's totally illogical. By using average, it doesn't matter how many people, because you're using, well, the average. Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well. What we are left with is an average of all workers, regardless of the quantity of those workers. That is my point. It's pretty simple really.
:head:desk:
Lame.
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
Are you suggesting using the total combined income all workers instead? That's totally illogical. By using average, it doesn't matter how many people, because you're using, well, the average. Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well. What we are left with is an average of all workers, regardless of the quantity of those workers. That is my point. It's pretty simple really.
That's not actually true, as maizeman and I have been trying to point out. When you say "average" I'm going to assume you mean the arithmetic mean, because you (and your graph) have been unclear on that. The mean is the arithmetic mean is the sum of all those sampled divided by the sample size. It's useful if you have a normal distribution (you've got roughly as many people earning above the mean as below it).
But here's the problem with using arithmetic mean over time - if your population is changing, your estimate of the mean cannot be compared year to year. Earlier maizeman showed how the percentage of people in the federal workforce has been declining relative to the total labor market and pointed out that this was primarily driven by hiring freezes (which by effect reduces the new hires, which also make less money).
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Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.
Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.
I am surprised you don't understand that.
Are you suggesting using the total combined income all workers instead? That's totally illogical. By using average, it doesn't matter how many people, because you're using, well, the average. Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well. What we are left with is an average of all workers, regardless of the quantity of those workers. That is my point. It's pretty simple really.
That's not actually true, as maizeman and I have been trying to point out. When you say "average" I'm going to assume you mean the arithmetic mean, because you (and your graph) have been unclear on that. The mean is the arithmetic mean is the sum of all those sampled divided by the sample size. It's useful if you have a normal distribution (you've got roughly as many people earning above the mean as below it).
But here's the problem with using arithmetic mean over time - if your population is changing, your estimate of the mean cannot be compared year to year. Earlier maizeman showed how the percentage of people in the federal workforce has been declining relative to the total labor market and pointed out that this was primarily driven by hiring freezes (which by effect reduces the new hires, which also make less money).
You must have missed my post above:
I commented on the part of maizman's chart that lined up with mine was relatively flat. You shouldn't compare a chart going back decades with one going back a much shorter time frame unless you isolate the longer period's chart to the time frame reflected on the chart with the shorter time frame. It was the pay and total compensation that has been going up.
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I didn't miss it. You are trying to compare charts where one of the charts (the one you posted) is ambiguous at best and more than likely intentionally deceptive. There's an saying in statistics: you can't get a meaningful relationship with bad data.
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But here's the problem with using arithmetic mean over time - if your population is changing, your estimate of the mean cannot be compared year to year.
Here's my favorite example example of your point, nereo.
A few years ago, there was a bunch of press coverage about a paper that came out which found that 45-54 whites were dying more often than they used to. (This was the "deaths of despair" paper.) However, it turned out about half of the apparent increase in death rate for 45-54 year olds was because the average age of 45-54 year olds in the USA was increasing over time as our overall population aged.
More 54 year olds and less 45 year olds = higher annual death rates for 45-54 year olds even if there was no actual change in the age at which individual people were dying.
Source: http://andrewgelman.com/2015/11/06/what-happened-to-mortality-among-45-54-year-old-white-non-hispanic-men-it-declined-from-1989-to-1999-increased-from-1999-to-2005-and-held-steady-after-that/
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Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.
Yes that makes sense. I know a cop who just retired at 52 with a full pension. While I've been saving 70%+ of my income for years, I still won't have it as good as him. Being a cop is usually not that physically demanding. This guy is like a spring chicken. Firefighters, that's another matter.
I think all pensions should be changed into a system similar to Social Security that most private sector workers are stuck with, and offer a 401K type plan with a "partial" match up to 4% of salary. This has gone on way too long. In my state, taxes have been increased 65% to pay for state pensions & retiree healthcare, and they want even more! The rest of us have to keep working longer for less take home pay so the government workers can keep retiring in their 50's with generous pensions and healthcare benefits. It's crazy!
That's funny. Our firefighters spent 1/3 of their shift sleeping and the other 2/3 washing fire trucks and BBQing.
come on out to Calif or any western state during wildfire season (which in the SW states is year round) and I think you'll see firefighters in a different light.
As for public pensions - not all are unionized. My weird little agency wasn't.
Hey I'm not the one generalizing an entire career field. ;)
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Regarding my double dipping comment, no I dont have an issue with someone retiring and then working elsewhere while collecting their pension. The issue is when someone retires and gets their pension and then gets rehired at basically the same role in the same place. It was rampant in my area for a while and still might be. It was widely understood to be gaming the system and got a lot of press coverage. The system should be reformed and in many places it has been. Since pensions are "for life" they shouldn't be started until you are truly done working at that job. Starting them as early as many do exacerbates the deficits that so many people complain about and provide unjust enrichment to those double dipping. If you're still doing the job you aren't retired and shouldn't be collecting that pension. There are many other problems with double dipping but that's the primary one. Here is one of many many articles about the practice.
https://www.google.com/amp/www.nj.com/articles/16904736/double-dipping_make_suckers_out_of_taxpayers_edito.amp
What I'm still not understanding is how these practices are hurting me as a taxpayer. As I understand it, the government is paying out a pension either way, and it is hiring a person to do a job either way. This seems to be a legal way for some individuals to enrich themselves. Unless there's a cost, I don't see what is worth getting upset about.
The real issue seems to be the life-time nature of pensions. Given that we've decided pensions should never 'run out' (particularly at the end of one's life) we have this problem of vastly unequal lifetime distributions. If someone works a job for 25 years and retires in their 40s, s/he could collect benefits for 50 years, or twice the length of his/her working career. Another could work the same amount at the same job but start at age 42 and retire at 67. That person might only get a decade of benefits (or much less). Vastly different lifetime compensation for the same amount of work.
Many pensions try to remedy this by requiring the individual to be a certain age (e.g. 55 years old) before taking a pension. But that doesn't preclude the individual from working a second job, and it seems enormously unfair to the individual to tell him/her "you can't work because you already have a pension". Under such circumstances what's the proper thing to do? Prohibit them from working? Prevent them from retiring? Obviously both are absurd suggestions.
To me, the problem is with offering lifetime pensions at all. FWIW this was a core rational behind IRAs and 401(k) plans when they were proposed.
As a one-off, you're not worse off as a taxpayer. However, the problem is how people change their behavior when the situation is not a one-off. In economics, it's a question of looking at static efficiency vs dynamic efficiency.
If the double dipping was not allowed, I would venture to guess that people would just continue working their job and not retiring to take their pension. However, when double dipping is allowed people then choose to "retire," take their pension and then get rehired. In this case, you are worse off as a taxpayer with allowing the double dipping than if double dipping was not allowed.
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Regarding my double dipping comment, no I dont have an issue with someone retiring and then working elsewhere while collecting their pension. The issue is when someone retires and gets their pension and then gets rehired at basically the same role in the same place. It was rampant in my area for a while and still might be. It was widely understood to be gaming the system and got a lot of press coverage. The system should be reformed and in many places it has been. Since pensions are "for life" they shouldn't be started until you are truly done working at that job. Starting them as early as many do exacerbates the deficits that so many people complain about and provide unjust enrichment to those double dipping. If you're still doing the job you aren't retired and shouldn't be collecting that pension. There are many other problems with double dipping but that's the primary one. Here is one of many many articles about the practice.
https://www.google.com/amp/www.nj.com/articles/16904736/double-dipping_make_suckers_out_of_taxpayers_edito.amp
What I'm still not understanding is how these practices are hurting me as a taxpayer. As I understand it, the government is paying out a pension either way, and it is hiring a person to do a job either way. This seems to be a legal way for some individuals to enrich themselves. Unless there's a cost, I don't see what is worth getting upset about.
The real issue seems to be the life-time nature of pensions. Given that we've decided pensions should never 'run out' (particularly at the end of one's life) we have this problem of vastly unequal lifetime distributions. If someone works a job for 25 years and retires in their 40s, s/he could collect benefits for 50 years, or twice the length of his/her working career. Another could work the same amount at the same job but start at age 42 and retire at 67. That person might only get a decade of benefits (or much less). Vastly different lifetime compensation for the same amount of work.
Many pensions try to remedy this by requiring the individual to be a certain age (e.g. 55 years old) before taking a pension. But that doesn't preclude the individual from working a second job, and it seems enormously unfair to the individual to tell him/her "you can't work because you already have a pension". Under such circumstances what's the proper thing to do? Prohibit them from working? Prevent them from retiring? Obviously both are absurd suggestions.
To me, the problem is with offering lifetime pensions at all. FWIW this was a core rational behind IRAs and 401(k) plans when they were proposed.
As a one-off, you're not worse off as a taxpayer. However, the problem is how people change their behavior when the situation is not a one-off. In economics, it's a question of looking at static efficiency vs dynamic efficiency.
If the double dipping was not allowed, I would venture to guess that people would just continue working their job and not retiring to take their pension. However, when double dipping is allowed people then choose to "retire," take their pension and then get rehired. In this case, you are worse off as a taxpayer with allowing the double dipping than if double dipping was not allowed.
I disagree. I think people would still take their pension and just get a different job. Unless you are arguing raising the pension withdrawal range, but again going back to total compensation you would have to raise wages. My co-workers and I can retire (collect our pension) at 53 (if we have 25 years in.) if that age were to change to 65 then you can bet I would expect to be compensated for that change (by moving closer to market rates due to a benefit cut.) Again, when you look at total compensation for similar employees (education, experience ect..) studies suggest we are compensated 97% of what our private sector counterparts are. If you cut the pension benefits I imaging it would drop to around 90%ish... meaning you would have to make it up elsewhere....
Again, anecdotally I have been offered 15% more pay with benefit cuts for private sector work. A branch of my union negotiated an 8% raise to get closer to market for their nurses. Our nurses did not get that raise.
Then people complain about how much OT public workers get... I don’t understand... of course there is a ton of OT, nobody wants to do the job for the current compensation package. Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)
Side topic- I think it’s funny that we are all on a site trying to take advantage of everything we can to benefit us the most to retire early (tax avoidance, student loan forgiveness, even millionaires using the aca subsidies) but people want to come complain about union pensions?
I would also like to say for the record that I would be in favor of a cap on annual pension benefits of less than 4x the median income (pick a number I don’t care.) or not I don’t know. We already have a tough time keep physicians causing physicians OT (or contractors being hired at massive rates.) I don’t understand what fiscal conservatives want done to rectify the issues they see.
Honestly unions do some harm, I agree. However they are a net good for the people they serve (in my opinion.)
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Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)
Yup, that's one of the arguments against trying to pay less for workers today for generous pensions in the future. Most workers value future pension benefits less than current compensation. So you might have to offer pension benefits with a net present value of $2-3 dollars for every dollar of reduced salary they'll agree to.
If you're a politician trying to reduce spending now who doesn't care what spending looks like after you're dead and buried (or at least out of office), trading $2-3 in net present value for $1 today may seem like a good deal. But as a society, we could probably get the same people to agree do the same work for a lower lifetime cost with front-loaded benefits rather than back-loaded benefits.
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Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)
Yup, that's one of the arguments against trying to pay less for workers today for generous pensions in the future. Most workers value future pension benefits less than current compensation. So you might have to offer pension benefits with a net present value of $2-3 dollars for every dollar of reduced salary they'll agree to.
If you're a politician trying to reduce spending now who doesn't care what spending looks like after you're dead and buried (or at least out of office), trading $2-3 in net present value for $1 today may seem like a good deal. But as a society, we could probably get the same people to agree do the same work for a lower lifetime cost with front-loaded benefits rather than back-loaded benefits.
I hear ya but I think pensions in general provide a needed service. People are very bad at delayed gratification, a pension program forces it upon them. I would be in favor of doing away with all pensions if the gov required all citizens contribute 10-15% of their gross salary to a 401k type account with a required match by employers. I would even be okay with this replacing the current SS program. But then if we want to make everything apples to apples we would have to tackle health care as well, so while we are overhauling pension laws let’s throw in universal healthcare so that everyone has similar healthcare coverage. Now That we have made sure everyone has the same or similar benefits, we can let the free market manage hourly rates.
Except for people opposed to pensions will never go for the above because they tend to be conservatives, and any kind of required contribution or welfare (universal healthcare) is big government trying to get more control.
So since I can’t wave a magic wand I guess here is what I will say. The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently. I guess I am glad we live in a world where my decisions are not the end all be all. We have a political system (and judicial) to sort this stuff out.
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Well if it was a government program required of all workers you'd avoid the issue of pension benefits being valued less than present salary by public sector employees, and a lot less than the net present value of providing those benefits by politicians, so I think such a system would be reasonable. But as you say, the likelihood anything like that ever gets implemented .... yeah.
The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently.
I would say that the bolded bit does not reflect my observation of the preferences for feelings of voters I've interacted with in a number of states.
Also in the specific case of Oregon, the voters clearly don't like the status quo because they keep trying to change it and are being told by the courts that they are bound by agreements entered into by dead politicians before many members of the current electorate were born.
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A few thoughts - this is one of the few threads where I find myself simultaneously agreeing with the most liberal AND conservative forum posters here. I think the sense of disgust I feel is one that we all share - a wish that things had never been designed like this. As a former resident of OR who paid roughly $4k in state taxes the past 2 years, its pretty depressing to know that my entire year's contribution covers 1.57 days of a single $76k a month pension. Compensation while working is negotiated and earned (employment contracts shouldn't be messed with) but in situations like this it has reached a point of absurdity. My brain struggles to believe that anyone really provides $1.9MM a year in justly earned salary. And once you are no longer working, its hard to argue that your value to the community should continue to same extent as a retiree. Personal contributions do inflate one's pension value, and I do not wish to discount that. However even if the pensioner had provided 25% of their final pension fund value (unlikely given OR's bogus math), its hard to justify the other $1.4MM as necessary or even reasonable in the context of public spending.
I am a future pension recipient, although with my projected work years (~8) I will collect between $6 - 14k a year depending on my speed to FIRE, final projected salary and pension draw start. My rubric is 1% x yrs service x top 3 yrs average salary. I do not get OT. I do contribute to SS. I contribute 1% of my salary for the first 50k, then 2% of the amount over. The older pension plan at my work gives 2.2% x yrs x 3 yrs salary. I calculated what that would mean for my coworkers who are under the plan and how their incentive to never retire is so much higher than mine (UGH PLEASE RETIRE ALREADY). I do receive a private matching to my retirement account that they don't but overall I feel my plan is adequate since I am comfortable managing my own accounts.
More anecdotes about people "double dipping" from their pension. In the medical field, its very easy to be a locums / traveller. Lots of people retire from their employer, draw their pension early, and then go work for a locums group doing the same exact job. These locums groups tend to pay much higher for fields like nursing than being a regular employee and since there is such a nursing shortage of course the RN can get their same job back again. It just further compounds the nursing shortage and strange stranglehold that locums agencies hold in the industry.
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A few thoughts - this is one of the few threads where I find myself simultaneously agreeing with the most liberal AND conservative forum posters here. I think the sense of disgust I feel is one that we all share - a wish that things had never been designed like this. As a former resident of OR who paid roughly $4k in state taxes the past 2 years, its pretty depressing to know that my entire year's contribution covers 1.57 days of a single $76k a month pension. Compensation while working is negotiated and earned (employment contracts shouldn't be messed with) but in situations like this it has reached a point of absurdity. My brain struggles to believe that anyone really provides $1.9MM a year in justly earned salary. And once you are no longer working, its hard to argue that your value to the community should continue to same extent as a retiree. Personal contributions do inflate one's pension value, and I do not wish to discount that. However even if the pensioner had provided 25% of their final pension fund value (unlikely given OR's bogus math), its hard to justify the other $1.4MM as necessary or even reasonable in the context of public spending.
It seems like porting over the "highly-compensated employee" rules from 401(k)s might be useful. If you cap pension contributions, then you won't end up with monthly payouts higher than the annual median household income. Beyond that, workers are free to use their money any way they like (403b, 457, 401k, taxable, hookers and blow, whatever).
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A few thoughts - this is one of the few threads where I find myself simultaneously agreeing with the most liberal AND conservative forum posters here. I think the sense of disgust I feel is one that we all share - a wish that things had never been designed like this. As a former resident of OR who paid roughly $4k in state taxes the past 2 years, its pretty depressing to know that my entire year's contribution covers 1.57 days of a single $76k a month pension. Compensation while working is negotiated and earned (employment contracts shouldn't be messed with) but in situations like this it has reached a point of absurdity. My brain struggles to believe that anyone really provides $1.9MM a year in justly earned salary. And once you are no longer working, its hard to argue that your value to the community should continue to same extent as a retiree. Personal contributions do inflate one's pension value, and I do not wish to discount that. However even if the pensioner had provided 25% of their final pension fund value (unlikely given OR's bogus math), its hard to justify the other $1.4MM as necessary or even reasonable in the context of public spending.
It seems like porting over the "highly-compensated employee" rules from 401(k)s might be useful. If you cap pension contributions, then you won't end up with monthly payouts higher than the annual median household income. Beyond that, workers are free to use their money any way they like (403b, 457, 401k, taxable, hookers and blow, whatever).
NoStache for pres! (esp the part about hookers and blow - another great way to limit the amount of time pensioners draw))
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Well if it was a government program required of all workers you'd avoid the issue of pension benefits being valued less than present salary by public sector employees, and a lot less than the net present value of providing those benefits by politicians, so I think such a system would be reasonable. But as you say, the likelihood anything like that ever gets implemented .... yeah.
The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently.
I would say that the bolded bit does not reflect my observation of the preferences for feelings of voters I've interacted with in a number of states.
Also in the specific case of Oregon, the voters clearly don't like the status quo because they keep trying to change it and are being told by the courts that they are bound by agreements entered into by dead politicians before many members of the current electorate were born.
I agree with you on the bolded, I was not specific enough. The voters of Oregon are okay with the status quo of Oregon. Other wise they would vote in someone different, perhaps from another party? Just because a lawsuit was brought does not mean that the vast majority of voters are unhappy with the status quo.
This is probably true of all states, Republicans love there state governments slashing budgets otherwise they would not keep voting in republican that slash budgets.
I agree that most people are unhappy with the status quo at the federal level. Maybe my bias is showing being from a blue state but the polls tend to agree with me.
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My favorite quote from the article:
But efforts to change the system, including a 1994 ballot initiative, were blocked by the State Supreme Court, which ruled that accruals could not be reduced during any public worker’s career.
So, when lawmakers required government retirees to pay Oregon’s 9 percent income tax, as everybody else did, they also increased pensions by 9.89 percent, giving retirees extra money to pay the tax with.
“It’s an affront to everybody who pays taxes,” said Bruce Dennis, a retired carpenter from outside Portland who earned a $54,000-a-year pension by swinging a hammer for 45 years. No one gives him extra money to cover his taxes.
109.89% x 91% = 99.9999%, I'm surprised they didn't fight for that 0.0001%
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Well if it was a government program required of all workers you'd avoid the issue of pension benefits being valued less than present salary by public sector employees, and a lot less than the net present value of providing those benefits by politicians, so I think such a system would be reasonable. But as you say, the likelihood anything like that ever gets implemented .... yeah.
The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently.
I would say that the bolded bit does not reflect my observation of the preferences for feelings of voters I've interacted with in a number of states.
Also in the specific case of Oregon, the voters clearly don't like the status quo because they keep trying to change it and are being told by the courts that they are bound by agreements entered into by dead politicians before many members of the current electorate were born.
I agree with you on the bolded, I was not specific enough. The voters of Oregon are okay with the status quo of Oregon. Other wise they would vote in someone different, perhaps from another party? Just because a lawsuit was brought does not mean that the vast majority of voters are unhappy with the status quo.
This is probably true of all states, Republicans love there state governments slashing budgets otherwise they would not keep voting in republican that slash budgets.
I agree that most people are unhappy with the status quo at the federal level. Maybe my bias is showing being from a blue state but the polls tend to agree with me.
I wouldn't vote in a politician who espoused views I disagree with 98% of the time simply over a disagreement about pensions. That does not mean that I de-facto agree with every decision made by the ruling party in OR.
The unfortunate choice with our 2 party political system is that we all have to vote that way, but it shouldn't limit complaining / campaigning for change to the opposite party only.
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I'm not sure I follow what you mean here. The private sector doesn't have the same problem because in that case the principal's are stockholders, who have found more effective ways to align the interests of their agents (CEOs and managers) with their own interests as shareholders, such as tying compensation to share price, or granting lots of options to executives which are only valuable if the company's own value continues to increase. And efficient stock markets do a much better job of penalizing companies for taking on long term unfunded liabilities to pay above market wages than voters manage with elected officials as well as penalizing companies that aren't willing to pay market rate waged to secure employees with the necessary skill sets to sustain the business.
Now that system does break down sometimes, for example in determining the pay of CEOs themselves. And as a society we spend a lot more incentive pay and stock options for CEOs than we do on salaries for elected officials, so the systems for aligning the interests of the management negotiating private sector pay with the interests of shareholders who don't want to pay employees more than market rate doesn't come cheaply. And I'm not arguing that the free market solution adopted in the private sector would work for the types of things we need government (and government employees) to do. But I don't think it is accurate to say this particular problem is equally prevalent in the private and public sectors.
The point is that those companies are using their political clout to benefit themselves, same as public sector unions. The only difference is the benefits go to the workers instead of the shareholders. Personally that's the same to me. A select few benefit from their political clout at the expense of the taxpayer.
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How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?
Mine certainly wasn't.
My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6
I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.
Finding my own city was trickier because of how they do the entries. Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k.
Average years of service just under 30 years.
Wow, is this in a big city? What would their annual salaries have been?
Those examples are getting twice the pension that Paul Ryan will qualify for in a couple years. (Of course, I have little doubt they also worked far more days in their careers than Ryan).
This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two. So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak. It's in fact very common.
Transparent California is the website.
As I said up above, the typical years of service for these retirees is 27-29 years. It's listed on the website, along with the year they retired.
So yes, there are people who have been pensioners for a couple of decades, who are being paid in part by taxes of people who weren't born when the deals were made.
I guess when the city defaults and goes bankrupt, it'll work itself out.
CALPERS has made several changes over the years to eliminate pension spiking. From what I can tell, you can no longer have a bunch of overtime thrown at you your final year and see your retirement benefit go up by any appreciable amount. In fact, overtime pay or off scale pay is seemingly disallowed--retirement benefits are calculated off the pay scale. Of course, before the reforms it was entirely possible to have your income as a firefighter or police officer boosted by overtime. Managers and department heads make far more, of course, so they will see correspondingly higher salaries.
Sadly, the information contained in Covered California is often inaccurate. I checked my own record (I'm a CA employee) and it is way off.
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I'm not sure I follow what you mean here. The private sector doesn't have the same problem because in that case the principal's are stockholders, who have found more effective ways to align the interests of their agents (CEOs and managers) with their own interests as shareholders, such as tying compensation to share price, or granting lots of options to executives which are only valuable if the company's own value continues to increase. And efficient stock markets do a much better job of penalizing companies for taking on long term unfunded liabilities to pay above market wages than voters manage with elected officials as well as penalizing companies that aren't willing to pay market rate waged to secure employees with the necessary skill sets to sustain the business.
Now that system does break down sometimes, for example in determining the pay of CEOs themselves. And as a society we spend a lot more incentive pay and stock options for CEOs than we do on salaries for elected officials, so the systems for aligning the interests of the management negotiating private sector pay with the interests of shareholders who don't want to pay employees more than market rate doesn't come cheaply. And I'm not arguing that the free market solution adopted in the private sector would work for the types of things we need government (and government employees) to do. But I don't think it is accurate to say this particular problem is equally prevalent in the private and public sectors.
The point is that those companies are using their political clout to benefit themselves, same as public sector unions. The only difference is the benefits go to the workers instead of the shareholders. Personally that's the same to me. A select few benefit from their political clout at the expense of the taxpayer.
Gotcha. Yes, making decisions in negotiating compensation with public sector workers which are not in the best interest of the tax payers is certainly not the only example of elected officials making decisions because their own best interest is not always aligned with the best interests of the people who elected them.
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I disagree. I think people would still take their pension and just get a different job. Unless you are arguing raising the pension withdrawal range, but again going back to total compensation you would have to raise wages. My co-workers and I can retire (collect our pension) at 53 (if we have 25 years in.) if that age were to change to 65 then you can bet I would expect to be compensated for that change (by moving closer to market rates due to a benefit cut.) Again, when you look at total compensation for similar employees (education, experience ect..) studies suggest we are compensated 97% of what our private sector counterparts are. If you cut the pension benefits I imaging it would drop to around 90%ish... meaning you would have to make it up elsewhere....
Again, anecdotally I have been offered 15% more pay with benefit cuts for private sector work. A branch of my union negotiated an 8% raise to get closer to market for their nurses. Our nurses did not get that raise.
Then people complain about how much OT public workers get... I don’t understand... of course there is a ton of OT, nobody wants to do the job for the current compensation package. Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)
Side topic- I think it’s funny that we are all on a site trying to take advantage of everything we can to benefit us the most to retire early (tax avoidance, student loan forgiveness, even millionaires using the aca subsidies) but people want to come complain about union pensions?
I would also like to say for the record that I would be in favor of a cap on annual pension benefits of less than 4x the median income (pick a number I don’t care.) or not I don’t know. We already have a tough time keep physicians causing physicians OT (or contractors being hired at massive rates.) I don’t understand what fiscal conservatives want done to rectify the issues they see.
Honestly unions do some harm, I agree. However they are a net good for the people they serve (in my opinion.)
Responding the bolded points:
1. Re: "you'd have to give me a raise if you raised the pension age" No, I don't think we would have to raise wages for about 90% of the state and local government workforce. Where would they go work? What other job is going to give them so many days off, let them obtain quasi-tenure/untouchable status, not judge performance based on value added to the enterprise, give uber-subsidized health insurance, let alone absurdly generous pensions and retiree healthcare benefits? It's still an *outstanding* deal for most of the folks employed by the govt.
Most of the people in state/local government would not be able to find a comparable paying job. I'm not even talking about police/fire, I mean the legion of office and white collar workers who get paid way more than their worth in the private sector. Yes, there is a sliver of people in state/local government that are actually skilled, not lazy, and marketable. We should pay those people more than they get paid now. But we should pay the rest less, many of them significantly less.
It would be immensely helpful to fiscal health of the states/localities if there was a "no early pensions" (pre-65 let's say) rule enacted. I would be happy to give all of the hard-charging, ambitious go-getters who would leave if the pension age was raised their entire personal contributions to their pensions in a lump sum in exchange for leaving their government position for greener pastures. The main problem would be that only about 5% - 15% would actually leave, because like I said, the vast majority have it way better in government than they would outside of it, even with harsher pension rules.
2. Re: OT, are you naive? No rational business would have chronic OT claims as a permanent feature. It would simply hire more people. Rolling OT implies you need more employees, and that you could staff things cheaper by hiring more people. Government doesn't do that because: (a) current workers *want* to work the OT, and the cost is paid by someone else (taxpayers), so who cares; (b) there's a gigantic fixed cost to hiring any employee because of pensions and retiree healthcare costs; (c) politicians like when it's hard to get hired because then they can dole out positions in quid pro quo or clout exchanges. You're going to have to cite statistics showing me that they have trouble filling government jobs, that applications are low, etc before I believe that all the OT payouts are because, well shucks, no one will sign up for the job! Preferably not an AFSCME publication.
3. Re: non-govt. MMM'ers taking advantage of things, I agree, I've personally criticized all of those behaviors on this forum. But the scale and ubiquity of public sector pensions vastly overshadows any shenanigans caused by the tax avoiding misers of MMM. Many state and local government budgets are dedicating the plurality, or even majority, of spending towards employee pensions and retiree healthcare. That is, current year spending is primarily tied up in paying for services rendered long ago. This is crowding out legitimate government functions [https://siepr.stanford.edu/sites/default/files/publications/17-023_1.pdf], as well as foisting unnecessarily high taxes onto the public, most of whom never would have signed off on these pensions had they been asked about it.
* * *
I know that you're not personally to blame for any of these problems. And I'm sure you're one of the people who actually has comparable employment options outside of the public sector. I don't really want to take away promised benefits from people, at least not people who are close to their promised retirement date (but I'd switch new and newer employees to a 401(k) and SS, just like the rest of us schlubs). What is galling is when people try to defend the indefensible. When a state like Illinois has 7,500 teachers drawing +$100k pensions [https://www.forbes.com/sites/adamandrzejewski/2016/04/22/mapping-the-100000-illinois-teacher-pensions-costing-taxpayers-nearly-1-0-billion/#6df3b970237e]—when the median *household* income is $59,000 [https://www.census.gov/quickfacts/IL]—that is simply indefensible, especially when you consider the horrid fiscal condition of the state.
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2. Re: OT, are you naive? No rational business would have chronic OT claims as a permanent feature. It would simply hire more people. Rolling OT implies you need more employees, and that you could staff things cheaper by hiring more people. Government doesn't do that because: (a) current workers *want* to work the OT, and the cost is paid by someone else (taxpayers), so who cares; (b) there's a gigantic fixed cost to hiring any employee because of pensions and retiree healthcare costs; (c) politicians like when it's hard to get hired because then they can dole out positions in quid pro quo or clout exchanges. You're going to have to cite statistics showing me that they have trouble filling government jobs, that applications are low, etc before I believe that all the OT payouts are because, well shucks, no one will sign up for the job! Preferably not an AFSCME publication.
The two bold bits are a bit contradictory. In both the public and private sectors, whether it's more cost effective to pay overtime or hire more staff depends on the fixed costs of recruiting, training, and maintaining new employees. Even in the private sector health insurance benefits costs enough at this point that depending on the circumstances it can be cheaper to shell out for some overtime pay than to grow the size of your workforce.
In government work, it may also be that there are fixed pay bands for a position which are not enough to attract applicants, and management is not permitted to raise regular compensation, but is allowed to pay overtime, so overtime becomes a backdoor way of circumventing legislative barriers to paying a market rate salary. As more positions are filled the amount of available overtime decreases, making remaining unfilled positions less and less attractive. As more positions become vacant the amount of overtime increases, making the unfilled positions more and more lucrative and hence easier to fill, until total income including overtime pay stabilizes as something approximately like market rate compensation.
Aside from that you're making some very strong statements in the absence of data. Yet, you're turning around and demanding people show their sources before they can disagree with you. For example:
Most of the people in state/local government would not be able to find a comparable paying job. I'm not even talking about police/fire, I mean the legion of office and white collar workers who get paid way more than their worth in the private sector.
Do you have source for the bolded statement above? There certainly are large numbers of individual cases of people being overpaid in state and local government relative to what they could earn on the open market. There are also systematic cases, like the Oregon pension system which was promising people returns well above market rates.
However, I'm specifically interested a source to back up the use of term "most" which implies that the number is at least 50% + 1 of all state and local employees.
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Responding to Maizeman
1. My understanding is that most OT is worked by police, fire, and prison guards. At least for the first two, there are normally far more qualified applicants than advertised positions. I'm willing to be proven wrong, please provide links.
2. Look at the CBO study I cited earlier in this thread. I would also invite you to spend time at a state or local government building some time and observe who works there. The median employee seems to be a dowdy slob who takes a smoke break every hour. Who is going to offer these people above-average compensation in the private sector?
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For #1, you've made two states of fact: A) most overtime is worked by firefighters and police officers and B) there are normally far more qualified applicants than advertised positions for both of those jobs.
The first would be easy to provide some data to back up, just dig up a study that shows what percent of overtime hours worked by public employees are worked by police and firefighters. The second is a bit harder because "qualified" is a bit hard to qualify, and the definitions of "far more" and "normally" are also subject to debate. But we could start with a study showing the average number of applicants per government position, and go from there.
You've also dropped the thread regarding the point that paying more overtime can be an economically rational decision if you fixed per-employee costs (things like training and healthcare) are high. Can I take the lack of comment an indication we are in agreement on this point?
For point #2, it's helpful to start with this quote from the CBO study you linked to:
Even among workers with similar observable characteristics, however, employees of the federal government and in the private sector may differ in other traits, such as motivation or effort, that are not easy to measure but that can matter a great deal for individuals’ compensation. Moreover, substantial ranges of compensation exist in both the federal government and the private sector among workers who have similar observable attributes. Therefore, even within groups of workers who have such similarities, the average differences in compensation between federal and private-sector employees do not indicate whether particular federal employees would receive more or less compensation performing a similar job in the private sector.
There is also a lot of great data in here about other differences between the federal workforce and the private sector. The workers tend to be a bit older (average age 46 vs 42), and 36% of federal employees work in fields like science and engineering vs only 20% of the non-federal workforce. Likely as a result of that 28% of federal workers have a masters, MD/JD, or PhD vs 11% of nonfederal workers.
Overall the CBO analysis was a fun read, and there's also a section in there about the problem I was talking about before of whether workers value an increase retirement benefits as much as an increase in current salary, even if the cost of providing the two is the same (they almost certainly don't), and I apologize for not reading it when you first posted it. However, I didn't find anything in the study about whether or not the majority of government workers would be able to find jobs with equivalent compensation if they left their current employer or not.
I'm not sure what the apparent attractiveness of state employees has to do with the point we're discussing. For obvious reasons I wasn't able to find any numbers on what percent of government employees would be considered dowdy. I was able to find this reference in a new paper column which indicates that in 2013 only 10% of wisconsin state employees would be effected by a new health insurance surcharge on smokers,* which in turn suggests that at least 90% of state employees (in that particular state) are not taking a smoke break every hour.
*Source: http://host.madison.com/wsj/news/local/health_med_fit/health-sense/health-sense-plan-to-charge-state-workers-who-smoke-isn/article_af18b548-8fd0-11e2-a0ac-001a4bcf887a.html
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Responding to Maizeman
1. My understanding is that most OT is worked by police, fire, and prison guards. At least for the first two, there are normally far more qualified applicants than advertised positions. I'm willing to be proven wrong, please provide links.
2. Look at the CBO study I cited earlier in this thread. I would also invite you to spend time at a state or local government building some time and observe who works there. The median employee seems to be a dowdy slob who takes a smoke break every hour. Who is going to offer these people above-average compensation in the private sector?
I am always surprised by the friendliness and professionalism of the employees at my local city hall. Everyone seems to enjoy their jobs and are always willing to help me with whatever issue it is that I am there for. I'm seriously impressed with the hiring managers there because the people are excellent. None of them seem like smokers but I didn't sniff their fingers to confirm.
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my god, this is obscene:
Maybe he needs it to take care of a former spouse?
"I paid off my wife’s student loans — then she filed for divorce after two years of marriage" (https://www.marketwatch.com/amp/story/guid/E3D51E72-44DC-11E8-98DF-1344D9AEADEF)
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.
This. I am a member of a public pension and it is managed by a 3rd party, not by my employer. My employer has to pay a certain percentage into it every year, along with the percentage I have to put in. My employer has to put in 1% more than I put in. The amount that I and my employer contribute is reviewed annually by the fund to ensure that everything is on target for my eventual retirement, as well as ensuring the health of the plan for current retirees. The contribution rate actually went down by 1% for 2018 due to the recent years market run up. It could easily go up a couple of % points next year. My total compensation package is still less than what my job goes for in the private sector (I am trading off work life balance for higher compensation, I am not complaining about this), so any arguments about public sector workers being over compensated, at least for those in the professions, is simply not correct. My eventual pension payout looks like it pretty much follows the 4% rule.
When I hear about municipal pensions being cut after the fact to employees like police and firemen, it makes my blood boil. The blame is squarely on the shoulders of the municipalities, not on the workers, but oh how easy it is to vilify the workers for their "gold plated pensions" sucking away resources to school children.
It isn't ok for the private sector to withhold compensation because a corporation would rather spend the money on new infrastructure, it shouldn't be ok for the public sector to do the same thing.
Perhaps something like Sarbanes–Oxley needs to be expanded to incorporate municipal and state financial accounting.
LAPP plan? Based on your location and description sounds like it. I might have an opportunity to take a job with LAPP pension but would pay $7000 less per annum in addition to loss of approx $10K bonus per year....so I guess $17000 less. But then i would get the 13% lapp match from employer....i'm just struggling to quantify if that makes up for the shortfall in compensation in today's dollars. Oh yea also the hours of work and "time in lieu" for working an extra half hour per day are absolutely absurd and as a taxpayer make me abit livid to be honest.
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
I don't have a problem with the pension either. The reason the pension is so high is because the salary was so high. The article is talking about a University President and a University Football Coach. Both positions probably pay 3 million/year.
If the football coach was in the NFL he would probably make 5 million, but have no pension. That is what Chip Kelly did, who was the last football coach of University of Oregon.
These are extreme examples. Let's talk about more typical examples.
I got my first full-time faculty job at a large state University in Florida. With a Ph.D., my starting salary in 2011 was 40K with a 10.42% contribution toward my 401K. During the recession, it was determined that the state workers retirement benefits were too high so they cut the employer contribution to 5.12%.
In 2015 a head hunter called me for a job that I was offered in the past. It was for a research position for a non-profit in D.C. I originally turned the offer down because the salary was too low for D.C. She called me to tell me they raised the starting salary to about 120K and wanted to know if I wanted to interview again.
If my value is 300% more in the non-profit sector it's probably 400% more in the corporate sector. Why are they taking my benefits away claiming that I'm over compensated?
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
I don't have a problem with the pension either. The reason the pension is so high is because the salary was so high. The article is talking about a University President and a University Football Coach. Both positions probably pay 3 million/year.
If the football coach was in the NFL he would probably make 5 million, but have no pension. That is what Chip Kelly did, who was the last football coach of University of Oregon.
These are extreme examples. Let's talk about more typical examples.
I got my first full-time faculty job at a large state University in Florida. With a Ph.D., my starting salary in 2011 was 40K with a 10.42% contribution toward my 401K. During the recession, it was determined that the state workers retirement benefits were too high so they cut the employer contribution to 5.12%.
In 2015 a head hunter called me for a job that I was offered in the past. It was for a research position for a non-profit in D.C. I originally turned the offer down because the salary was too low for D.C. She called me to tell me they raised the starting salary to about 120K and wanted to know if I wanted to interview again.
If my value is 300% more in the non-profit sector it's probably 400% more in the corporate sector. Why are they taking my benefits away claiming that I'm over compensated?
1) cost of living. Florida is one of the cheapest places in the country, and DC one of the most expensive. Pay at both institutions reflects that
2) your first job you had 0 yrs experience as a Ph.D. Your 2nd job you had 4 yrs. In the first situation you were probably not a very competitive candidate (with no experience) and therefore they could hire you for sub market wages. In the 2nd example you were very desirable with 4 yrs in the field and your offer also reflected that. You failed to compare your salaries based off what the Dc job would have paid in 2011.
3) market recovery. In 2011 many state budgets were strapped. In 2015, the market was up and private firms had more $$ with which to work.
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Long thread!
My only comment is its amazing that some cities/counties/states still haven't figured out they need to cap earnings eligible for pension.
I get a private sector pension, but the income that's eligible is capped so the people at the top and 1-2 rungs below the top aren't getting any more accruals than some field managers. We are in an industry that doesn't give pensions, but leadership feels its really important for the $40k employees, so I hope they move that cap way down to accomplish leadership's goal but get more competitive on cash compensation.
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LAPP plan? Based on your location and description sounds like it. I might have an opportunity to take a job with LAPP pension but would pay $7000 less per annum in addition to loss of approx $10K bonus per year....so I guess $17000 less. But then i would get the 13% lapp match from employer....i'm just struggling to quantify if that makes up for the shortfall in compensation in today's dollars. Oh yea also the hours of work and "time in lieu" for working an extra half hour per day are absolutely absurd and as a taxpayer make me abit livid to be honest.
I assume that your current employer is also doing some kind of RRSP match, don’t forget to include that in your assessment. The way healthcare benefits are paid may be different as well, and things like disability insurance was covered by my previous employer but now it is mandatory out of pocket for me. My total comp delta is much higher than what you are describing, but as I mentioned, personal time was as important to me as money in my decision making. And by the way, every second Friday off in lieu for working longer hours was not unheard of in the Alberta oil patch for many of the big corps, so ask yourself why your standards for public sector workers are different. If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.
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Taxpayers don't have to pay for the shortfalls of private pension schemes offered by companies. That's a monumental difference. Cmon now, you're smart enough to understand that.
You sure about that? It seems to me that the government has had to step in and bail out companies many times.
Airlines
GM?
Pension benefit guarantee corporation?
Sent from my Pixel 2 XL using Tapatalk
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If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.
The best part being that a lot of the people complaining have 0 federal tax burden, and many utilize those same gub'mint services they rail against.
Aslo like republican lawmakers who rail against government workers, while either failing to acknowledge (or hope others don't) that they themselves are the govt.
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LAPP plan? Based on your location and description sounds like it. I might have an opportunity to take a job with LAPP pension but would pay $7000 less per annum in addition to loss of approx $10K bonus per year....so I guess $17000 less. But then i would get the 13% lapp match from employer....i'm just struggling to quantify if that makes up for the shortfall in compensation in today's dollars. Oh yea also the hours of work and "time in lieu" for working an extra half hour per day are absolutely absurd and as a taxpayer make me abit livid to be honest.
I assume that your current employer is also doing some kind of RRSP match, don’t forget to include that in your assessment. The way healthcare benefits are paid may be different as well, and things like disability insurance was covered by my previous employer but now it is mandatory out of pocket for me. My total comp delta is much higher than what you are describing, but as I mentioned, personal time was as important to me as money in my decision making. And by the way, every second Friday off in lieu for working longer hours was not unheard of in the Alberta oil patch for many of the big corps, so ask yourself why your standards for public sector workers are different. If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.
Yes there is a 9% rrsp match....basically all in I would be at 156k at current employer whereas potential is 129k + 13%lapp = 146k. Of course the bonus at my work can be less than 10k some years. I guess the question i have to figure out is what is the future value of that DB plan once i start collecting at 65 or get it early at 55. Even contributing for 10 years works out to about 25k per year at age 65. It would be wonderful to offset some of the market risk those of us without DB plans have. Those hoping to retire in the next five years are due for a rude awakening given the inevitable market correction coming....public sector employees have not a care in the world about it. My buddy has LAPP plan and hasn't saved a dime and told me why would I when the government is taking care of my retirement...
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No rational business would have chronic OT claims as a permanent feature. It would simply hire more people. Rolling OT implies you need more employees, and that you could staff things cheaper by hiring more people. Government doesn't do that because: (a) current workers *want* to work the OT, and the cost is paid by someone else (taxpayers), so who cares; (b) there's a gigantic fixed cost to hiring any employee because of pensions and retiree healthcare costs; (c) politicians like when it's hard to get hired because then they can dole out positions in quid pro quo or clout exchanges. You're going to have to cite statistics showing me that they have trouble filling government jobs, that applications are low, etc before I believe that all the OT payouts are because, well shucks, no one will sign up for the job! Preferably not an AFSCME publication.
Huh? OT is pretty much constant at the company I work for, and it's been like that since well before I started over a decade ago. They in fact have a reputation of burning people out due to the overtime/travel. It's most definitely a permanent feature.
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If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.
The best part being that a lot of the people complaining have 0 federal tax burden, and many utilize those same gub'mint services they rail against.
My federal tax burden is pretty high. Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars. Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden. However, even those in low income households votes count just as much (assuming they are legal citizens.)
Aslo like republican lawmakers who rail against government workers, while either failing to acknowledge (or hope others don't) that they themselves are the govt.
Those who want to cut government waste typically recognize that that doesn't mean eliminating all of government. There are extremists on both sides, but that's not the norm.
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Taxpayers don't have to pay for the shortfalls of private pension schemes offered by companies. That's a monumental difference. Cmon now, you're smart enough to understand that.
You sure about that? It seems to me that the government has had to step in and bail out companies many times.
Airlines
GM?
Didn't Obama tell us that GM paid back every last dime borrowed from the government?
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I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.
I don't have a problem with the pension either. The reason the pension is so high is because the salary was so high. The article is talking about a University President and a University Football Coach. Both positions probably pay 3 million/year.
If the football coach was in the NFL he would probably make 5 million, but have no pension. That is what Chip Kelly did, who was the last football coach of University of Oregon.
These are extreme examples. Let's talk about more typical examples.
I got my first full-time faculty job at a large state University in Florida. With a Ph.D., my starting salary in 2011 was 40K with a 10.42% contribution toward my 401K. During the recession, it was determined that the state workers retirement benefits were too high so they cut the employer contribution to 5.12%.
In 2015 a head hunter called me for a job that I was offered in the past. It was for a research position for a non-profit in D.C. I originally turned the offer down because the salary was too low for D.C. She called me to tell me they raised the starting salary to about 120K and wanted to know if I wanted to interview again.
If my value is 300% more in the non-profit sector it's probably 400% more in the corporate sector. Why are they taking my benefits away claiming that I'm over compensated?
1) cost of living. Florida is one of the cheapest places in the country, and DC one of the most expensive. Pay at both institutions reflects that
2) your first job you had 0 yrs experience as a Ph.D. Your 2nd job you had 4 yrs. In the first situation you were probably not a very competitive candidate (with no experience) and therefore they could hire you for sub market wages. In the 2nd example you were very desirable with 4 yrs in the field and your offer also reflected that. You failed to compare your salaries based off what the Dc job would have paid in 2011.
3) market recovery. In 2011 many state budgets were strapped. In 2015, the market was up and private firms had more $$ with which to work.
I agree with your points
1) Yes, Florida was cheaper and that's why I said "no" to the original offer of $67,500 for D.C.
2) The D.C. job posting was Masters Degree and four years experience minimum, but Ph.D. preferred. I was finishing up a Ph.D. and I had 7 years experience doing applied experiments in the field across my MA and Ph.D. I technically didn't have a Ph.D. yet when I was offered the job. I asked if I could get a guaranteed raise after getting my Ph.D. in about 4-6 months and they said no.
The non-profit had plenty of money in 2011. You should have seen the building they leased. It's crazy expensive. They didn't budget enough for the position. After 4 years of struggling to hire someone they re-budgeted and they called me back. New minimum salary was 105K, but with a Ph.D. and now 11 years experience, more like 120K.
My salary at the state school in Florida after 4 years went from 40K to 42.6K. After getting my benefits cut by over 5%, my overall compensation was basically flat over 4 years. Because that school is really bad about raises they have a problem with salary inversion. New hires out of grad school are sometimes getting higher salaries than people who have been there for 5 years. I left after 4 years.
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Universities are generally terrible at recognizing and responding to the fact that the market wage their employees could command continues to change over time after they are hired.
Essentially you need to have another job offer in hand, with a higher salary attached, and be absolutely willing to leave for that other position in order to have any shot at a significant raise. At which point you might as well leave.
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If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.
The best part being that a lot of the people complaining have 0 federal tax burden, and many utilize those same gub'mint services they rail against.
Aslo like republican lawmakers who rail against government workers, while either failing to acknowledge (or hope others don't) that they themselves are the govt.
I notice three common 'themes' among the crowd who rails against government workers. I say 'themes' instead of 'assumptions' because to them these are indisputable facts, backed up by a few cherry-picked examples and their own beliefs
1) government workers are overly compensated, largely because of their benefit packages (see this thread)
2) They are lazy individuals who cannot be fired and this kind of output would never be tolerated in 'the free marketplace'.
3) There is no competition from the private sector, so free market forces are not at work.
If you believe all, some, or potentially even one of these it's easy to assume that the private sector could do the same jobs faster and cheaper. It also doesn't take long to find specific examples where some of these themes seem to hold true. At the same time, these may be the exceptions rather than the rule, and one could certainly find similar circumstances in the private sector as well. Some themes, such as #1, place substantial sacrifices on the worker like being tied to the same job for 2+ decades or working an obscene amount of overtime (little work-life balance). Others (like #2) rely on a stereotype that private corporations (particularly large ones) never have unmotivated employees and that ignore both the many hardworking and dedicated federal employees as well as the fact that federal jobs are frequently cut both for performance reasons (within the worker's control) and for funding reasons (external - cuts made due to a political change or reduced revenue). Indeed, here there are a lot of parallels to large corporations. Finally, the idea that there is no competition is directly contradicted by the immediate suggestion that we source more functions of the federal government to the private sector. The 'solution' to this 'problem' is to let private companies bid on doing the same work that a particular federal agency has been tasked to do. Indeed every single government agency already works constantly with private contractors that do a large portion of the work, and federal managers are keenly aware that there's a steady drum-beat of political constituents who want to shrink their funding and outsource their work.
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My federal tax burden is pretty high. Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars. Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden. However, even those in low income households votes count just as much (assuming they are legal citizens.)
Ok, why WOULDN'T you pay more in taxes than a household earning the same but had to feed, house, and clothe 4x as many humans? That's the point of the personal exemptions and standard deduction - to reduce the tax burden due to the fixed costs of surviving. If your household has more humans, it costs more and thus, the taxable onus isn't as great.
Also, if you make 6 figures and a comparative 4 person household also made the same, their income is likely not being paid to them via collected tax dollars.
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My federal tax burden is pretty high. Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars. Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden. However, even those in low income households votes count just as much (assuming they are legal citizens.)
Ok, why WOULDN'T you pay more in taxes than a household earning the same but had to feed, house, and clothe 4x as many humans? That's the point of the personal exemptions and standard deduction - to reduce the tax burden due to the fixed costs of surviving. If your household has more humans, it costs more and thus, the taxable onus isn't as great.
Also, if you make 6 figures and a comparative 4 person household also made the same, their income is likely not being paid to them via collected tax dollars.
To play devil's advocate here -- because that household of 4 almost certainly consumes far more public goods than the household of one.
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My federal tax burden is pretty high. Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars. Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden. However, even those in low income households votes count just as much (assuming they are legal citizens.)
Ok, why WOULDN'T you pay more in taxes than a household earning the same but had to feed, house, and clothe 4x as many humans? That's the point of the personal exemptions and standard deduction - to reduce the tax burden due to the fixed costs of surviving. If your household has more humans, it costs more and thus, the taxable onus isn't as great.
Also, if you make 6 figures and a comparative 4 person household also made the same, their income is likely not being paid to them via collected tax dollars.
To play devil's advocate here -- because that household of 4 almost certainly consumes far more public goods than the household of one.
Yes, let's discourage immigration and children-having. What could possibly go wrong?
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So I can certainly understand how taxing people based on income without giving perks for increased household size reduces the incentive to have children, but how would it discourage immigration?
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So I can certainly understand how taxing people based on income without giving perks for increased household size reduces the incentive to have children, but how would it discourage immigration?
Sorry, it doesn't. It was a separate point. Our current immigration policy is moving in the direction of less immigration.
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Gotcha, thanks for explaining.
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My federal tax burden is pretty high. Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars. Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden. However, even those in low income households votes count just as much (assuming they are legal citizens.)
Ok, why WOULDN'T you pay more in taxes than a household earning the same but had to feed, house, and clothe 4x as many humans? That's the point of the personal exemptions and standard deduction - to reduce the tax burden due to the fixed costs of surviving. If your household has more humans, it costs more and thus, the taxable onus isn't as great.
Also, if you make 6 figures and a comparative 4 person household also made the same, their income is likely not being paid to them via collected tax dollars.
To play devil's advocate here -- because that household of 4 almost certainly consumes far more public goods than the household of one.
This is an argument for abolition (or significant reduction) of income taxes and replacing with a system akin to a sales tax - it's an interesting one but that's not the current system we have. We are taxed mainly on our income, not on what we spend/consume - and in that system the family of 4 gets breaks compared to the individual ceteris paribus. We're pretty entrenched with income taxes, especially with tax-advantaged accounts, but I do quite often wonder how well consumption taxes would work (especially with regard to public education). I guess I could read up on the UAE, Bermuda, Andorra, Monaco, and The Bahamas.
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Universities are generally terrible at recognizing and responding to the fact that the market wage their employees could command continues to change over time after they are hired.
Essentially you need to have another job offer in hand, with a higher salary attached, and be absolutely willing to leave for that other position in order to have any shot at a significant raise. At which point you might as well leave.
Companies are just as bad.
One of my friends is a university professor, and just changed universities, partly for that reason also.
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Universities are generally terrible at recognizing and responding to the fact that the market wage their employees could command continues to change over time after they are hired.
Essentially you need to have another job offer in hand, with a higher salary attached, and be absolutely willing to leave for that other position in order to have any shot at a significant raise. At which point you might as well leave.
Companies are just as bad.
One of my friends is a university professor, and just changed universities, partly for that reason also.
Well in both cases the employer has a vested interest in paying their workers as little as they can get away with, and hoping that changing jobs is too disruptive for most employees to undertake.
It should be noted that, at least in the short-term, offering a pension which vests only after a few decades is one way of retaining employees ('golden handcuffs').
In the largest university system in my area, they have an active practice of trying to buy-out professors who have ~15 years of experience so that they leave before their pensions vest. In exchange they hire younger non-tenured PhDs who work their asses off for less money. The older profs sometimes leave for private industry or a private college having pocketed 2-3x their annual salary but without the lucrative pension which attracted them to the job in the first place.
The biggest drawback to this practice IMO is that there's a steady 'brain-drain' of the best profs shortly after they've really become established and start to really draw money for the university in the form of large federal grants. But the personell department understands salary and liability (pensions) and rarely considers the value added (grants, experience). Consequentially, the system remains second-tier even though there's a perennial push to move up in the rankings.
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Yes, let's discourage immigration and children-having. What could possibly go wrong?
Does anyone decide to have kids or not based on the tax code?
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Yes, let's discourage immigration and children-having. What could possibly go wrong?
Does anyone decide to have kids or not based on the tax code?
Directly, no.
However, if your take-home pay is the same as someone without kids, it's totally plausible that a statistically significant number of people would conclude they can't afford it.
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Yes, let's discourage immigration and children-having. What could possibly go wrong?
Does anyone decide to have kids or not based on the tax code?
It was at least one consideration in our decision-making. knowing that a having a kid was going to put a strain our our budget, it was at the very least comforting to know we'd be paying less in taxes, mitigating the financial burden slightly. If that incentive went away... we might have decided to further delay - which very could have led to not having any kids at all.
in other words, like NoStachOhio said - we probably would have concluded we couldn't afford it.
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My federal tax burden is pretty high. Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars. Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden. However, even those in low income households votes count just as much (assuming they are legal citizens.
As a family of 5, I tip my hat to you for that, sir. In my experience, there are a whole lot of ppl on disability or SS sitting around watching Fox and reiterating talking points that are likely to make them lose their last time.
Are you actually assuming that the people voting aren't citizens? I believe your illustrious leader's commission on voter fraud famously failed to find anything of interest.
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In the largest university system in my area, they have an active practice of trying to buy-out professors who have ~15 years of experience so that they leave before their pensions vest. In exchange they hire younger non-tenured PhDs who work their asses off for less money. The older profs sometimes leave for private industry or a private college having pocketed 2-3x their annual salary but without the lucrative pension which attracted them to the job in the first place.
The biggest drawback to this practice IMO is that there's a steady 'brain-drain' of the best profs shortly after they've really become established and start to really draw money for the university in the form of large federal grants. But the personell department understands salary and liability (pensions) and rarely considers the value added (grants, experience). Consequentially, the system remains second-tier even though there's a perennial push to move up in the rankings.
Yup, buy-outs are generally going to be a terrible way to reduce headcounts/total payroll, since you'll preferentially remove the most productive people who are confident they can go find another job somewhere else, while the people who know they're already getting more than they'd make at another job are the ones who are least likely to accept a buyout offer.
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The flipside:
Public Servants Are Losing Their Foothold in the Middle Class
https://a.msn.com/r/2/AAwdQrD?m=en-us&a=1
Sent from my ONE A2005 using Tapatalk
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In the largest university system in my area, they have an active practice of trying to buy-out professors who have ~15 years of experience so that they leave before their pensions vest. In exchange they hire younger non-tenured PhDs who work their asses off for less money. The older profs sometimes leave for private industry or a private college having pocketed 2-3x their annual salary but without the lucrative pension which attracted them to the job in the first place.
The biggest drawback to this practice IMO is that there's a steady 'brain-drain' of the best profs shortly after they've really become established and start to really draw money for the university in the form of large federal grants. But the personell department understands salary and liability (pensions) and rarely considers the value added (grants, experience). Consequentially, the system remains second-tier even though there's a perennial push to move up in the rankings.
Yup, buy-outs are generally going to be a terrible way to reduce headcounts/total payroll, since you'll preferentially remove the most productive people who are confident they can go find another job somewhere else, while the people who know they're already getting more than they'd make at another job are the ones who are least likely to accept a buyout offer.
This is interesting b/c DH's federal job is on the bubble right now b/c Trump's budget request slashed funding for scientific research. DH is adjunct at the local university, and when they heard the possibility that his job would be gone next year, they immediately offered to try to hire him on as faculty (he's got Full Professor status) and implied they would try to match his federal salary or close to it. The reason is the value that DH brings to the dept...he brings in some of the most money, and supports and graduates a very large number of grad students, among the highest in his department (in fact just won a prestigious college-level award last year). So I'm not surprised they'd be loathe to lose him.
However, your story makes me think that, were push to come to shove, they might not actually offer him a full professorship with retirement and health benefits, but some sort of highly paid 'temp' position.
Congress makes the actual federal budget, of course, and I doubt Trump's moronic attempts to gut funding for scientific research will mostly come to pass, so probably DH won't have to actually find out if his university is as shitty as some of these stories imply.
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Depending on the university, most of the ones in the USA don't have a pension plan anymore so bringing your husband on as a tenured faculty member vs high-paid temp wouldn't save them any money in the short term. Add into that most of the people making the decisions are tenured faculty themselves and couldn't imagine being willing to take a job without tenure, and the argument your husband can make that he wouldn't be taken as credibly in applications for new grants is he's a non-tenure track faculty member, and I'd be optimistic that if they can pull together the money to hire him at all it'll be a tenured position.
FWIW, after previous government shutdowns I have multiple colleagues who were federal employees with adjunct appointments at universities who got fed up and switched over to faculty positions at their associated state universities, and all of the ones I've kept up with since have seemed a lot happier after making the transition.
Good luck!
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Depending on the university, most of the ones in the USA don't have a pension plan anymore so bringing your husband on as a tenured faculty member vs high-paid temp wouldn't save them any money in the short term. Add into that most of the people making the decisions are tenured faculty themselves and couldn't imagine being willing to take a job without tenure, and the argument your husband can make that he wouldn't be taken as credibly in applications for new grants is he's a non-tenure track faculty member, and I'd be optimistic that if they can pull together the money to hire him at all it'll be a tenured position.
FWIW, after previous government shutdowns I have multiple colleagues who were federal employees with adjunct appointments at universities who got fed up and switched over to faculty positions at their associated state universities, and all of the ones I've kept up with since have seemed a lot happier after making the transition.
Good luck!
Adding to this - an absurd irony with the latest fights over (and inability to pass) the federal budget has resulted in a series of continuing resolutions (CRs). While DJT has proposed slashing many scientific and education proposals, the actual (yet temporary) outcome has been that funding for these organizations has often increased over the past year. I'm paid through one program that DJT tried to zero out - but congressional leaders ultiamtely give us full funding through the 2018 cycle. It wastes a whole lot of f-ing time as departments go into triage-mode and draft up contingency plans to stay afloat with reduced/no fiscal support, only to be told to go back to life as normal (at least for the next 3-6 months until the next continuing resolution).
New people aren't being hired and attrition is setting in - yet we lack any clear guidance of what future budgets will look like; we're being asked to cut 22% by the WH but got a slight increase (+4%) from congress and the lastest CR over the previous fiscal year.
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The Flood:
pensiontsunami.com