Public Pensions

San Francisco Police Union endorses Angela Alioto for Mayor

In the heyday of the “New Deal”, FDR’s program to address the crisis of the Great Depression of the 1930’s, a lot was done to shepherd workers into unions.  But one group was not encouraged, or even given the opportunity to unionize, government workers.  This is because unions were supposed to get workers a percentage of the profits they were generating for the “fat cats”.  And it was obvious to everyone that government workers didn’t’ create profits.  Even FDR himself explicitly stated that unions were NOT a good idea for government employees.

Today we know why.  The laws and regulations were changed in the early 1960’s, under President Kennedy.  He probably thought he was just giving a simple “right” to those that had not been allowed to unionize.  Neither he, nor those that took similar action at the state and local level, evidently did not foresee what the consequences would be.

Unionization led to massive increases in pay rates and pensions for government employees.  These range from teachers in local schools, to the police and fire departments, to bureaucrats doing government work at every level in a myriad of byzantine organizations that collectively are paid for with tax dollars.

It used to be that being a policeman or a fireman was a decidedly blue collar job.  No one went into these fields to get rich.  Now, they are among the best paid professions in the country.  They frequently make more in salary than many engineers do.  And their pensions are astronomical.  A policeman in California (OK, probably the worst example, but it’s to make the point) can retire at 50.  If he works for thirty years, his pension will be 90% of the average of his last couple of years on salary.  And this “average” is typically inflated by overtime, selling back vacation days, and other “tricks”.  Nobody, not even military, get a pension like this.

The reason for this mess is that politician all think short term.  They only care about their election or re-election.  They will not be around when the pay raise or pension bump they gave the police union in return for their political endorsement (Mayor X is “tough on crime”) has to be paid.

These salaries and pensions have by now wrecked havoc on local, state and federal budgets.  Many municipalities and quite a few states are now literally bankrupt.  Services will have to be severely curtailed.  This could mean lack of the very police and fire protection that we all rely on.  Detroit today is the case in point.  It is where every major city is headed.

The funny thing is that in the end, by bankrupting the cities and states they work for, the government employees will end up getting almost nothing.  They will have literally killed the goose that laid the golden egg.

What to Do

Government worker pay, especially executive level compensation, needs to brought back to reasonable levels, in line with other workers in the private sector.  Government pensions should be reduced to long term sustainable levels.

If needed, caps need to placed on public pensions to prevent excess and to give local and state governments some latitude regarding their financial future.  In fact, these caps could ensure that people who have government pensions will at least get something when the system craters.