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Thursday, March 17, 2011

LETTERS response to “Don’t Blame Public Employees”

While visiting a friend in Forestville recently, I read the front page article in your March 3 edition by Martin J. Bennett entitled “Don’t Blame Public Employees”, and discovered it was almost identical to a piece that appeared a couple of months earlier in my local on-line newspaper, Voice of San Diego. Mr. Bennett, a junior college history professor, instead of dealing directly with the central question of whether public sector pay and benefits are out of line with the private sector, trots out a series of allegations to get people fired up. He claims that The Economist magazine, to which I subscribe, is part of a misleading corporate campaign to scapegoat public employees. This is ridiculous. The Economist is a British publication and is far and away the best and most objective weekly news magazine. It’s bias is, if anything, slightly liberal.

The author then proceeds to blame the housing meltdown, Wall Street, oil companies, Proposition 13, wealthy people and a “too low” top State income tax rate of only 9.3%, while claiming that an article entitled “The Truth about Public Employees”, written by two Berkeley professors, proves that public employees are not overcompensated compared to the private sector.

I’ve read this study, because it was cited in the Voice of San Diego story. It contains a huge fallacy, that pay scales should somehow be based not merely on the work people perform but primarily on their education and their age. I live in San Diego, which was perhaps the first city to discover it was in deep trouble as a result of foolish commitments made to public employee unions. The President of one of our unions is a trash truck driver. She happens to be a college graduate. Should she be paid more than other drivers because of her degree? Most people would consider this a ridiculous question, but it’s at the heart of the Berkeley professors’ claims that public sector compensation is not out of line. Their study is garbage.

I’m a retired human resources director from the private sector, so I read articles like this one very carefully to check their validity. This one flunks. E.g., Prof. Bennett cites average pensions for CalPERS retirees of only $25,000 a year, without mentioning comparable figures for private sector retirees, which are far lower. The reason this figure seems rather modest is that it includes all retirees, many in their 70’s and even 80’s, and you will find that public sector retirees in recent years have opened up a huge gap. I’ll explain why in a moment, but first let me cite some history.

Public sector organizations used to compare pay and benefits with private sector firms, but stopped doing so over 30 years ago when they realized they had passed private firms in many aspects of compensation. They now look strictly at other public entities, typically other cities and counties, and search for “leaders” to justify pay and benefit increases. And why not? The people paying the bill, the general taxpayers, are completely shut out of the process because, it is claimed, these are sensitive “personnel” issues.

About 15 years ago when tax receipts in California, as a result of the high tech boom, swelled dramatically, major increases in retirement benefits were granted. In San Diego, these occurred in 1996 and again in 2002, and instead of improving the benefits only for future service, increases were given for past service as well, thus instantly creating huge unfunded liabilities that have come home to roost and are simply unsustainable. San Diego’s situation is not an aberration, it’s more or less typical among larger cities and many small cities as well.

No one is “blaming” public employees. They do what most people would do, take advantage of any chance they get to maximize their financial situation. But the public sector is different. The unions have huge political clout, and often make the difference in elections, thus in effect selecting their bosses, the politicians who approve proposed pay and benefit increases negotiated by managers who know they’ll get the same deal or better. It’s no accident that the majority of unionized workers are now in the public sector. It’s basically a monopoly; there’s no competition except the occasional pressure for “out sourcing”, which is more talked about than actually accomplished.

Here’s the typical California city package for you to compare to your own situation: Automatic “step” increases within each job classification, plus (until the last couple of years) an additional general increase granted to everyone; paid vacation and sick leave time 4-6 weeks a year plus 10-12 paid holidays; paid overtime, usually at premium rates, even for supervisors and middle managers, engineers and other professionals exempt from statutory overtime pay requirements; Civil Service protection, as well as union representation against arbitrary discipline, favoritism, etc. The stories you’ve heard, e.g., about the near impossibility of firing incompetent teachers are, unfortunately, true. The “due process” is endless.

But wait, it gets better. “Normal retirement” is at age 55, and if you are a police officer or firefighter, age 50. You get a defined benefit pension equal to 1.5 or 2% per year of service times your single highest year’s pay, up to 3% for cops and firefighters. And, of course, you get annual cost-of-living increases to your pension. There is often, in addition, a 401(k) type savings plan to which the city matches the employee contribution. Medical benefits are for life. The employee contributes, sometimes paying up to 25% of the cost. You decide whether that’s a better deal than you have.

Many people wonder why police and fire personnel get a far more generous package, both earlier retirement ages and a much richer benefit. The rationalizations are two: cops and firefighters, because of the nature of their jobs, have a shorter life expectancy after retirement, and since they “put their lives on the line daily” they are much more likely than other occupations to suffer serious injury or even death before retirement. Sounds plausible, but neither claim stands scrutiny.

Now, just like you, I respect and appreciate the work these public safety employees perform, and there certainly are risks and stresses in these occupations. But remember, these people chose these jobs, knowing exactly what they entailed before they applied.

Here are two facts that may surprise you. CalPERS, the largest state public pension system, keeps lots of statistics. Their numbers show that the post-retirement life expectancy of police officers, highway patrol officers, firefighters and other public safety personnel is identical to other public employees. And, if you go on the internet and examine the lists of jobs with the highest occupational fatality rates, they show that commercial fishermen, roofers, loggers, farmers, pilots, truck and taxi drivers have higher fatality rates on the job than police officers or fire fighters. When openings in public safety jobs occur, there are always lots of applicants, because they pay very well, have lots of opportunities for overtime and you can retire very young with a nice pension and generous health care. Many go on to lucrative second careers.

The public has only recently begun to focus on just how generous pay and benefits for public employees at almost every level have become in the last 15 years or so. The information is not readily available, because public agencies have many tools to hide or obfuscate it, and every incentive to do so. Ironically, federal employment is, in most respects, much less lucrative than at state, county and city levels. But the simple fact is that, blame whoever you want, the situation is unsustainable financially and simply must be corrected.

William Bradshaw
San Diego, CA

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