“Without disputing the figures, Monique Morrissey, an economist with the Economic Policy Institute in Washington, D.C., said the findings are misleading because they do not compare specific classes of employees or account for differences in education levels and total hours worked.”
California Is Golden State For Public Employees, by Michael Carroll, AMI Newswire, Jan. 31, 2017

Ms. Morrissey has a point, even though there was no intent to “mislead.” While our recent study “California’s Public Sector Compensation Trends,” found that full-time public sector workers in California earn pay and benefits that average at least twice as high as their counterparts in the private sector, going into comparisons by specific class of employee was beyond the scope of that particular study. But Ms. Morrissey is missing the forest for the trees.

First of all, as acknowledged in Carroll’s article where Morrissey is quoted, the study found that California’s public employees earn pay and benefits that average 39% higher than their public sector counterparts in the rest of the U.S. So especially in California, we conclude there are two classes of workers – public sector workers, whose 2015 pay and benefits averaged $139,691 for full-time work (if you properly fund their pensions), and private sector workers, who, very best case, earned pay and benefits that averaged $62,475.

Everybody knows that public sector workers have, on average, higher levels of education than private sector workers. Should this translate into average (and median, by the way) total earnings that are twice what all private sector workers receive? It challenges credulity.

Ms. Morrissey’s biography states “She is active in coalition efforts to reform our private retirement system to ensure an adequate, secure, and affordable retirement for all workers.” Bravo. That is a goal we share. And so in the spirit of aligning ourselves with practical, feasible, equitable objectives towards achieving that goal, Ms. Morrissey is invited to answer the following questions:

(1)  Do you think what public sector pensions (ref. CalPERS, the largest) pay to California’s government retirees should be three to five times what Social Security offers private sector retirees?

(2)  The average current retiree pension – not including retirement health benefits – for a state/local government worker with 30 years of service is $67,762 per year (click on any pension system to see average per former employer). There are 10 million Californians over the age of 55, 25% of the total population If all of them received a pension of $67,762 per year, that would cost $677 billion dollars, 32% of California’s aggregate personal income of $2.1 trillion. Do you think people who are retired should collect state-funded pensions worth more on average than the earnings of people who work? Do you think this is feasible?

(3) Defenders of unaltered state/local government pension benefits in California argue that pension benefits are primarily paid for via investment returns. But they claim investment returns can average 7.5% per year (4.5% after adjusting for inflation), “risk free.” Are YOU, Ms. Morrissey, willing to personally guarantee that MY retirement investments will earn this much? Because if you are, I’ll invest every penny I’ve got with you.

(4) Our “apples-to-apples” comparison of California’s new “Secure Choice” pension option for private citizens yielded the following comparisons: (a) Public sector: Teachers/Bureaucrats, 30 years work – pension is 75% of final salary. (b) Public sector: Public Safety, 30 years work – pension is 90% of final salary. (c) Private sector: “Secure Choice,” 30 years work – pension is 27.6% of final salary. Do you think this disparity is fair to private sector workers?

(5) Can you explain why public sector pensions are not subject to the same conservative funding and investing rules as private sector pensions are under ERISA?

(6) Do you support government programs that offer ALL American workers the SAME retirement benefits, subject to the SAME formulas and incentives, or not?

In reference to our recent CPC study, Ms. Morrissey is also on record as saying “There have been a lot of attacks on public-sector unions because their members have been a stalwart voting block for the Democratic Party, but that doesn’t mean they’re overpaid.” This remark suggests Ms. Morrissey thinks nonpartisan “attacks” on government unions aren’t justifiable and won’t happen. That is incorrect.

Government unions, unlike private sector unions, have the ability to negotiate for financially unsustainable pay and benefits because they control their bosses through campaign contributions, because their bosses are politicians instead of businesspeople, and because these pay and benefit packages are paid for through coercive taxes instead of via allocations of precarious profits.

Government unions have created two tiers of workers in this country. Government workers not only have unaffordable pay and retirement security, but their union leaders have an incentive to support government policies that destabilize and divide this nation, because that will create the need for even more unionized government workers. Government unions, intrinsically, are economically damaging and politically authoritarian.

“Unsustainable” means that sooner or later an end will come. When the money is gone, Morrissey and her gang will have a lot more questions to answer.

 *   *   *

Ed Ring is the director of policy research for the California Policy Center.

5 Responses to Questions for Someone Who Supports Superior Benefits for Government Workers

  1. Tough Love says:

    A few thought (and perhaps better questions for Ms. Morrissey) …

    (#1) Quoting …

    “(3) Defenders of unaltered state/local government pension benefits in California argue that pension benefits are primarily paid for via investment returns. But they claim investment returns can average 7.5% per year (4.5% after adjusting for inflation), “risk free.” Are YOU, Ms. Morrissey, willing to personally guarantee that MY retirement investments will earn this much? Because if you are, I’ll invest every penny I’ve got with you.”

    The far BIGGER point is that suggesting that there is in fact a 3-rd source of paying for Public Sector pensions(that being “investment income”) is simply WRONG. All investment earnings derive from (and in proportions to the amount and timing of employee and employer contributions). Without those contributions there would be no investment income, and in the absence of the need to fund the grossly excessive pensions granted Public Sector workers, the investment income on the far larger Taxpayer’s share of total Plan contributions would have stayed in the Taxpayers’ pockets …. perhaps helping to fund their much SMALLER retirements.

    (#2) Quoting ….

    “(1) Do you think what public sector pensions (ref. CalPERS, the largest) pay to California’s government retirees should be three to five times what Social Security offers private sector retirees?”

    You should have highlighted (from a pension/benefits standpoint) the MOST EGREGIOUS segment of Public Sector workers …. Safety workers. While their base cash pay seems reasonable based on job risks, education, knowledge, experience, and skills when compared to Private Sector workers, when their pensions and benefits are included, their “Total Compensation” is ludicrously excessive by any reasonable metric.

    If asked, most reasonable people would agree that (simply due to the nature of the job) a somewhat great safety-worker pension is appropriate, and I’d wager that if asked, responses as to the % by which such worker pensions should be greater than those of similarly situated Private Sector workers (with equal wages, age at retirement, and years of service) would come in at 10%, 20%, perhaps even 30%. But, do you believe ANYONE would suggest that they deserve a pension with a value at retirement that is 4 to 6 TIMES GREATER than those of their Private Sector counterpart? Do you think retiring at 55 (or even 50) with ZERO reduction in payout for beginning to collect a COLA-Increased pension at such a young age comes cheap? It doesn’t, and that 4 to 6 times greater safety-worker pension is exactly the level ROUTINELY promised CA safety workers today.

    (#3) Qouting …

    “(4) Our “apples-to-apples” comparison of California’s new “Secure Choice” pension option for private citizens yielded the following comparisons: (a) Public sector: Teachers/Bureaucrats, 30 years work – pension is 75% of final salary. (b) Public sector: Public Safety, 30 years work – pension is 90% of final salary. (c) Private sector: “Secure Choice,” 30 years work – pension is 27.6% of final salary. Do you think this disparity is fair to private sector workers?”

    You missed a BIG one here……

    The Private Sector worker is getting that pension of 27.6% of final pay by paying for ALL (yes ALL) of it. The 75% of final pay pension for teachers (90% for safety workers) is 80%-to-90% paid for by Taxpayer … NOT the workers.
    ——————————–

    Lastly, why not add a question for Ms. Morrissey asking WHY, when employer-sponsored retiree healthcare subsidies are all but GONE in the Private Sector, should Taxpayers subsidize the retiree healthcare benefit granted PUBLIC Sector workers …….. with some studies suggesting that the cost of the generous promises in place today cost about a level annual 10% of pay.

  2. Bob says:

    No mention of number of hours worked a year or number of days worked a year.

  3. S Moderation Douglas says:

    I do agree with Monique Morrissey:

    “It’s like it’s written by a nerdy 11th-grader who got excited by finding this database,”…“It’s not a serious analysis.”

    Or….

    It is intentionally misleading.

    Not comparing equivalent workers is a big deal. Ignoring employer size is a big deal. Using today’s ARC as the normal cost is a big no-no.
    And it would have been more logical to include teachers and exclude safety.
    If, in fact, one can still get a job as a policeman with only a high school education, then yes, that job is worth more than a roofer (app. $40,000 a year) or a warehouse worker ($30,000 year)

    I don’t entirely agree (or entirely disagree) with Morrissey ‘ s statement. ..
    ” “Public-sector workers are a bargain for taxpayers,” she said, and higher-educated employees working for state or local governments – including doctors, teachers, nurses and attorneys – tend to opt for pay that’s lower than the private sector because they have a sense of public service.”

    Some do, I’m sure. But many choose lower pay in the public sector for more job security… and a pension.

    • Rex the Wonder Dog! says:

      Not comparing equivalent workers is a big deal.
      I agree Douglas, lets compare an unskilled, GED cop job coming in at $200K BEFORE overtime to the same private sector skill set 🙂

  4. art says:

    Most of these studies allow for education leveling but teachers are a large part of the government workforce. Nobody would compare the rigor of an elementary ed or even basic high school ed degree to a STEM degree so it is foolish to compare an 80k elementary ed teacher with pension, tenure and summers off to a pharma or IT researcher at the same pay level with 401k, no tenure and year round work schedule. Elementary ed teachers are now the biggest single category of employment in the USA according to the BLS

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