Public Sector Employee Benefits
- Public sector pension plans are more generous than comparable plans in the private sector.
- They tend to be underfunded and in some cases dramatically so.
- They are even more poorly funded than official estimates indicate.
- Public pension fund managers do not appear to invest in a manner consistent with asset-liability matching.
- The cost of retiree health plans is soaring and, in most states, these plans are completely pay-as-you-go.
Source: NBER working paper.
Very timely. Good stuff.
The biggest problem is that public employees get to vote for their employer. There is no way to have arms length bargaining if you can vote the person you are bargaining with out of office.
All of the above is why we are in trouble.
Public employee unions (with their generous benefits) are an example of interest group theory, where small groups of well-organized individuals can dominate and extract resources from the poorly-organized masses. You can make the argument that public sector unions trade benefits for cash wages. But research shows public employees earn about 20% more than comparable private sector workers.
A few years ago the city where I live (100,000+ residents at the time) had a special election (on a Saturday) to decide whether to rollback a major tax hike. Out of about 5,000 people who voted, the measure failed by 180 votes. Public employee organizations made a special effort to get every teacher and city worker to the polls. Of the 2,600 people who voted against rolling back a huge tax increase, I wonder how many were public sector employees or (their families)?
First, public employees do not negotiate their benefits or pay. Government bureaucrats and professional union representative and do. The employees simply perform a duty for a wage.
Second, if the funding streams for these benefits have been underfunded or invested incorrectly then we need to prosecute those with a fiduciary duty to maintain those accounts. But again the employee has no part or burden in these areas.
Devon, if you are referring to the Heritage article which appears in today’s email blog:
http://www.heritage.org/Research/Reports/2011/02/Federal-Compensation-Why-Government-Pay-Is-Inflated
FTA:
“This is an apples-to-oranges comparison because federal employees have more education and experience than private-sector workers.”
This is no more than a diatribe from an individual who gets paid to produce propaganda.
So why are we going after the income of working fathers and mothers?
Maybe the private sector worker needs to unionize to increase their benefits instead of attempting to pull other workers into the gutter with them. As they say “A rising tide lifts all boats.”