Young workers want good old fashioned pension

[almost there]

+1

 

[FinanceDude]

I don't understand why people attack the teachers who get paid below average salaries to nurture of the minds of our children. I'd want the best and the brightest to do that job, and the way you get those folks is to offer good pay and benefits. We have our priorities reversed when teacher pay and benefits is the issue rather than company tax evasion and CEO pay.

The average teacher in Wisconsin makes about $50,000 a year plus benefits. With pension and healthcare added in, total compensation goes up to about $85,000-$90,000. How many unemployed people in America would take that job? Last year, our district had 12 openings, and got 2700 resumes........apaprently some people think that being a teacher isn't that bad of a deal..........

 

[ziggy29]

...and loyalty in the private sector means nothing.

Sort of, but I'd add that whether a company is publicly traded or privately held is also a factor. When you look at Fortune magazine's annual "best 100 companies to work for" list, private companies are disproportionately represented by a fairly wide margin. It's the Wall Street addiction to the quarterly earnings report and "hitting their numbers" THIS QUARTER without much regard for the longer term that adds to much of the absence of loyalty.

A privately held company may decide that mass layoffs in a weak economy will put them at a disadvantage in the long run once the recovery takes hold, so they stay put or keep layoffs to a minimum. Public company CEOs and other execs want to show that they are getting "lean and mean" and the more heads they can cut, the better for their stock price (and executive bonuses). Whether it hurts them a couple years down the road is barely a concern, if at all. And a private company can decide to leave some profit on the table if they decide they're doing well enough -- while public company executives who did this would be ousted by angry institutional shareholders for not squeezing that last penny per share out of the business by being ruthless.

 

[almost there]

publicly traded

 

[rescueme]

I don't understand why people attack the teachers who get paid below average salaries to nurture of the minds of our children.

Not in my area. I know quite a few teachers in our development who live a "lifestyle" much better than DW/me.

Also, by the time they are in their mid-50's, they are retired (due to my taxes). Something that still grates me the wrong way.

Heck, I pay for my living expenses; I also pay for "theirs", via taxes, which include a good retirement well after I was still "humping".....

 

[ziggy29]

Not in my area. I know quite a few teachers in our development who live a "lifestyle" much better than DW/me.

Also, by the time they are in their mid-50's, they are retired (due to my taxes). Something that still grates me the wrong way.

See, here's the thing. When some people invoke the 80s and 90s and say "the private sector was a much better deal," it misses one thing: Even when it was (and that wasn't always true), the ability of the public sector to retire (often as early as 55 and sometimes even 50) was never in question. Today, ANY retirement for the pensionless is in question, especially if they weren't prodigious savers since their 20s. Sure, the govvies weren't going to "get rich quick" but they sure as hell never worried that they could never retire.

Also, I don't think a lot of taxpayers would complain about paying for an employment deal (like retiree health insurance and a generous pension even for early retirement) if they were getting the same -- and weren't having theirs taken away. I think one of the best thing the public sector compensation advocates can do is stop bashing the private sector, but advocate for it. If we were still getting anything close to what you were getting, I suspect much of the backlash would go away. Most of us can't protest at corporate HQ when we get screwed, not if we want to keep putting food on the table. (And yes, it *is* a two-way street. Bashing in either direction is not useful or productive.)

This has become a wedge issue to divide and conquer the middle class, I think, by the folks who have a vested interest in keeping us fighting amongst ourselves. There IS a real problem with the increasing disconnect between the public and private sector employment deal, but I'd like to think the middle class turning on itself isn't the best way to debate it. I'd also like to think we won't try to "balance" the two by simply letting them race to the bottom in tandem.

 

[donheff]

Absolutely not sarcasm. My modest proposal is to shut down all those grasping private businesses, and have everyone work for a much more beneficent employer, the government.

Ha

You need emoticons Ha. A fair number of readers don't understand A Modest Proposal when they see one.

 

[almost there]

"This has become a wedge issue to divide and conquer the middle class"

Maybe more of a by product:
Its a scam to keep the working class working & paying tax's longer. (80 is the new 70 LOL LOL)
Those that benefit naturally get looked at cross eyed.
And it isn't either of the above parties fault.

But, never the less here we are.

 

[haha]

I'd want the best and the brightest to do that job, and the way you get those folks is to offer good pay and benefits.

So far that hasn't worked very well.

 

[landonew]

I work for state government and have a choice of a BD or a DC plan. The pay in terms are exactly the same ie mandated 11% of salary with 5% state match. However, there's a 10 year vesting on the BD plan and it only becomes a good benefit after 15 or 20 years of service. As I began my job at age 42 with the plan to retire in my early 50s I went with the DC plan because of it's flexibility. I've run the numbers and the value of my DC plan could buy a lifetime annuity thats a bit more than the value of the BD plan I'd get if I retired now.

That's what I was thinking. Assuming that the DC plan contribution and DB funding is equal, isn't the DB just a forced annuity?

 

[rescueme]

I don't need a retirement plan. I'm retired - DW still wor*ks (per her decision).

Life is good ...

 

[FinanceDude]

That's what I was thinking. Assuming that the DC plan contribution and DB funding is equal, isn't the DB just a forced annuity?

Yes, but more often the DB funding is a lot more than the contribution. For instance, the budget repair bill in Wisconsin would require state workers to contribute 5.6% of their pension, while the state covers 94.4%. A match of dollar for dollar on 50% of the first 6% is not quite the same.....

 

[FinanceDude]

See, here's the thing. When some people invoke the 80s and 90s and say "the private sector was a much better deal," it misses one thing: Even when it was (and that wasn't always true), the ability of the public sector to retire (often as early as 55 and sometimes even 50) was never in question. Today, ANY retirement for the pensionless is in question, especially if they weren't prodigious savers since their 20s. Sure, the govvies weren't going to "get rich quick" but they sure as hell never worried that they could never retire.

Also, I don't think a lot of taxpayers would complain about paying for an employment deal (like retiree health insurance and a generous pension even for early retirement) if they were getting the same -- and weren't having theirs taken away. I think one of the best thing the public sector compensation advocates can do is stop bashing the private sector, but advocate for it. If we were still getting anything close to what you were getting, I suspect much of the backlash would go away. Most of us can't protest at corporate HQ when we get screwed, not if we want to keep putting food on the table. (And yes, it *is* a two-way street. Bashing in either direction is not useful or productive.)

This has become a wedge issue to divide and conquer the middle class, I think, by the folks who have a vested interest in keeping us fighting amongst ourselves. There IS a real problem with the increasing disconnect between the public and private sector employment deal, but I'd like to think the middle class turning on itself isn't the best way to debate it. I'd also like to think we won't try to "balance" the two by simply letting them race to the bottom in tandem.

+1

 

[ziggy29]

That's what I was thinking. Assuming that the DC plan contribution and DB funding is equal, isn't the DB just a forced annuity?

In some sense, yes -- except that the annuitized monthly payout is fixed and carved in stone, whereas someone putting the same amount into a DC plan is dependent on financial markets while working, *and* dependent on current interest rates when it's time to annuitize.

Sure, if you retired in 1999, got the stock run-up in the 1982-1999 megabull and then cashed it out for an annuity at decent interest rates, this works great. Someone who retires in 2009, got slammed with a decade of bad returns and then had to annuitize into near zero interest rates? Not so much.

In reality, what many today are longing for is security and certainty in an insecure and uncertain environment, even if that means sacrificing potential for even greater gains. (This is what I meant by "pensions are the new stock options" a little while ago. Right now people seem to want stability, certainty and security more than a spin on the roulette wheel, so just as stock options were the thing many chased in 1998, so too is a pension something people lust after today. Back then, the stock market was "sexy" -- today, security is sexy.)

And also, many of these promised pension payouts are based on something like 8% returns on the pension fund balance. I wish I could invest in something that paid me a guaranteed 8% and put all the risk on another party.

 

[almost there]

"I don't need a retirement plan. I'm retired - "

I look at the opposite, when your retired is when you need a retirement plan.
Till then, your just funding it.

 

[nun]

To attract and keep the best, good pay and benefits are necessary but not sufficient. Employers also have to have a rigorous selection process to hire the right folks, and be ready to "un-hire" them efficiently so another applicant can move in. Throwing more money at a present batch of mediocre employees (regardless of the job) will not make them better, and if they've got effective lifetime employment guarantees and advancement based on seniority rather than performance, then higher pay is just wasted.

I'm all for dedicated skilled employees and that means continual assessment, and seniority as a basis for employment being abandoned. I don't get the drive to reduce pay and benefits though. True performers will welcome skill and aptitude based promotion and salary increases....but to get those we need to value their work in our attitude to it and in compensation.

 

[Bimmerbill]

I work for the federal gov't and read any article I see on public vs private salary levels. I still say that there are a lot of public positions that are under paid.

One thing I can't seem to put a value on is that a lot of the jobs where I work require a credit check and security check. So, if you have credit problems or had legal issues you are not allowed to work here. I don't know how much of the general public would be barred from working here due to these issues so don't know how to value a clean credit and criminal history.

I work in IT and know I am under paid if compared to public companies. I would expect the nuke engineers and other project managers were under paid as well.

I don't know how to value job security either.

 

[ziggy29]

I'm all for dedicated skilled employees and that means continual assessment, and seniority as a basis for employment being abandoned. I don't get the drive to reduce pay and benefits though.

It's not that people *want* to reduce pay and benefits. I for one don't want to see anyone screwed the way I got screwed with frozen pensions , retiree health insurance taken away, and total cumulative raises of 4% over the last 6 years.

The bottom line is that the steadily increasing gap between public and private sector employment deal is not sustainable. The deal the public sector gets is only as secure as the private sector's ability to fund it, and the more we get screwed, the less we can afford to pay to sustain your deal. It's that simple. I've said it before and I'd say it again: I'd rather bring the pendulum back toward equilibrium by bringing the private sector deal back up than by taking the public sector deal down, but I'd also say that advocates of govvies (teachers in particular for this discussion) won't get much support by painting the other side as a bunch of greedy and heartless folks who want to screw the children and those who teach them.

At least try to understand why the backlash is growing, and help us restore the dream so the backlash will fade. As I said before, *we* aren't the ones who can demonstrate at corporate HQ like govvies can march on the state house. (Especially not non-union folks in right to work states.) It's not like the motivation is pure selfishness. But when our own ability to make ends meet is being threatened by unemployment and shrinking real wages, asking us for more money to help others when no one cared about the screwing we've been taking isn't a good way to win people over to your side.

I guess what I'm saying is: Ending the demonization and the questioning of motives would be a good down payment toward looking for constructive ways out of this and defeating the divide and conquer being foisted on us.

 

[almost there]

Great idea!
Also, as most States as well as the Fed seems to be "broke" at this time.
This could really help the folks on Gov pensions as well.

 

[eytonxav]

No one likes having the rug pulled out from them based on the compensation/benefit promises made when they first took their jobs. I worked for a mega corp and began to see benefits erode back in the 90s and compensation shortly thereafterafter. We didn't like it, but there was not much one could do about it except go elesewhere. Now it seems that many of the government jobs are starting to face the same fait, with gov't finally realizing it can no longer fund these generous benefits.

Look at Wisconsin, if a group of mega corp employees showed up at their company HQ and started protesting the givebacks, you'd get a quick boot out the door (of course unless you had a union to protect you).

 

[almost there]

I am in the mega corp club that watched and missed every grandfather clause slip by.
In 1984 at 22 yrs old I had 100% medical for life and an 80% pension at 55. Now, I pay about $7000.00 out of pocket for $22K of medical INS (am still working and have never really used it BTW-total rip-off)
My pension will now be about 15% of my base pay.
Most of my check went to paying my house 10 yrs ago at 39 then stashed anything xtra for retirement. 401k, ROTH, CD's etc.
(Think lived well below my means, wife and kids)

One thing we have not mentioned is the medical Ins issue over the past 25 yrs. IMO That is one of the main reasons Gov employees will need to kick in like the folks at mega corp. And, no we didn't get a raise when we started paying in. It was $50.00 a month at 1st, then it just kept getting bigger as the years went by. There is no way the Gov. could pay everyone's med ins. At this time, they cant even pay their own employees (like everyone else)

 

[MasterBlaster]

I work for the federal gov't and read any article I see on public vs private salary levels. I still say that there are a lot of public positions that are under paid.

Quotes like this are often made by public employees. And there was probably a time in years gone by where there was some truth to it. However statistical analysis shows that many (most) public employees are paid better than they could do in the private sector.

In other words, what you post just isn't so.

 

[Leonidas]

See, here's the thing. When some people invoke the 80s and 90s and say "the private sector was a much better deal," it misses one thing: Even when it was (and that wasn't always true), the ability of the public sector to retire (often as early as 55 and sometimes even 50) was never in question.

Allow me to interject with the Leonidas exception to all of that.

More than a few have recognized that my DB plan was actually sound and made actuarial sense (except for a brief period of craziness in the mid-2000's). This is my way of asking people to not use their big paintbrushes on this issue, and remember that not all pensions are even close to some of the crazy examples people are bandying about.

Before the mid-00's, the typical "retirement" for my older co-w*rkers was to collect the modest pension from the city and then go work for some smaller government agency until they were too ancient to work anymore - or someone noticed the old coot had stopped breathing.

The running joke in the 80's and 90's was that the pension meant you didn't have to sleep under the bridge with the rest of the bums. At least you could afford a flophouse room somewhere.

The 20-30% that didn't become deputy marshals, sheriffs, or constables, had some kind of self-employed thing on the side that became their source of income supplemented by the pension. I have a file full of business cards for retired cops who will give me a break on plumbing, a/c repair, electrical repairs, real estate, cars, hunting guide services, etc., and so on.

By banking ~27% of payroll every year for decades, and the best stock market returns you could imagine, by the time we hit the late 90's we were very over-funded. The pension board voted to grant us some increases. Which was followed by some malarkey on the part of the city and the union who forgot to ask the pension board what they thought about the first and second contracts we ever had. The pension sued and negotiated a new contract and all has been fixed.

Also, I don't think a lot of taxpayers would complain about paying for an employment deal (like retiree health insurance and a generous pension even for early retirement) if they were getting the same -- and weren't having theirs taken away. I think one of the best thing the public sector compensation advocates can do is stop bashing the private sector, but advocate for it. If we were still getting anything close to what you were getting, I suspect much of the backlash would go away. Most of us can't protest at corporate HQ when we get screwed, not if we want to keep putting food on the table. (And yes, it *is* a two-way street. Bashing in either direction is not useful or productive.)

You guys in the private sector got screwed - no doubt about it. Your employers saw the opportunity to make/save some money by screwing you over, and they relied on the fact that there wasn't much that you could do about it.

I'm on the flip side of that coin. And like the Euro, this coin has different images on the obverse depending on the jurisdiction. In the Northeast and other places like Bell, California, I think the obverse side is a bunch of scammers and crooks working together. In other places, like where I w*rked, it is more a case of my former employer screwing the employees and the taxpayers at the same time. To save money on hiring when the private sector was a fierce competitor for applicants, they boosted the pension in a delayed manner so they could hold on to employees longer. Then, to save even more money, they decided to reduce their contributions. It was like planting bombs in the city treasury and the pension fund.

They told the taxpayers "more cops for less money!", and told the employees, "more pay and better pensions!" And nobody asked them, "How exactly did you give me more for less?"

As for protesting at HQ when we got screwed - we tried that when they started cutting pay in the 80's. The city only responded when they realized that they were not attracting applicants for open positions. Our options where the same as yours - stay there and eat $*1% or vote with our feet and go elsewhere. I have loads of friends who work for places like the FBI, DEA, CIA, DIA, etc. because they left during that period.

You're absolutely right that this is a wedge issue. The political power structure is using this issue in their never-ending war and the people who are getting hurt are the middle class.

 

[rescueme]

However statistical analysis shows that many (most) public employees are paid better than they could do in the private sector.

That has been my observation FWIW, for comparison of my/DW income in the private sector vs. her relatives working in similar federal positions in DC.

 

[GregLee]

And yet, many (if not most) of the people making this argument in "defense" of teachers and their compensation vehemently oppose the ability to get rid of bad teachers more easily, eliminate K-12 tenure or offer merit pay for top performers. Cognitive dissonance, methinks, if the goal is to have the best and brightest become teachers.

This is confused. Could you explain how making it easier to get rid of bad teachers will make it easier to attract more of the best and brightest to become teachers?