According to Forbes Magazine journalist Stephane Fitch, public pension participants are living the life of Riley. "Gilt-Edged Pensions" (February 16, 2009) showcases individuals who have been able to retire at a relatively young age and with a comfortable nest egg, courtesy of taxpayers, at least in part. Examples include the following:
- Retired police offer who received a pension at age 42 worth about $2 million
- New Jersey social studies teacher who earns $80,000 per year, pays 5.3% towards a pension, can retire at age 60 with full benefits and the ability to teach part-time thereafter
- Florida security guards who can moonlight for private companies, with time clocked on such assignments being credited toward public pension payouts
Adding insult to injury, Fitch relies on Bureau of Labor Statistics data to suggest that a pay gap exists, in favor of public workers. He writes that "State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector's $19."
I'm not picking on public workers but I do think it is important to understand how much taxpayers owe now and in the future for others' benefit claims. (By the way, I think that includes Social Security and Medicare unfunded liabilities too.) Many people I know are amenable to the notion of a municipal employee receiving higher benefits if they receive lower cash wages, as compared to the private sector. However, few taxpayers want to subsidize both current and future compensation, especially if they themselves are cash strapped (self-employed, lost their job, work for a company without a retirement plan, etc).
The stage is set for continued frustration on the part of public employees (many of whom no doubt work quite hard to do a great job) versus Joe and Sally Taxpayer who have less and less disposable income to finance giant IOUs.
Editor's Note: Fitch quotes me in the article by writing that "Taxpayers are on the hook," says Susan Mangiero, who maintains Pensionriskmatters.com, a blog highlighting pension plan issues.