http://www.usnews.com/opinion/mzuckerman/articles/2011/01/21/public-employee-union-benefits-are-a-fiscal-disaster
Some 30 states face a structural budget gap, where ongoing expenses are not covered by revenues. California, for instance, projects a structural budget gap of over $20 billion in fiscal 2012, $22.4 billion in 2013, and $20.4 billion in 2014. New York's projected gap is $9 billion in 2012, $14.6 billion in 2013, and $17.2 billion in 2014.
States have shied away from making unpopular cuts in core services and state workforces beyond what they have already done. They sowed the dragon seeds in the fat years by buying off service unions with generous pensions, employee contracts, healthcare, pay, and benefits. According to a study by Daniel DiSalvo, a political scientist at City College in New York, state and local workers now earn an average of $14 more per hour in wages and benefits than their private sector counterparts. In general, the average state government worker reaps retirement benefits several times richer than a counterpart in the private sector, a critical reason why public pension costs have become unsustainable. For example, state and local governments contributed $3.04 per hour toward each employee's retirement in 2007, according to U.S. Labor Department figures, while private employers paid 92 cents an hour.
Even worse, "governments" don't pay for anyone's retirement, the citizenry does. Private employers don't pay for retiree benefits either, the customers who buy their products do. Viewed through that lens, it makes perfect sense that government employees are paid more - there's no competitive force holding their pay down. In a private employers calculus, paying more than the other guy brings a comparative disadvantage in product pricing; the rubber actually meets the road somewhere.
One might argue that the citizenry are paying for the private employer's retirement benefits also - but the key difference is that the arrangement is voluntary. I don't have to pay a dime of a private retiree's benefits unless I am willing to pay the market price for the products the retiree's company sells.
Some 30 states face a structural budget gap, where ongoing expenses are not covered by revenues. California, for instance, projects a structural budget gap of over $20 billion in fiscal 2012, $22.4 billion in 2013, and $20.4 billion in 2014. New York's projected gap is $9 billion in 2012, $14.6 billion in 2013, and $17.2 billion in 2014.
States have shied away from making unpopular cuts in core services and state workforces beyond what they have already done. They sowed the dragon seeds in the fat years by buying off service unions with generous pensions, employee contracts, healthcare, pay, and benefits. According to a study by Daniel DiSalvo, a political scientist at City College in New York, state and local workers now earn an average of $14 more per hour in wages and benefits than their private sector counterparts. In general, the average state government worker reaps retirement benefits several times richer than a counterpart in the private sector, a critical reason why public pension costs have become unsustainable. For example, state and local governments contributed $3.04 per hour toward each employee's retirement in 2007, according to U.S. Labor Department figures, while private employers paid 92 cents an hour.
Even worse, "governments" don't pay for anyone's retirement, the citizenry does. Private employers don't pay for retiree benefits either, the customers who buy their products do. Viewed through that lens, it makes perfect sense that government employees are paid more - there's no competitive force holding their pay down. In a private employers calculus, paying more than the other guy brings a comparative disadvantage in product pricing; the rubber actually meets the road somewhere.
One might argue that the citizenry are paying for the private employer's retirement benefits also - but the key difference is that the arrangement is voluntary. I don't have to pay a dime of a private retiree's benefits unless I am willing to pay the market price for the products the retiree's company sells.
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