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Go Home Why Public Employees Are the New Welfare Queens

JONATHAN COHN AUGUST 8, 2010

Why Public Employees Are the New Welfare Queens

BY JONATHAN COHN

This is an item about why your local fireman or teacher has such a nice retirement package, why you probably don’t, and the way conservatives are using that contrast to advance their broader economic agenda.

Friday’s New York Times had a column about the “coming class war,” focusing on the fact that retirement packages for public employees seem to be a lot more generous than the ones for private employees. This is not a new discussion. Experts and think-tanks have been churning out research on the topic for years. But, thanks in part to the recession, the pension gap has become a major political controversy.

Conservatives say that excessive public employee pensions exemplify the greed of unions (which sought these generous benefits for public employees) and inefficiency of government (which agreed to pay them). If local and state governments are struggling financially, these conservatives say, they should figure out some way to reduce or revoke those promised benefits, rather than come to Washington and beg for help from the taxpayers.

The Senate Republican Policy Committee sums up the right’s mantra succinctly: “No state bailouts should be contemplated until the wages and pensions of public sector employees are brought into line.” Translation: You shouldn't have to give up another cent of your taxes until government stops paying its bureaucrats so damn much.

I'm sure that argument resonates with a lot of Americans, particularly those who are struggling themselves. But is the premise of the overpaid public employee valid?  That's not so clear.

While raw statistics show that public employees get more compensation than private employees doing comparable work, research that adjusts for variables like education has suggested otherwise. Earlier this year, a study with such adjustments by economists Keith Bender and John Heywood concluded that compensation for local and state workers was, on average, 6.8 to 7.4 percent lower than compensation for comparable private sector workers.

Also, as Dean Baker of the Center for Economic and Policy Research points out, many public employees don’t get Social Security. Overall, he says, “most public sector pensions do not provide retirees with an especially high standard of living.” Exceptions to this rule frequently include firefighters and police, particularly in New York. Then again, they risk their lives to protect the rest of us from lethal threats, which is more than you can say for CEOs like the former telecom executive who in 2007 retired with a $159 million benefit package.

To be clear, I can't vouch independently for the calculations or the conclusions in all of this research. (Among other things, Andrew Biggs, of the American Enterprise Institute, suggests public employees really do fare better once you account for retiree health benefits.) If nothing else, the fact that so many public employees still have traditional pensions is increasingly an anachronism. The majority of private sector retirees don't have retirement plans from their employers. Those that do increasingly have private investment accounts (like 401Ks) that don't guarantee fixed benefits.

And to the extent this gap exists, conservatives are surely right when they say that unions and government accommodation of them are the main reason. Unions represent around 37 percent of public sector workers, compared to 7 percent of private sector workers. Note that one of the few exceptions to the public-private compensation differential seems to be unionized industrial laborers, like the auto workers--and that, during last year’s debate over what to do with the auto industry, we were having a very similar conversation about the relatively rich benefits that members of the United Auto Workers were getting.

But ask yourself the same question you should have been asking then: To what extent is the problem that the retirement benefits for unionized public sector workers have become too generous? And to what extent is the problem that retirement benefits for everybody else have become too stingy?

I would suggest it's more the latter than the former. The promise of stable retirement--one not overly dependent on the ups and downs of the stock market--used to be part of the social contract. If you got an education and worked a steady job, then you got to live out the rest of your life comfortably. You might not be rich, but you wouldn't be poor, either.

Unions, whatever their flaws, have delivered on that for their members. (In theory, retirement was supposed to rest on a "three-legged stool" of Social Security, pensions, and private benefits.) But unions have not been able to secure similar benefits for everybody else. That's why the gap exists, although perhaps not for long.

The fact is that local and state goverments have promised a lot more than they can deliver financially, in part because people love public services but hate to pay the taxes for them. In the short term, then, budget cuts are probably inevitable. And, in this political universe, the likely alternative to reducing public employee compensation is cutting essential services for people who are just as worthy and quite likely more needy.

In the long term, though, it seems like we should be looking for ways make sure that all workers have a decent living and a stable retirement, rather than taking away the security that some, albeit too few, have already. But that's a conversation about shared vulnerability and shared prosperity--a conversation we don't seem to be having right now.

SHARE YOUR THOUGHTS

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61 comments

An interesting figure to look at is how much people earned per day of work at the end of their life. A teacher will have a 34 years of work (including college, varies from state to state, some more, some less), followed by a nearly full pension including health care. Average salary while working is about $85K (including benefits). Average salary in retirement is about $75K (including benefits). They work about 180 days per year. Living to the age of 85, a teacher will have earned about $5M over their lifetime, while working 34 years at 180 days a year. This is about $822/day of work. A doctor also starts school at the age of 18, and will average about $150K per year once finished with school and residency. They are responsible for their own retirement. Medical school will leave them with about $200K in debt. tehy don't start making a reasonable salary until the age of 29. Living to the age of 85, and working until the retirement ago of 65, a doctor will earn about $5.2M over his lifetime. He'll work about 216 days per year, and work (including school) about 47 years. In the end, the doctor will have made about $516 per day of work. For each day worked, the teacher earns almost 60% more than the doctor. Cohn asks "To what extent is the problem that the retirement benefits for unionized public sector workers have become too generous? And to what extent is the problem that retirement benefits for everybody else have become too stingy?" Let's assume tomorrow that everyone joined a generous union. What woudl happen to everyone's salary? It'd stay the same. You can't just give everyone a higher salary without the cost of everything we need to buy also going up. This is a very important point to realize: As the number of people in unions increases towards 100%, then the perks that unions are able to extract goes to zero. As the number in unions declines, then the perks that unions are able to extract goes much higher. But realize that unions don't grab their rich benefits from the CEO. They grab their benefits from the other workers. When everyone is gaining, then people tend to ignore that a small group (unions, CEOs, banks) are making so much money. But when the music stops, people tend to care more. Especially when it becomes very clear that certain groups have no real exposure to the bad times.

- seattleeng

August 9, 2010 at 4:06am

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The post by seattleng says 90% of what I have to say. Cohn's "thinking" is laughable--"in the good old days everything was fine." I would point out that firefighters retire after 20 years. Because they "work" 24-hour shifts--mostly sleeping and watching TV--they work, on average, less than 2 days a week. They call in sick about 6 times a year, which amounts to about a month off, in addition to their vacation time. A few years ago Mayor Bloomberg noticed that NYC had 40% fewer fires than it did 20 years earlier, and he suggested that maybe it needed 40% fewer firefighters. Naturally, this idea went nowhere. Con really needs to do better. TNR isn't funded by the NEA, is it?

- AlanVann

August 9, 2010 at 7:48am

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I have an in law relative who retired by age 54 at 2/3 of salary (a generous salary, BTW, as she was a senior administrator at a state university). She worked 30 years in what I can only describe as a very low stress environment (basically no employment risk, generally adequate staffing for the job she was doing, well-defined responsibilities, zero risk that she'd misunderstand the market and lose her job as a result, generous benefits), and she's retired and out of the productive work force at 54, at public expense. Even moved out of the state she worked in for 30 years, so they don't get benefit of her property and income taxes. On a consulting gig some years back for state government, I was assigned to work with a late 40ish engineer. Extremely competent guy. After two weeks working on project specs, I pointed out a significant risk in the project, as it was predicated on using software that would be essentially defunct by the time the project went live. I said we had to raise this as risk, so contingency plans could be included. "No way," he said, "the risk won't materialize for 3 years, and in 2 years, if I keep my head down, my full pension is guaranteed, and I'm outta here. If I raise that risk, I'll be saddled with figuring out a solution, and end up actually working for the next 2 years." Hopefully my anecdotes represent anomalies. I doubt it though. I don't begrudge public employees reasonable and competitive salaries. I don't mind if they want to trade some of that salary for the increased job security they get. But I object mightily to the notion that they are entitled to mid-career retirement, just by virtue of having sat in the same seat for 30 years. Cohn talks lovingly of the "social contract." The social contract that allowed for generous guaranteed retirement in this country was always built on the notion that the population of young workers and the economy would grow sufficiently rapidly compared to the retiree population and life expectency, and that everyone need to save as well, so that the whole thing would be affordable. It was a crappy set of assumptions, as circumstances have proven. Cohn compares public employee expectations to executive retirement payouts. This is a red herring at best. Executive compensation is a different issue. Those thieves deserve their own comeuppance to be sure, but the right people to compare the generously retired former public employee to are not private sector executives, but a private sector wage earners or professionals of like skills - all of whom have had to assume in their own planning a piece of the larger risk that our society cannot avoid - the risk that things may not work out as planned. We need a uniform and universal safety net - social security we can count on - to make sure that retirees can feed and house themselves, and live with basic independence and dignity. For everything else private, portable, retirement savings is the way to go, for everyone. There is nothing wrong with the concept of the 401k/403b plan. We just need to get people to take saving seriously (most don't), and offer reasonably rates of return (how about a government bond that retirement savings accounts could invest in, returning an assured, inflation protected 3-4%?). Then if folks want to retire at 50, they can save now, to get longer retirement years, and do it on their own savings, not mine. They can hedge their life expectency risks with annuities, to spread the actuarial risk to a larger pool.

- IowaBeauty

August 9, 2010 at 9:11am

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I agree with the main thrust of this post -- the resentment has as much to do with the insecurity many middle class people feel as they approach retirement -- insecurity that union members addressed through collective bargaining (sacrificing current wages and spending to provide security in retirement). The rising numbers of Americans who can be considered "middle class" coincided with the rise in the numbers of Americans in unions. Isn't it odd that so few take the angle on this issue that Mr Cohn has rightly taken -- the problem is not that public employees have decent pensions but that so few of the rest of us do. Clearly there are abuses of the public payroll and retirement systems, and the inefficiency of local government and school districts is appalling, but the problem is not solved by stripping teachers, for example, of their pensions. I note that there has been much talk of the need to improve education in this country, and the key factor repeatedly identified is the quality of teachers. In New Jersey, where I live, the governor has been bad-mouthing teachers for months, and forcing layoffs, and cuuting pay and benefits for teachers. I wonder why anyone with any smarts would choose a career in teaching today, especially in New Jersey. One more way that our political leaders and the right wing tea party rabble are blundering their way to an even worse situation for all of us. Neil

- purcellneil

August 9, 2010 at 9:18am

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They work about 180 days per year. HA HA HA. Obviously seattle is confusing teachers with children. Um...children have 180 days a year, teachers work far more having to take hours of school work home with them every night and weekends. Or does seattle imagine school papers, grades, and lesson plans can be done during the school day? Teacher burnout rates are higher than student dropout rates. Nearly half of all teachers quit during their first five years, according to the National Center for Education Statistics, but the numbers alone don't convey the full severity of the problem. For a profession that seems to offer easy millions according to seattle, this should make no sense, unless seattle is the person making no sense. In fact, most teachers quit because the money is not good enough for the stress involved. But hey, seattle obviously educated himself (cough cough) who says we need teachers anyhow. And how can we have a consumer society until private businesses learn to pay their employees enough to buy their own products? The real issue is employer stinginess.

- blackton

August 9, 2010 at 9:27am

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Nice big gross comparisons you make there. I am kind of curious as to how you value the benefits portion of the teachers compensation. Since the average K-12 teacher's SALARY is a little less than $45K, you are valuing their benefits at $40k or more. That seems high. Please provide a little detail You fail to take into account teachers debt when they graduate from college. You include the doctors school days as part of his working days while not including the same days for the teachers. You underestimate how many days teachers work. I don't know of ANY teachers that work a fixed 180 days a year. Most work at least a month more AND also many end up paying for some students supplies. You claims simply do not hold up to even minor scrutiny. Sounds like you have dog in this race.

- e065702

August 9, 2010 at 9:38am

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$75k/year for a teacher? Where? In my neck of the woods, a teacher will never make more than $50k/year with a Master's degree and 25-30 yrs. in the trenches. They retire at maybe 2/3 of that at most. Most make in the 30-40k range. And they deserve it and more. I've been in the classroom to help out at my kids' school and you couldn't pay me enough for that job. If the pay is so good why don't more go into teaching? Why do they reject other difficult fields like engineering or the physical sciences and go into business/finance to be a banker or still crowd medical schools to be a specialist? As usual, seattledude distorts lies and makes up things.

- tnmats

August 9, 2010 at 9:44am

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I once worked as a high school teacher for a year. My respect for teachers soared.

- Claris

August 9, 2010 at 10:05am

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blackton writes "Ha ha ha" Most everyone takes work home with them Blackton. 1-2 hours of email a night before bed is pretty much par for the course among professionals. And when the BLS looks at "hours worked", they take into account ALL hours worked, as reported by the workers. This includes work at home. Teachers rang in at 36 hours per week, INCLUDING take home work. Others worked more than that. See the link below. tnmats "$75K for a teacher, where?" BLS. See some deeper analysis on the data here: http://www.manhattan-institute.org/html/cr_50.htm Teachers average $34/hour, 36 hour weeks of work, not including benefits. That's $44K. Add in $15K for health and dental insurance and you are at $60k. Add in the value of the retirement package (30 years of retirement at $60K/year) and you are WELL over $75K per year. Think about this tnmats. If you went to purchase an annuity that would pay you $60K/year for 30 years, how much would it cost per year to purchase that? Hint: Much, much, much more than $15K/year. In fact, to get that annuity would require you to pay in $1.3M. In other words, the value of the teacher retirement package is $1.3M upon their retirement. Now, how much of that $1.3M did the teacher actually pay? Final data point: Each year here in Seattle, the state "sets aside" $88K per teacher as the "fully loaded cost". This is readily seen in the budget. This covers their salary, benefits and retirement. You are sadly misinformed if you have not done the math on this previously. Finally, note the BLS data data shows editors and reporters earn 24% less, psychologists earn 9% less than teachers, architects earn 11% less, chemists earn 5% less, mechanical engineers 6% less, and economists earn 1% less. And these all ignores benefits. Teachers have MUCH better benefits than all these professions, meaning teachers make much, much more than architects. BLS data, remember.

- seattleeng

August 9, 2010 at 11:48am

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e065702 points out one thing I was going to say: seattleeng included school debt for doctors but conveniently left it out for teachers; blackton has dealt with the "days worked" nonsense. I also wonder greatly at his (?) valuation of teacher benefits, since actual money-you-can-use-to-pay-bills income is significantly much lower than the "average" $75K. (I challenged that number a few weeks ago with data from BLS, and I haven't seen why his number should be better than theirs.) Moreover, counting any benefit numbers assumes stable employment throughout one's working life, an outdated model for teachers if it was ever true. A large number of people I graduated high school with in the late 80s went on to teach in public school systems in their 20s; none that I can think of are still doing it at 40. Those that still teach at all have gone to private schools, where funding for their jobs is not at the mercy of voters who don't see the value of educating other people's children. But honestly, all you have to do is find a random doctor and a random public school teacher at the same stage in their careers -- even, I'd wager, in retirement -- and see who's got more disposable income.

- frippo

August 9, 2010 at 11:51am

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Teaches are like the proverbial elephant being examined by blind men - depending on how you approach their employment, you could conclude radically different things about it. Observations (valid in Iowa at least): - Teachers clearly don't earn nearly as much as physicians - or at very least, if they do, they don't spend the money in very obvious ways. - They also clearly don't work the hours that most professionals I know do. Not even close in the case of physicians' schedules, or even the 60 hr weeks that I and my colleagues routinely work - and that's not counting the fact that school is not in session and their work commitments are essentially nil 14 weeks of the year. - Teachers may leave the profession due to burnout (it isn't an easy job), but if they choose not too, they enjoy job security - notwithstanding recent cut backs - that those of us in the private sector can only envy. - None of this matters in the pension debate. The question is whether generous defined benefit programs with early retirement options are affordable to the states, or not. They aren't unless the economy and workforce grows underneath them enough to fund what is essentially a ponzi scheme. When it doesn't, shit falls apart.

- IowaBeauty

August 9, 2010 at 12:37pm

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In California, government employees get to retire at 55; public safety employees (police and fire and a lot of others, about 25% of the total work force) can retire at 50. There are no actuarial reductions for retiring at that early age (many start new careers). Work from age 25 to age 55 at a state job; get 90% of your highest year's salary forever, adjusted for inflation, and free health care forever. Work 30 years; get paid for 60 years...at the highest salary. Virtually no one in the private sector gets those kind of benefits except maybe a few pampered CEO's. But then, I don't pay taxes to support them. Another problem is we have 2-3 times as many government employees than we need, and many agencies do things that are not necessary. Many of them work to create work for each others. It's time for a drastic downsizing. Dale Ogden, Libertarian, 2010 Candidate for Governor of California; http://www.daleogden.org http://www.daleogden.net

- dalefogden

August 9, 2010 at 1:09pm

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I love it! Teachers who make 75k! Doctors who make only 150K! Remind me what universe this is in? (Libertarian-Think-Tank universe, apparently). I know plenty of docs. One, my ex, earns almost 500k as a gynecological oncologist and works for a system that employs its docs. He is 36. 36. I had a job offer to be a teacher before law school. I would have made $34k. Obviously, I should have been making less so that he could take more home in lower taxes. Obviously.

- Tilghman

August 9, 2010 at 1:19pm

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Perhaps we value, or should value, teachers more than CEOs because they prepare the next generation for taking over the reins of our society. Perhaps we value, mostly, police and firefighters more than CEOs because they have to turn toward danger when the rest of us are running away. We can show that value in several ways, monetarily and also in terms of respect for what people do. The latter also, because "a day's work" doesn't cover the helping of a child in difficulty, a chat to reassure an accident victim, or what happens when someone flies a couple of passenger aircraft into skyscrapers. Perhaps we don't respect seattleeng or AlanVann because they sound -- and maybe unintentionally -- like greedy sociopaths who think that their wellbeing is the only measure of worth in the universe.

- ironyroad

August 9, 2010 at 1:28pm

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During my time--70 years--public employees have generally received somewhat less income in return for security and decent benefits. I don't think voters will support any generalized and continuing re-shuffle that provides higher pay and benefits for public employees than for private employees doing comparable work. As for police and firefighters, the public has generally accepted that they, like soldiers, should receive special early retirement consideration because of the hazards associated with their work. If their benefits are currently subject to some question, it may be because some departments have veered away from the military model. When a sergeant retires from the army he gets a sergeant's benefits. He doesn't get promoted or get extra overtime as retirement approaches to goose up his retirement benefits. Where benefit games are being played, they will have to be curbed. As for teachers, that job has become harder over the years as order has collapsed and parents offer less and less support. In too many schools the job has changed from pedagogue to pedagogue/zookeeper.

- lsernoff

August 9, 2010 at 2:06pm

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Public employees do not face employment risk like private sector employees do. Given the quality of their health benefits and retirement benefits they are overpaid compared with the private sector. Just look at how hard it is to get a public sector job. If they were not overpaid why is their quit rate so low compared with the private sector. The argument is obvious. You make the exact wrong conclusion about unions. They work for public sector employees because there is no competition. They cannot drive government jobs overseas like they do for the private sector. And public sector unions can get good benefits for their employees because they can impose them on taxpayers who cut services to poor people. Politicians cannot stand up to public sector unions (Reagan and the controllers is the one counterexample), they just pass the costs onto future generations. Chait would like the unions do that in the private sector to, but the jobs will just leave the US.

- bwickes

August 9, 2010 at 3:08pm

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"If they were not overpaid why is their quit rate so low compared with the private sector. The argument is obvious." Hold your horses. "The argument is obvious" is just another way of saying "there are other considerations of which I am blithely unaware". Some other plausible explanations: 1) Lack of transferrable skills. It is typically easier to leave one private sector job and find a comparable one in the same market than to do so in public sector jobs. Government generally has a monopoly on a task within a given unit (city, county, state, federal), but private companies rarely do. 2) Possible loss of tenure. Many public sector jobs have strong built-in incentives designed to prevent turnover. 3) Different compensation emphasis between public and private sector. For example, the extra vacation time for a teacher is particularly appealing for someone who expects to be the primary caregiver for their children every summer. In other words, being differently paid may be more important than being overpaid. I could probably go on with this list all day, but I think my point should be clear by now.

- Fishpeddler

August 9, 2010 at 3:44pm

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I think lsernoff's observations are generally correct. It is certainly still true true today (at my University) that staff are paid less than they would get in comparable private sector jobs, although they probably get greater stability and better benefits. Local and state government here have had to recently offer higher pay to be able to get professionals with specialized legal or financial expertise, because the compensation gap has been large enough to discourage highly skilled people from taking the public sector jobs. But I disagree that a "generalized and continuing re-shuffle that provides higher pay and benefits for public employees than for private employees doing comparable work" has been occurring. I don't thing pay and benefits for public sector employees has been getting better -- salary freezes and benefit cuts have become more common than before. Not to mention pay cuts like across-the-board furloughs imposed on all employees in many states, which are essentially pay cuts. What has changed, I think, is that the employment and retirement security for private sector employees has been plummeting, whlle the situation for public employees has been worsening much more slowly.

- JEFF FREY

August 9, 2010 at 3:56pm

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I think lsernoff's observations are generally correct. It is certainly still true true today (at my University) that staff are paid less than they would get in comparable private sector jobs, although they probably get greater stability and better benefits. Local and state government here have had to recently offer higher pay to be able to get professionals with specialized legal or financial expertise, because the compensation gap has been large enough to discourage highly skilled people from taking the public sector jobs. But I disagree that a "generalized and continuing re-shuffle that provides higher pay and benefits for public employees than for private employees doing comparable work" has been occurring. I don't thing pay and benefits for public sector employees has been getting better -- salary freezes and benefit cuts have become more common than before. Not to mention pay cuts like across-the-board furloughs imposed on all employees in many states, which are essentially pay cuts. What has changed, I think, is that the employment and retirement security for private sector employees has been plummeting, whlle the situation for public employees has been worsening much more slowly.

- JEFF FREY

August 9, 2010 at 3:56pm

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Sorry for the double post.

- JEFF FREY

August 9, 2010 at 3:57pm

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A huge part of this problem is that many states have underfunded their pensions. Pension contributions for teachers currently working are certainly going to be impacted by the current budget crises, but if a state has been managing its pension funds competently, then paying benefits to retired workers should be covered by the pension funds. Many states chose to not meet their investment obligations for decades knowing that some day the bill would come due. It has, and the bill is huge. This is like a private company telling you they're matching your 401K contributions for your entire career and then not doing it. Then when you retire they add up the numbers (plus interest) and say "WOW! That's too much, sorry we can't pay you". Not only are Seattle's basic numbers wrong - the entire basis on how he calculates payments is ignorant. Public workers contribute to their pensions and the state matches those investments at whatever ratio they've negotiated. They are not being paid by the state when they retire, they are withdrawing from investments they and the state have made during the course of their career (including the profits/interest earned over that time). A doctor would certainly save money for retirement and would earn interest too.

- Attrill

August 9, 2010 at 4:05pm

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I think Attrill nails it. I know more than one lawyer who has bitterly complained that the Bush administration basically told private firms that they would not be enforcing the laws requiring them to meet the obligations of their negotiated fixed benefits. States and municipalities (I assume) are exempt from it, but have been similarly negligent. Iowa also has a good point in that the revenue stream needing to be there to support the plans, but the fact that they have been woefully underfunded for many years is what is exacerbating the issue right now. So lets try a natural experiment - what happened in the private sector (lets say, pick finance) when a firm presumably didn't have the money to pay out bonus' as they were so insolvent that the government had to bail them out? All of those contracts were just "adjusted" to meet the current conditions right?

- Nari224

August 9, 2010 at 4:36pm

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"A huge part of this problem is that many states have underfunded their pensions. Pension contributions for teachers currently working are certainly going to be impacted by the current budget crises, but if a state has been managing its pension funds competently, then paying benefits to retired workers should be covered by the pension funds. Many states chose to not meet their investment obligations for decades knowing that some day the bill would come due." A couple of responses: 1. By far the majority of states were current according to standard definitions of pension funding as recently as 2006. The claim here that many have been underfunding for decades is an exaggeration. Since then, and certainly since the market collapse in 2007/2008, the number not properly funded has exploded, but then, to be fair, what pension funds haven't imploded in that time? Private employee's 401k/403bs sure as hell have. 2. States obligations to employees are in general contractual. It's true that there are requirements for funding the investment pool set by Federal, actuarially-derived guidelines, but it's also true that however those investments work out, the States are on the hook for the payments. They are required to make up the investment income shortfalls, or default on their obligations to retirees. Describing this system as in essence a defined contribution plan as Attrill does, is simply wrong. A 401k/403b is a defined contribution plan - nowhere does it suggest what the beneficiary will get out of it, other than by reference to actual investment performance. No one is on the hook for the shortfall except the retiree. 3. All US States are required to have balanced budgets. Where they did underfund the States' contribution, it was part of balancing a budget. Had they not underfunded the State contribution, either taxes would have had to be significantly raised (generally politically impossible), or services cut, requiring in all likelihood layoff of public employees (not acceptable to the public employee unions, right?). You can blame the legislators for not having the courage to piss off taxpayers or public employees, or both, but you can't really claim that the public employees were lined up pleading for layoffs or higher taxes, or to raise their part of the contribution to cover the shortfall (which is what those of us with defined contribution plans have to do). 4. Want to fix it overnight? Make the minimum retirement age for public employees 60, and the full benefit age 66, rising to 70 over the next couple of decades, as has been done for the rest of the work force. A lot of underwater pension funds will look very rosy in no time. Ah, but that's where we started isn't it - public employees somehow deserve retirement that is both guaranteed and early. In truth, the system was growth-dependent. Take away 8-10% annual investment returns, and a lopsided distribution of workers to retirees due to growth in government, and it was bound to be revealed as in trouble. Which is what has happened.

- IowaBeauty

August 9, 2010 at 5:54pm

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Blackton, how much would you pay to watch seattleeng try to teach high school for just one week? My guess is anyone who thinks teachers are living on easy street and work only 36 hours a week would last less than two days. There are teachers who only work 36 hours a week. They're called crappy teachers. Let's try a little math (please be kind - I was a history teacher.) My school day was 7:30-2:30. We'll take off the 22 minutes a day I had for lunch. That gives me 5 hours and 38 minutes of work. I'm pretending here that I never had to meet with students during that time. So far I'm up to 27 1/2 hours of work a week. According to those BLS numbers, that leaves my 8.5 hours a week to do all of my lesson planning, parent communication, staff meetings, grading, and helping students. No problem! Let's say I have three sections of U.S. history and I gave them a test. Since I'm not a crappy teacher, I didn't just copy the one that came with the text book. I wrote my own. Since I'm feeling generous, we'll assume that I'm using one I wrote last year. My test has a big essay question, which means it will take much longer to grade than the lame test that came with the text book. How much longer? On average, I would say I spent 10 minutes grading each test. If three classes took it, that is at leat 75 kids. That is at least 12 hours of grading. Uh oh. I'm already 3.5 hours over the 8.5 hours a week BLS says I'm going to spend working, and that was grading one test for just three of my classes. I guess the other two classes can wait until next week for something interesting to do in class. The bottom line is that every good teacher I knew spent at least 9-10 hours a day at school, took work home, and worked at least 5 hours on the weekend. I'm not even going to get started on using school vacations to revise course material and prepare to teach new classes.

- Clareita

August 9, 2010 at 6:25pm

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Iowa - fully agree with point (4). And the same for extending pretty much all retirement benefits with the usual hazardous occupation exclusions. Except for the little problem that un-retired older people now appear to actually be crowding out the younger generation (obviously not universally). Truth be told, not sure there's a quick fix for that. However for (3), that's really not the public employees job right? They have engaged in a collective bargaining effort, and in a democracy we get the government that we deserve. This is not to absolve the unions of all wrong (I live in Chicago after all), however if people don't want to pay any attention to their local elections, sucks to be them when they get socked with the tax bill. This isn't to say that I disagree that there's going to have to be some sort of increase in contributions.

- Nari224

August 9, 2010 at 6:36pm

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JEFF FREY: Thanks for your kind remarks. Actually, though, I didn't say a generalized and continuing re-shuffle is, in-fact, occurring. Don't know, and don't trust many of the statistical arguments I hear on all sides. Bi-partisanship, these days, seems to involve an agreement to obfuscate. My comment was addressed to IF. As for abuses of police and fire pensions, we are all aware of some outrageous abuses that have hit the national news; how widespread "outrages" are I don't know. I do know the system was being gamed in Palm Beach County, Florida before the financial crisis (the local press ran stories); I hope it has now come to a close.

- lsernoff

August 9, 2010 at 7:39pm

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A few points of interest. While I love teachers and my Mother and Grandfather are teachers, in Michigan, they are grossly over-compensated in the Benefits side of the package. In Michigan alone, the Legislature debated a move to Traditional Health Care coverage as provided to other state employees and the savings was in the hundred of millions of dollars. This little expose probably cost Andy Dillion the Democratic Nomination for Governor. Blackie's point that teachers spend nights and weekends checking home work and grading papers is a little thin. Most teachers spend at most 6 hours a day with students. The two other hours for grading and lesson plans is what most teachers use if sufficient. Yes there are teachers that work 12 hours a day, but 80% are not. And for the obvious, you can check what teachers are paid outside the Public Union Envoronment. Why are teachers at Parochial Schools working for 50% less? Why are there so many candidates for every opening? Regarding Teacher Burn-Out, yes we had a friend who quit after 4 years. She was working in the Detroit Public School system. Yes you have lots of turnover in these Urban school districts. Suburban school districts are quite a different subject. I think most people would accept a pay premium for Urban Schools. Current Instructional Costs in our school district are $ 100,000 per year per class. This is lot of money. The costs are mostly hidden as Health Care Benefits and Retirement Costs. Switching the risk of these costs to Defined Contribution can bring these down fairly equitably, but the Unions won't discuss this. Now that the pinch is on the Teachers are throwing everyone else under the bus. Our district has outsorced maintenance and fired the Custodians and replaced them with a service employee getting paid half the previous wages. Bus service was cancelled. parents are forced to pay for sports and other extra curricu8lar activities. Teachers have only offered mild concessions such as less 'Sick Days' and deferred raises. Autoworkers took a 50% pay cut for new hires. Almost every white collar employee has lost substantial bonuses and overtime. Teachers may have their union protection right now, but believe me, their time will come.

- CRS9TNR

August 9, 2010 at 7:44pm

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Iowa - sorry if I was unclear in my 401k analogy. I meant it to be viewed as what it would mean to the individual, not as an analogy to the financial arrangements or commitments. If you look at it from the perspective of a retiree who has worked for 35+ years with a contract stipulating what your employer is obligated to provide to you, I think the analogy holds. Living in Illinois my perspective is probably skewed, but I know WV, CA, NJ, also have had funding issues for years (although not as drastic as Illinois' problems). On a practical level, if a fund cannot make payments it is by definition underfunded. I think pension funding standards have been a joke for years - I agree with you that they were completely growth dependent. Governments grew complacent in the 90's when economic growth meant they did not have to contribute as much. They spent the 2000's discounting future benefits believing that the growth of the 90's would continue. This is the mismanagement I see in the situation. Regarding your 3rd point I agree with Nari that it is not public employee's responsibility to balance the budget, and I would disagree with you that they weren't supportive of raising taxes. Unions representing public employees are almost always supportive of raising taxes to meet the obligations. I agree with your overall take of the situation (tax increases and/or service cuts were needed), but I do not agree that contracts can be broken because the political will did not exist to deal with the problem. I understand that benefits need to be drastically changed going forward (and are being made), but past contractual obligations need to be met. (BTW, I am not a public employee and never want to be one)

- Attrill

August 9, 2010 at 8:31pm

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The catch is that although the shift from defined benefit to defined contribution plans hauled a lot of new money into capital markets and made work for Wall St firms, as well as giving people potentially a richer reward, the underlying assumption was that (as Iowa notes above) everything would be going well and it would all work out in the future. This, as many people have noted, defies the observable history of repeated financial crises. Incidentally, a soon-to-be-retired colleague of mine was the only faculty member in our dept to refuse to switch to a 401k-style plan 20 years ago. He was regarded as a timid soul who was going to regret his hidebound conservatism. Now in 2010 the state will have to pay his original defined benefit pension while everyone else is nervously wondering what the hell they are going to do if the bottom falls out of the market again. Maybe what we need is a new Social Security concept for the 21st century that takes into account that everyone isn't a steelworker who retires after 42 years on the job.

- ironyroad

August 9, 2010 at 8:53pm

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Atrill writes: "A huge part of this problem is that many states have underfunded their pensions. Pension contributions for teachers currently working are certainly going to be impacted by the current budget crises, but if a state has been managing its pension funds competently, then paying benefits to retired workers should be covered by the pension funds." Underfunded? You think? Consider a teacher that retires at 52 and gets 75% of their highest salary + a gold plated health plan. That is $75K a year they are paid for 30 years in retirement. Guaranteed. And in many cases indexed for inflation. That is $2.3 million paid to the teacher in retirement. Tell me, when did the teacher pay that $2.3M INTO the retirement fund? Answer: They did not come close to paying for that retirement. We have a lot of teachers posting here. How about THEY tell me how much they pay each year towards retirement. And then we'll go to school and actually do a little math. And yes, we can get into annuities, but I'm really curious to hear teachers explain where all this money comes from. BTW, think these numbers aren't right? In a recent speech from NJ gov Christie, he notes in New Jersey, a state worker retires at 49 and paid $124K towards his retirement. The benefits he'll extract, however, are worth $3.3M in cash payments, and $500K in health care. That's a $3.8M retirement package. Where in this world can you spend $124K and get $3.8M in return, for doing absolutely nothing? He notes a teacher retires having paid $62K towards her pension. And in return, they get $1.4M in pension benefits, and $215K in health care benefits. That's a $1.6M retirement package. So when you say "underfunded pensions", you are right. They have not been funded. They depended on the continued kindness of tax payers. But why should I as a taxpayer pay someone to stop working at age 50 so that they can travel the world while I work until age 65?

- seattleeng

August 9, 2010 at 9:08pm

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"Regarding your 3rd point I agree with Nari that it is not public employee's responsibility to balance the budget, and I would disagree with you that they weren't supportive of raising taxes. Unions representing public employees are almost always supportive of raising taxes to meet the obligations." Of course, only the legislative and executive can balance the budget. I don't see how I said that PE unions could. As for their support for increased taxes, I agree, I simple miswrote. "I agree with your overall take of the situation (tax increases and/or service cuts were needed), but I do not agree that contracts can be broken because the political will did not exist to deal with the problem." Well, the way this has played out in the private sector is that the corporation goes to it's employees and says, "look, the money is not there; either we change the rules or the company goes bankrupt, and you lose everything. Want to negotiate?" Sure, it's a gun-to-the-head negotiation, but changes get made. Likewise, if I'm a current governor or legislator trying to fix a state public employee retirement system, I'm going to work with what I have. If you can't force the tax increases through, and the money isn't there to fund the promised benefits, the benefits are going to change, or else the state will go bankrupt and then they will for sure change. Note that the equity calculation here isn't simple: Do you raise taxes on current wage earners because their parents didn't pay enough to full fund the system 20 years ago (in Illinois and New Jersey, e.g.), and thus reduce their ability to save for their own self-funded retirement? Do you screw your overall economic recovery and ability to attract business by raising taxes? I already pay a very high marginal income tax rate compared to many states, it won't make it easy to attract businesses if you raise it to fix a system that counted on 8-10% returns, and now has to live with 2%, on top of an overall decline in the last 3 years? There may simply have to be losers somewhere in the system for this to be resolved, and the job of the current legislatures and executives is clearly to minimize the damage overall, not just stick slavishly to promises that are not affordable, however well intentioned they may have been.

- IowaBeauty

August 9, 2010 at 10:23pm

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I think by framing this question as what do public sector employees deserve, we are making it also impossible to answer. Who is really competent to determine what someone else or even what they themselves deserve; what can be the basis for this determination? Maybe a more realistic way to view this question is to ask whether the taxpayers are getting a good deal for their money. So, would the resulting decline in the benefit provided by public employees outweigh the savings of paying them less? I’m guessing the answer is, at least sometimes, no.

- dmresnick

August 9, 2010 at 11:49pm

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"There may simply have to be losers somewhere in the system for this to be resolved, and the job of the current legislatures and executives is clearly to minimize the damage overall, not just stick slavishly to promises that are not affordable, however well intentioned they may have been." Why do the losers have to be retired teachers in their 60's and older? How about requiring all elected politician's pensions are reduced by 2X whatever is negotiated by teachers? How about taking money back from financial advisors who earned millions putting together plans for pension funds that have failed? Also, if you live in a state you assume the responsibility for that state's debt as part of your taxes - no matter how long ago that debt was incurred. I also think reducing pensions will have a noticble negative impact on the economy. Retirees spend the money they get, and reducing pensions nationwide will result in more foreclosures, reduced spending, etc. Overall I think retroactive reduction of pension benefits will be devastating to public education in this country. If the government is not seen as being able to keep its promises it will be increasingly hard to attract and retain good candidates for jobs. It is absolutely horrific policy in general.

- Attrill

August 10, 2010 at 12:04am

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"Where in this world can you spend $124K and get $3.8M in return, for doing absolutely nothing?" - Seattle Read my previous post, I don't thing you have yet grasped the concept of how pensions (and retirement finances in general) work. The place where you get millions in return for $124K is with an investment banker over decades. It is the responsibility of the state (or employer) to contribute enough money during an employee's career to make sure the investment earns enough to cover their contractual obligation. A pension should NEVER be paid from general revenues, it should be withdrawing money from investments that were made over decades.

- Attrill

August 10, 2010 at 12:10am

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Attrill writes "The place where you get millions in return for $124K is with an investment banker over decades." Attrill, are you incapable of working a calculator? If you contribute $124K over 30 years, that is $4000 per year. If you made 8% return each year on your contribution, at the end of 30 years you'd have $453K. A guarantee of 8% per year for 30 years is not something you will find anyplace except the fantasy land that is pensions. No investment banker will guarantee you 8% over a decade. To take that $124K and amass $3.8M requires to earn 19% interest for 30 freaking years. Do you think this is common? Are you kidding? I think we can all agree here that 6% return averaged over 30 years is safe. Not certain, but safe. Given that 6% return would take $4000 per year contribution up to $316,000, where do you think the $3.8M - $316K = $3.4M comes from? That right. It's a GIFT from tax payers. Is this right? Is this fair?

- seattleeng

August 10, 2010 at 1:42am

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Irony writes: "Maybe what we need is a new Social Security concept for the 21st century that takes into account that everyone isn't a steelworker who retires after 42 years on the job" Agree. But it needs to start from the premise "how many workers will support a single retiree?" If the answer is 3:1, which it is today, then we are in trouble. If the answer is 12:1, which si what it was in 1960, then it'll work out. The other way to look at this is "how many years of work is required to 'earn' a year of retirement?". In the 50's, for each decade you worked you "bought" a year of retirement. Very sustainable numerically. You started work at 18, worked for 40 years, retired at 58, and died at 62. But this stuff today where you work for 30 years, and then enjoy 35 years on the take. The math will never work. If we applied the 1950's rule of retirement and SS to life expectancy in the near future, you'd work for about 60 years to the age of 78, and then enjoy the next 6 years resting and then you expire at 84. But how do you sell a message to a 20-something today that they are working until they are 78...Gads...

- seattleeng

August 10, 2010 at 1:58am

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"A pension should NEVER be paid from general revenues, it should be withdrawing money from investments that were made over decades." So, Attrill, if your state fund made the "appropriate" contributions, using "reasonable" expectation of return on investment, and was current in 2006, but now finds itself 25-40% below where it needs to be, because - don't be shocked now - investment returns since 2006 have been generally NEGATIVE, who pays, and from what fund? What if we have an entire decade in which investment returns average 2% instead of the "expected" 8%, just when a large cohort of retirees start withdrawing? This could easily happen, and certainly has in the past for extended periods. Who makes up the shortfall. More generally, if state funds are $1.5 Trillion short on their combined pension and health care obligations (which they are), how do you propose to make that up without changing the rules for when one can retire, or what benefits retireees receive? There are roughly 140 million taxpayers in the US. Shall we clip them all for $10,000 right now just to catch up, before we raise their taxes for ongoing contributions? No one wants to see retired teachers, cops, firefighters, or anyone else starving on the street. No one is talking about killing the pension system. But there is going to have be adjustment on both sides to make the system work.

- IowaBeauty

August 10, 2010 at 9:01am

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Seattleeng - You are correct in that while the current pension system for teachers and other public employees might have worked in the past, it's unclear how taxpayers can continue to pay out such large sums of money. The problem with your argument is when you say it's okay to dramatically trim retirement benefits for teachers because they are slackers who aren't even working full time. If you started with the economics and how we just can't afford this system, regardless of how teachers perform, you wouldn't get so much blowback. CRS9TNR - You say most teachers find two hours a day sufficient for lesson planning, grading, helping students, etc. I can only speak for high school teachers, but any h.s. teacher who has 125 students and spends only 10 hours a week outside of the school day on these tasks is at best a mediocre teacher. There is simply no way that you can be a good, nevermind a great teacher, working 36 hours a week. The teachers who inspire, motivate, and make a difference in our children's lives work significantly harder than that.

- Clareita

August 10, 2010 at 12:53pm

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"Agree. But it needs to start from the premise "how many workers will support a single retiree?" If the answer is 3:1, which it is today, then we are in trouble. If the answer is 12:1, which si what it was in 1960, then it'll work out. The other way to look at this is "how many years of work is required to 'earn' a year of retirement?". " Bullshit. There's this phenomena called 'economic growth,' if you just quote ratios and ignore real economic growth, then you're just bullshitting, and I grow bored. By the way, at 3:1, SS is running a MASSIVE surplus, it's not the ratio alone. Social Security is fine. I do agree that some serious discussion though wrt public worker pension and benefits is in order.

- mmathog

August 10, 2010 at 3:16pm

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Here's a couple other angles: People with public-sector type pensions, such as the teacher's union or the people mentioned in Colorado, also include other workers within the system, such as shipping clerks. Their salaries are relatively low yet their benefits will be much higher than those of a comparable private sector worker or even a private sector worker who has earned a significantly higher salary (and paid the SS taxes to boot - double for self-employed people - this is becoming more and more commonplace as companies hire "independent contractors" etc.) On the other hand these workers - teachers, other members of the public sector system - are NOT ALLOWED to contribute to Social Security. What happens if they lose their job before retirement? They could well wind up with NO benefits. If the pension is cashed in due to a family's need - then what? A person with less than 30 years but, as in the case of a family member well over 20 years on the job winds up with ZERO retirement benefits. Plus, public sector workers' tax money isn't going into Social Security, thus that system is weakened. I think everybody should be part of the SS system, period. But then I'm for single payer medical insurance too. Sigh.

- Sophia

August 10, 2010 at 4:12pm

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62% of the nation's educators AREN'T unionized. Those states where public sector workers are likely to be unionized are the states that also have the highest percentage of unionized workers in the private sector. I don't know when Americans became a nation of bootlickers, but, frankly, I find this constant conservative whining and complaining about other people's greater initiative in standing up for their economic interests cowardly and unseemly.

- esmense

August 10, 2010 at 7:51pm

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I'm with esmense, although I'd call them 'peasants' or 'serfs' rather than 'bootlickers,' same concept though. It's weird, a huge percentage of conservatives LOVE to get screwed up the butt by rich people, I don't get it.

- mmathog

August 10, 2010 at 8:00pm

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mmathog writes: "Bullshit. There's this phenomena called 'economic growth,' if you just quote ratios and ignore real economic growth, then you're just bullshitting, and I grow bored." Of course, before you type you could actually look up the numbers. Read this: http://www.nytimes.com/2010/03/25/business/economy/25social.html In 2010, for the first time, SSN pays out more than it takes in. Economic growth doesn't solve this. It's kind of like the old joke "we sell each one at a loss, but we make it up in volume". BTW, you do know that the "surplus" isn't sitting in an account some place earning interest, right? The money you pay in SS leaves that same year to retirees. If there is extra, they buy treasury bonds with the surplus mmathog writes: "By the way, at 3:1, SS is running a MASSIVE surplus, it's not the ratio alone." Strike 2. Think about it. The math is easy. Pick round numbers. Two workers make an average of $50K per year. They pay in 12.4%. That's $12.4K they pump into social security. One retiree takes out on average $13K per year. But because a wife that never worked is also eligible if you've been married for at least 10 years, the 2:1 ratio is thus under water. At 3:1 the math barely works. And one hiccup and we are where we are today. But don't take my word for it. Know that today we are near the 3:1 ratio (per SSA), and know we are paying out more than we are taking in (per NYT article above).

- seattleeng

August 10, 2010 at 9:42pm

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esmense writes: "I find this constant conservative whining and complaining about other people's greater initiative in standing up for their economic interests cowardly and unseemly." If unions were able to extract a benefit for their workers without impacting the other workers, I'd agree with you. But when unions extract benefits for their members, it comes at the expense of non-unionized workers.

- seattleeng

August 10, 2010 at 9:45pm

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Clareita, please re-read my first note. Chait’s premise was “But ask yourself the same question you should have been asking then: To what extent is the problem that the retirement benefits for unionized public sector workers have become too generous? And to what extent is the problem that retirement benefits for everybody else have become too stingy?” My point was that a teacher earns, when benefits are considered, as much or more than a doctor in terms of $ per day of work. The numbers are very clear. So, to answer Chait's question, yes, they are too generous. Yes, they perform a valuable service, but so does everyone. And as such, we must value their contribution based on the 1) number of people that could do the job, and 2) the number of people that want to do the job. Turns out a lot can in fact teach. And plenty of people want to. So why is the compensation so high? The reason teachers pay is so competitive with doctors is because teachers work comparatively very little. Anecdotes such as yours I don’t care about. If you want anecdotes, I can recount my 80 hour work weeks and 3 weeks straight on the road in Asia. You cannot come close to matching that. So we skip anecdotes and instead rely on government data. And the government data says that teachers really work a fair bit less than other professionals. And they make a fair bit more. Thus, if you are unhappy with teachers’ salary, then work more. Period. It’s not really debatable. Next up is the pension. Based on Attrill’s non-response to the math, I can only assume that he realizes now that pensions are NOT paid for by the employee, and that they are a gift from the taxpayer. And that he is now wondering how on earth any government employee can ask for a $1.5M gift from the tax payer so that he can retire at the age of 50 while the poor slob taxpayer works until 65. When a CEO grabs unfair compensation, he grabs if from shareholders. They can readily refuse to participate in his stealing. And there’s only a few people that are given lavish rewards at an company so the balance of things overall is not upset. But when a public employee negotiates obscene compensation, I have no recourse as a tax payer. And there are so many of them that it seriously does upset the balance of things. Looked at another way…When Bill Gates takes a $25M compensation package, that is only $277 per Microsoft employee that is lost. He’s one person. But when you have millions of employees, each taking $1+ million in benefits without working for those benefits, then as Iowa notes, that is $10,000 per tax payer. Ergo, the lavishly compensated public sector union employees costs the taxpayers much more than even the most grossly compensated bucket of CEOs. But my guess is that you see the CEO as a much bigger problem. It’s only because you haven’t sat down and done the math. I hope you left this debate a bit more informed.

- seattleeng

August 10, 2010 at 10:05pm

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seattleeng you like to present yourself as some common-sense guy, but your mask comes off and you're just another right-wing hack slinging old boring myths: "In 2010, for the first time, SSN pays out more than it takes in. Economic growth doesn't solve this. It's kind of like the old joke "we sell each one at a loss, but we make it up in volume". " ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha. That isn't AT ALL what 'economic growth' is, you might as well have said 'economic growth is when you put cheese in a fridge and it goes bad...' 'economic growth' is when you have 3 people in an economy, all 3 need to work full-time to keep each other alive, suddenly, a new technological efficiency emerges and only 2 need to work full-time for the 3 to stay alive. The 3rd can either stop working entirely or start working on something "new" to make everyone's life just that much better. Are you saying that we need exactly the same number of people to grow food in 1933 as we do in 2010? You want links? here's a link: http://pol.moveon.org/ssmyths/ And yes mr. pedant, I know the moolah isn't sitting in a fucking filing cabinet, that would be a pretty stupid place to put it wouldn't it? Or now are you gonna trot out that 'have it both ways' bullshit of suddenly a US government IOU is meaningless. As for that Times piece, whatever... tax rolls are down because the economy is in the shitter, when it recovers, tax rolls will rise and the surplus/deficit/projection ratios will all change. SS liabilities are a piece of cake to cover. Finally, even if we had to cut SS benefits to what the scaremongers scarily project, say to 70% of promised benefits, those benefits are still more in REAL dollar terms than those receiving their benefits today. It isn't the fact that social security tax revenues are spent, spending it is fine, preferable, actually, it's that it's often spent on really stupid shit. Anyone who talks about government liabilities but chooses to discuss social security (which is fine) rather than health care (which isn't) is an ignorant hack, at best. Go post this bullshit on barackobamaisacommiesocialistterrorist.org or whatever, TNR is a serious site for serious commenters, not for this recycled right wing crap.

- mmathog

August 10, 2010 at 11:48pm

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For several years, at 3:1 (actually, 3.5:1), SS ran a massive surplus. This year, at 3:1, it's down a tad, gee, what else could be going on? Has this change from 3.5:1 to 3:1 wrought this massive change from surplus to deficit?? Wow that would be amazing!! Maybe it's the fact that, at the moment, twice as many people are out of work.

- mmathog

August 10, 2010 at 11:54pm

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mmathog, your're better when you are citing data instead of ranting. You wrote: "'economic growth' is when you have 3 people in an economy, all 3 need to work full-time to keep each other alive, suddenly, a new technological efficiency emerges and only 2 need to work full-time for the 3 to stay alive. The 3rd can either stop working entirely or start working on something "new" to make everyone's life just that much better." You are referring to productivity. Not the same as economic growth. Productivity can contribute to growth, sure. Economic growth refers to growing per-capita GDP. It can come from rowing harder (working more) or rowing smarter (productivity) or making things that are more valuable, etc. Let's look again at what I wrote: "If the answer is 3:1, which it is today, then we are in trouble. If the answer is 12:1, which si what it was in 1960, then it'll work out. The other way to look at this is "how many years of work is required to 'earn' a year of retirement?"." And then you wrote "Has this change from 3.5:1 to 3:1 wrought this massive change from surplus to deficit??" So it looks like we agree? We are at 3:1 and all agree more goes out than in. You said it, I said it, the NY Times said it. How is this right wing rambling if we're all saying the same thing? We might disagree on the 3.5 or 4. But I also think we all can agree above that 4.0 is getting "safe" again. mmathog writes: "TNR is a serious site for serious commenters" Uh huh. PS. If you think I'm going to take a moveon.org link over the CBO for social security projections...Hah, that's rich...

- seattleeng

August 11, 2010 at 2:29am

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seattleeng: "Yes, they perform a valuable service, but so does everyone. And as such, we must value their contribution based on the 1) number of people that could do the job, and 2) the number of people that want to do the job. Turns out a lot can in fact teach. And plenty of people want to." But you're leaving out a crucial component: quality. Stats show that those entering the teaching profession are generally not the highest achievers. And just because a lot can and do teach doesn't mean they're particularly good. Why is that? Because too much pay is causing qualified prospects to turn away? That would fly in the face of market theory. Higher wages are supposed to attract more qualified people, not less. If we're unhappy with teacher quality, then the market-based answer is to improve wages and working conditions. Maybe teachers should be paid more because, well, it really is a hard job to do well. "But when a public employee negotiates obscene compensation, I have no recourse as a tax payer." But you do have recourse as a citizen in a participatory democracy. Politicians are accountable to voters. A mobilized voter base can force politicians to respond. Just look at what's been going on in New Jersey recently. You have recourse, if your fellow citizens are willing to organize.

- dsimon

August 11, 2010 at 11:46am

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Seattleng -- Where do you get your information? "If unions were able to extract a benefit for their workers without impacting the other workers, I'd agree with you. But when unions extract benefits for their members, it comes at the expense of non-unionized workers." The proven, demonstrated, long recognized fact is exactly the opposite: union activity helps increase overall pay and benefits for non-union workers as well as union workers. Non-union workers in states with a higher percentage of unionized workers in the workforce enjoy greater average wages and greater worker protections than those in right to work states with low levels of union participation. That is just a fact. In the past, when private sector unions had a bigger voice and greater power in the political life of the nation, all workers benefitted with shorter work weeks, better wages, more dependable pensions, etc. As unions have become weaker, workers overall have lost ground. If you don't like the economic hand you've been dealt, organize. Trade your envy and resentment for a little bit of self-respect and courage.

- esmense

August 11, 2010 at 3:52pm

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"And then you wrote "Has this change from 3.5:1 to 3:1 wrought this massive change from surplus to deficit??" So it looks like we agree? We are at 3:1 and all agree more goes out than in. You said it, I said it, the NY Times said it. " No, we disagree, it's incredibly unlikely that .5 change has mattered at all. I still have no idea why 12:1 in 1960 is 'good shape' while 3.5:1 in 2005 (tossing off massive surpluses) is maybe ok while 3:1 is 'bad shape.' Here's a brookings take down of that times piece you love: http://www.brookings.edu/opinions/2010/0328_social_security_aaron.aspx

- mmathog

August 11, 2010 at 5:40pm

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key graf: "These numbers indicate two key facts. First, there is no surprise in the fact that outlays exceed payroll tax revenues. This front-page story is based on something that was anticipated nearly a year ago. The weakness of the economy means that the gap may be a bit larger than the trustees projected in 2009. But if the gap was news, it is last year’s news. Second, the trust fund was projected to run an overall surplus of $138 billion in calendar 2010. The Congressional Budget Office now puts the projected surplus for fiscal year 2010 at $91 billion. The surplus is smaller than anticipated last year because of economic weakness, but a sizeable surplus will remain. " It's STILL running a surplus, even at this big scary 3:1 ratio. Can we stop talking about this now?

- mmathog

August 11, 2010 at 5:43pm

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again, 2nd esmense. I remember after the UAW brouhaha a year and a half ago or so, I sat eagerly waiting for bob corker or richard shelby to produce a southern auto worker ginned up to fight not for his own increased wages/benefits, but to fight for LOWER wages/benefits for detroit brethren. (apologies for the male only pronouns). Of course, this never happened (although corker made at least one anecdotal comment suggesting such a worker existed). It was a beautiful illustration of political failure, senators fighting against their own constituents' interests (well, most of them at least).

- mmathog

August 11, 2010 at 6:14pm

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dsimon writes: "Higher wages are supposed to attract more qualified people, not less. " People have to know about the higher wages first. If you asked 100 people on the street "Who earns more on average, an architect or a teacher?" The answer for 99 out of 100 would be "Architect, by quite a bit". If you asked 100 people "Do teachers have a reasonable compensation package compared to other professionals with similar education?" The answer from 99 out of 100 would be "no". And in both cases, 99 people would be wrong. So how do you expect the market to work if the market doesn't know? If teaching jobs were billed as "Make more per hour than accountants, civil engineers and architects according to the BLS. Work just 180 days per year. Retire at the age of 55 with $1.5M in the bank and premium health care the rest of your life" then you can bet we'd see the market work. Now, why doesn't the union sell teaching that way? Why do they go out of their way to try and convince everyone that the job pays a pittance?

- seattleeng

August 11, 2010 at 9:42pm

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esmense writes "The proven, demonstrated, long recognized fact is exactly the opposite: union activity helps increase overall pay and benefits for non-union workers as well as union workers" Cite? If 10 years ago private employees were paid more than public employees, and today public employees are paid dramatically better than their private counterparts (see http://www.nytimes.com/2009/01/09/nyregion/09salaries.html and http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm#chart) then I'm not sure how you can make this claim. Because it's actually very easy to tease out the constant trajectory of private salaries and compare to the metoeric rise of public salaries. Private salaries have large tracked inflation, while public salaries have largely exceeded. If what you said was true, we'd see government and private accountants outpacing inflation by similar ratiometric amounts. You write "If you don't like the economic hand you've been dealt, organize. Trade your envy and resentment for a little bit of self-respect and courage." But what's wrong with saying that a doctor should make roughly 2X more than a school teacher, and thus that teachers are paid enough? Is that not a valid belief? Or is your belief that everyone screws over as many as possible to brute force their way to a better salary?

- seattleeng

August 11, 2010 at 9:52pm

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mmathog writes: "No, we disagree, it's incredibly unlikely that .5 change has mattered at all. " So, one number generates a surplus. And another generates a deficit. And to you there is no difference to you. Too funnny.

- seattleeng

August 11, 2010 at 9:57pm

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mmathog writes: "Here's a brookings take down of that times piece you love" Takedown? The article you note says " Congress needs to raise Social Security revenues, cut benefits, or do a bit of both in order to assure that revenues and outlays are in balance over the very long run. " How does this differ from what I said? I said the 3:1 is unsustainable. We're very near 3:1. Your link says something needs to change too because it is UNSUSTAINABLE. So now we have me, NYT, CBO and the Brookings Institute all in agreement that the current ratio is unsustainable. But keep digging. You've already made it clear you don't own a calculator. Now I wonder if you even read past the first few sentences of what you find on the web.

- seattleeng

August 11, 2010 at 10:04pm

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"So, one number generates a surplus. And another generates a deficit. And to you there is no difference to you. Too funnny." No, what's funny is that you stare at one variable. " Congress needs to raise Social Security revenues, cut benefits, or do a bit of both in order to assure that revenues and outlays are in balance over the very long run. " How is that a crisis jackass? People who obsess over SS are right-wing hacks, there's way way bigger problems.

- mmathog

August 12, 2010 at 2:25pm

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I never said it was a crises. I said it was unsustainable. Your job is to find someone that says the status quo is sustainable. You have not. But you and have and found several that also agree it is unsustainable.

- seattleeng

August 12, 2010 at 8:59pm

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esmense is quite correct. The era from 1930 roughly until 1970 was the period of both the largest volume of unionized employees and also the most sustained general -- I emphasize general -- increase in prosperity in our history. After the decline of unionization, the benefit from better technology, higher productivity etc has accrued to the richest 10% of the population.

- ironyroad

August 13, 2010 at 2:54am

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seattleeng -- Architects, like workers in other creative fields, work in a winner take all environment. Like most actors, most architects won't make huge amounts of money over their careers -- they'll be lucky to make a consistent, decent living. But some will be stars and hit the jackpot -- building high profile, national and world-wide reputations -- although probably not until relatively late in life compared to the peak earning years for workers and professionals in general. (An architects' high earning years are often his 70s and 80s. Longevity is a uniquely good asset for that profession). You are ignoring the fact that there is, frankly, a MUCH GREATER DEMAND for educators than for architects. The truth is, you can build successful projects without an architect's input -- as many contractors and large developers routinely do. (And those that do employ architects aren't generally looking for a lot of individual creative input from them. Being one of many architects employed by a large developer is pretty creatively unchallenging and modestly paid -- you'll be paid for the most basic and interchangeable of your skills rather than for your most individual and creative ability.) I have a few architect's in my family, which is why I'm well aware that they are a luxury item. When my brother switched from chemical engineering to architecture my irritated father told him architecture was a profession "for a rich man's son." His point being that there are many things beyond skill and talent required to make a real success in the field. Contacts. Luck. Longevity. The ability to market yourself. Broader developments in the economy. All of these matter in the earnings of an architect in ways that don't apply to teachers.

- esmense

August 13, 2010 at 1:03pm

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