I discussed two such articles on Sunday and Monday
- Huge Battle Looms Over Public Pensions - Who Will (Who Should) Foot the Bill?
- Hawaii Furloughs Its Children; Extreme City Moves; Who Is To Blame?
Here are some emails from readers in response to those articles.
Private Sector Worker Chimes In
Let's consider the point of view of someone who works in the private sector and is currently unemployed.
Denise writes ...
Hello MishSelf Employed Person Chimes In
First, let me say how much I enjoy reading your blog. And, may I say, as an unemployed person, how much I appreciate it's FREE!
The public pension issue makes my blood boil for many, many reasons, most of which you have addressed. I'm writing because there is one point of view which usually isn't. Most comparisons are made between the public sector and the private sector with their 401ks. I am part of a different group - the private sector with NO 401k! I worked 17 very long, difficult years. I was laid last year and apart from the ROTH I funded myself, I have nothing. Can you imagine how my blood boils every time I read about these pensions?
Every time I drive by one of our County municipal buildings I wonder what in the world do those people do to earn payments from me for their retirement? I also wonder about teachers who say they do it because they love it and in the next second bellyache because they are "only" making $85,000 a year or more counting benefits? What is so special about teachers that I should pay for their retirements?
Where did the concept come from originally anyway? Don't even get me started on Congressional pay. I lost my health insurance and cannot afford a rise in my blood pressure. I know most people think military benefits are sacrosanct, but I wonder about them too.
Civil SERVANT. Public SERVANT. Who knew those titles would become so oxymoronic?
Thank you for listening.
Denise
VegasBob, a self-employed reader of this blog chimes in with a real-life example of public pension math. VegasBob writes ....
My Dad retired from Federal Civil Service in April 1977 after 30 years' service.Union Supporter Chimes In
During that time, he paid in about $29,000 toward his civil service pension.
Over the next 29 years and 4 months (until July 2006), my Dad collected just over $1,360,000 from the Federal Government on his pension (I still have the notice the Office of Personnel Management sent after Dad died).
Then my mother collected a survivors' benefit for 13 more months, until she passed.
My Dad also collected Social Security for 21 years, and my Mom collected for 15 years.
I think Dad's pension started out around 24K in 1977 (Dad's final Federal salary in 1977 was around 40K). With COLAs every year, Dad's pension grew to around 62K when he died in 2006.
Sustainable? I don't think so...
Bob Writes ....
You are an idiot if you think teaching is a cherry job. Wonder why 80% of all new teachers are gone in 5 years.Well for starters I never said teaching was a "cherry job". It is amazing how people attempt to put words in my mouth that I never said. As for teaching being an honorable profession, I happen to agree.
Teaching is the most honorable respected and needed profession on the planet. You don't have a clue. And if you think paying a teacher for 10 months "time" is going to fix the problem then you are stupid. And if you think teachers sit home for two month in the summer, you are really stupid. And if you think that teachers are the culprits in all this you Sir are a moron.
The "fix" is real simple: close down the Dept of Ed. Throw out the unions, Pay teachers enough so they can save/earn the $900K needed to retire....let teachers bid on pay scale they will take..and then get it through your head that Teachers are the most precious Humans on the planet! (NOT BLOGGERS!)
How about you pay the teachers what football players make and pay football players what teachers make...DUH!
I recommend people take a career that they want to do. It is more important to be happy, than to work somewhere for expected benefits. If someone wants to teach, fine teach. But if someone cannot teach well, they should be fired. Unfortunately unions prevent that, even in cases of teachers making sexual advances towards kids.
Unions are also against merit pay, charter schools, home schooling and damn near everything else that might benefit the kids. Unions do not give a rat's ass about what is good for the kids, they only care about what is good for the union.
My beef is not with teachers per se, but with teachers' unions, more specifically public unions in general, as well as their absurd sense of entitlement.
Note Bob's amazing sense of entitlement as to what a teacher is worth.
By the way, to help explain Bob's statement "Teachers are the most precious Humans on the planet!" I need to point out Bob's "slight" bias. In one of several Emails from Bob, he indicated his wife is a teacher.
Here is my reply to Bob ...
Hello BobWhat's a Profession Football Player Worth?
I don't control football salaries. More to the point, it might help if you understood simple math.
Math Questions To Ponder
Pray tell how many professional football players are there?
How many teachers are there?
How many have the talent to be professional football players?
How many have the talent to be teachers?
How long does the average football player live and with what injuries after they leave the game?
How long does the average teacher live after they retire?
What would it cost if teachers made what football players did?
How could they possibly be paid?
Duh Indeed!
Mish
Somehow Bob thinks a teacher is worth as much as a professional football player. It's an absurd argument. Bob failed to consider sports math of what takes to be a professional athlete and how many fail after years of trying, how many wreck their bodies while playing.
Here is the real issue, however: Who is Bob (or anyone else) to tell people how to spend their entertainment dollars?
I will not pay what it takes to support those salaries, and apparently Bob will not either, but many will. What right does Bob have to decide what people are willing to pay to see a game.
Tossing the nonsensical sports comparison aside, Bob thinks teachers deserve $900,000 annuities at retirement. Nowhere does Bob say where the money comes from. The only place it can come from is if everyone else is taxed to death to pay for it.
Why? Because Bob thinks "Teachers are the most precious Humans on the planet!"
Why? Because Bob's wife is a teacher.
Bob seriously needs a math lesson. He also needs to consider who has to pay for his wife's pension, notably private sector workers who receive no such benefits.
Professional Money Manager Chimes In
Peter From California writes ...
Mish,In a followup Email Peter Writes ....
I have been a professional money mgr for over 30 years. Started reading your blog on recommendation of a relative two years ago.
I have to hand it to you for your relentless attack on public sector pensions and unions. It was obvious to me many months ago that you were convinced this was going to be a national topic of major interest!
You were there first, you were there early, and you were, as I mentioned above, relentless. For a while I couldn't believe that what you were writing about was not making national headlines. It just took a while.
It has now become one of the most talked about problems in America. Again, huge congratulations for identifying that before the rest!
Thanks for giving us all a consistently outstanding blog.
Peter
I live in California. There is a lot of talk, but no action. Even in Bell, the city manager resigns over the clamor but continues to collect pension. My local fire chief retiring at 55 with $233k annual pension. There hasn't been a fire in my town in the four years I have lived here.Thanks Peter. Unfortunately many don't see it that way.
I suspect Bernanke/Geithner/Obama will try to bail out the states temporarily and manipulate stock market higher in an attempt to make pension funds look better. I just don't see state constitution rewrites or defaults on state debt. Therefore, problem continues to fester and retirees live like kings.
I received a lot of Emails from union supporters, most unprintable, some bordering on nonsensical.
By the way, they are not all living like kings, but in comparison to Denise who has no pension or medical benefits they all certainly are.
Public union pensioners have no sense of how well off they are compared to private sector employees.
Concerned Retiree Chimes In
Steve, a concerned retiree living in New Jersey writes ...
Hello MishHello Steve
I'm a retired state employee in New Jersey. After 28 years of service I get about $40,000 a year. The cost of living is high in New Jersey and $40,000+ does not give me an opulent lifestyle.
I was a computer programmer and my peers in private industry usually made quite a bit more money than I did. People left state positions to go work in private industry to get better pay. I worked hard, my salary was not high, I made my pension plan contributions, and now my annual payments are modest.
When you rail against the pay and benefits of police, firefighters, and teachers, you should at least note that the majority of public-sector workers get less pay and less in the way of benefits.
If the state made terrible investment mistakes in the face of our own objections, why should the vast majority of modestly paid public-sector retirees have to be penalized?
Steven Welzer
East Windsor, NJ
Thanks for a rational email, unlike most I get from public union employees. However, I have some tough questions for you.
1. Pray tell exactly how much did you contribute to your pension plan and how much do you expect in return?
2. Who do you propose pay for your mistake (if it was a mistake) of working for the government?
3. Should those working at Walmart with no pension at all pay your pension? 24-year old kids out of college struggling to find a job? The 8 million unemployed? Who?
4. Please note that when a private corporation goes bankrupt, benefits are assigned to the PBGC and the beneficiaries take a huge haircut. Given that cities and states are effectively bankrupt, why shouldn't the same apply to you?
5. If you are not responsible for your career choice, who is?
Retired NASA Engineer Chimes In
Sometimes I am surprised by what people write. This is one of those times.
Here is an email from Keith S. Brown, a retired NASA engineer.
Keith writes ...
Hello Mish,Director of Graduate/Undergraduate Programs Chimes In
I greatly enjoy your blog. I hope you continue your fight.
Despite being a retired NASA (Federal) Engineer, I generally agree with you, though at times I think you don't go far enough. We, and I'm including my children and grandchildren in this comment, can no longer afford the massive government, that we have accumulated. Entire agencies need to be disbanded. The remaining agencies should be drastically pared back.
I expect my federal pension will ultimately vanish, and I've planned accordingly. Those plans may go awry, but I've done what I can for my family.
I enjoyed my job at NASA, worked hard, and lived way below my means (on about 1/3 my gross), all as part of a pre-planned "career" change when I retired (pre-planned for 15+ years). A year ago (at the height of the crash) I bought a small farm and retired a couple of months later (early Jan '09). It's been a lot of fun, I spend more time with my family, and due to the outdoor work and more relaxed pace, I feel better and am in better shape. By living below my means while working, retirement has been an effective pay-raise. Attitude and planning can make a difference.
Sincerely,
Keith
As much as the above Email surprised me, the next one from a Director of Graduate/Undergraduate Programs at a major university might surprise you. I have communicated with this person before, and although he did not ask, I will suppress the university he works for and his name.
"University Director" writes ...
Hi Mish,Attitudes Make A Difference
Read your post from August 8th about public pensions. I could not agree more. Before moving up the �ponzi pyramid� to higher education I was a high school social studies teacher in a large urban (inner city) district.
Of our �faculty� only 20% of them were capable of teaching. I felt salaries and benefits were out of this world in comparison to actual ability and performance.
I remember sitting in a union meeting where teachers were upset over having to start paying 5% of their salaries instead of the previous 4%.
Shortly thereafter, I quit.
It's not often someone tells me I do not go far enough in regards to public unions, especially someone on a public pension.
Notice the wide variety of attitudes from Peter, Bob, Steve, Denise, VegasBob, Keith, and a university director. Yes indeed, attitudes make a difference, and one Email stands alone in a massive sense of entitlement.
As far as who is responsible and who should pay, Bob in particular needs to do some soul searching and some math, especially regarding demographics. A massive wave of boomers is retiring and Bob wants $900,000 annuities for all of them. Bob needs to take a good hard look at the entitlement strife in Greece and explain why it would work differently here. He also needs to explain exactly who is supposed to pay for his wife's pension as well as why.
Solutions
I am frequently accused of offering no solutions. Even Bob accused me of that in our email exchanges.
The irony is I fully 100% embrace Bob's idea of "closing down the department of education, throwing away the unions, and letting teachers bid on pay scale they will take."
It is indeed the perfect solution otherwise known as the free market. We need to do exactly that, not just for teachers, but for all government employees.
Benefits would plunge in the absence of union coercion, charter schools would spring up offering parents a real choice, and school boards unencumbered by union rules would quickly get rid of poor performing teachers.
Thus the quality of teachers would rise and children would receive a better education. It is supposed to be about the kids isn't it? You would never know it from the way unions and people like Bob act.
However, I commend Bob for recognizing the urgent need to get rid of public unions. That is indeed one of the necessary steps to fix the biggest problem facing cities and states: absurd public union salaries and pension benefits.
Unfortunately, getting rid unions only addresses the problem of future retirees down the road. It does not address the problem at hand. The only solutions to the immediate problem are bankruptcy, default, or unions giving up pension benefits by negotiated deals, by increased taxes on pension benefits, or by court decree.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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