02.20
The Mortgages We Were Already Paying
We all heard about Obama’s mortgage “relief” plan yesterday, but maybe you didn’t know that you’ve been paying a lot of people’s mortgages for years. How’s that? Well, I know I can’t be the only one that has noticed the surge in government pay and benefits in the last decade or so. It seems that everywhere you turn these days, somebody’s on the government dole getting a lot better benefits than us. Turns out my instincts were correct. I want to prepare you that the contents of this article will make your blood boil. You’ve been warned.
The article explains how all the best jobs now are to be had not in the private sector, but in the public sector. It used to be that you sacrificed pay for better benefits when you took a government job. Not anymore. Government unions so dominate the public sector now, that you can get private sector type wages with astronomical benefits to go along with it. Here’s the lowdown:
Goss retired four years ago, at 42, from a $90,000 job as a police commander in Delray Beach, Fla. He immediately began drawing a $65,000 annual pension that is guaranteed for life, is indexed to keep up with inflation and comes with full health benefits.
Goss promptly took a new job as police chief in nearby Highland Beach. One big lure: the benefits.
The problem with this picture is not Glenn Goss. By all accounts he was a good cop. The problem is that there are millions of Glenn Gosses from Highland Beach to Honolulu. So many that they pose a vast, debilitating burden to state and local finances.
So our buddy Glenn, and millions of others like him, are enjoying benefits and wages unheard of for comparable private sector jobs and stability that just can’t be matched due to it being written into law. It makes you wonder why there is even a private sector anymore. It used to be that if you wanted a really stable job, you went to work for one of the utility companies. They’d take care of you for a lifelong career. Those days are gone now:
In private-sector America your job, assuming you still have one, hangs on the fate of the economy. If your employer ever offered a pension for life, like young officer Goss is receiving, odds are it has stopped doing so, or soon will. Those retirement accounts you scrimped and saved to assemble? Unless they are invested in Treasurys, they aren’t doing too well. In private-sector America the math leads to the grim prospect of working longer and living poorer.
In public-sector America things just get better and better. The common presumption is that public servants forgo high wages in exchange for safe jobs and benefits. The reality is they get all three. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector’s $19, according to Bureau of Labor Statistics data. Throw in pensions and other benefits and the gap widens to 42%.
If you want to live the good life now days, you’ll have to go and get on the government payroll. But not just any government job. You’ll have to get one of the ones that are backed by a government worker’s union. We’ve talked about unions here before and how their collusion and special treatment allow them to keep wages and benefits artificially inflated above market value. Well, guess what you get when you combine that with government protection enshrined by law:
For New York City’s 281,000 employees, average compensation has risen 63% since 2000 to $107,000 a year. New Jersey teaching veterans receive $80,000 to $100,000 for ten months’ work. In California prison guards can sock away $300,000 a year with overtime pay.
Four in five public-sector workers have lifetime pensions, versus only one in five in the private sector. The difference shifts huge risks from government to private-sector workers.
The private sector(you and I) are footing the bill for these fatcats to live high on the hog. Excuse me if I don’t buy into the notion that teaching children for 20 years entitles you to lifetime inflation-adjusted pensions with full paid health care. Guess what I’ll get if I retired after 20 years at my job. You guessed it. A few grand in a profit-sharing plan and a nasty COBRA payment each month. I also don’t buy into the cops as public servants thing either. At least not the cops I see around here. All they do is write speeding tickets and tow their bass boats to the lake. That’s when they aren’t conning the mayor into spewing fear rhetoric about budget shortfalls meaning less cops on the street. Any time I’ve needed a cop to actually help out they’ve given me the cold shoulder. When our house was robbed a few years ago they basically said sorry. We could probably use a few less cops on the street. Maybe at least then I wouldn’t get a speeding ticket that one time I forget to stare at my speedometer. Again, excuse me if I don’t jump on that bandwagon.
But surely it’s not as bad as all that, right? Guess again:
Michael Hirth, a 55-year-old fireman in Hallendale Beach, Fla., has a nifty deal known as a Deferred Retirement Option Program. It enables public employees to “retire” and stay in their old jobs. Hirth is receiving both a pension and a salary for the same job. He’s even allowed to direct income from the pension into a fund that guarantees an 8% return as long as he works. (The only way ordinary folk get guaranteed returns is with something backed by the U.S. Treasury. Treasurys pay 0% to 3%.) If the fund fails to achieve that hurdle, taxpayers will just have to kick in the difference.
These benefits are so sacrosanct, and such a source of union power, that labor bosses have turned them into the third rail for NYC politicians–touching them is suicide. That goes for the benefits not only of existing workers but of future ones as well.
But, but, but, you say, firemen and cops have dangerous jobs so they need to have benefits like that right? Not exactly:
Cops and firemen initially were granted early retirement because their work was physically demanding and they tended to die young. These days they live as long as everyone else, but early retirement lives on for an ever expanding pool of public workers. So do liberal disability rules. Nevada law 617.457 decrees that heart disease among uniformed safety workers is job-related. The medical reality, says the American Heart Association, is that a fireman gets heart disease from diet, lack of exercise or genes, not from dashing into burning buildings. Still, veteran Las Vegas firemen hobbled by heart disease can collect an inflation-protected $40,000 a year for life on top of their pension. That applies even if they’re healthy enough to work in another occupation.
So, at the end of the day, what do we think about all this? Being realistic, the laws of economics don’t cease to exist simply because it’s government doing it. Pension plans are ponzi schemes. Always have been and always will be. So just like all the private sector pension defaults, the government one will eventually fail too. There simply won’t be enough money to fund them. Until then, though, maybe we should all go to fireman school.
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