Lost in the hooha about public workers’ pensions is the fact that those pensions are in fact deferred wages, negotiated by the public workers in lieu of higher cash compensation in the form of salaries. That’s been true forever. State and municipal governments say to their employees “We can’t pay you what we’d like to in salaries; we’d have to raise taxes and the public won’t stand for it. So how about we give you a defined benefit plan based on your salaries at the time of your retirement? That way you’ll get a set amount after you retire.” The employees, recognizing the reality of that argument, agree.
I am not alone in this belief. Apparently reporters don’t understand it, though, as most of the articles coming out of Wisconsin and elsewhere take it as read that the state governments want their workers to contribute more to those pensions.
The labor agreements show that the pension plan money is part of the total negotiated compensation. The key phrase, in those agreements I read (emphasis added), is: “The Employer shall contribute on behalf of the employee.” This shows that this is just divvying up the total compensation package, so much for cash wages, so much for paid vacations, so much for retirement, etc.
Reporters seemingly don’t have too many government civil servants among their daily contacts, or they’d know this.
Nor do they have people who work in the non-government sector who depend on a pension/401K for their retirement. Part of my compensation is I contributing to a 401k with my employer matching a set percent. There was some time recently that my company quit the matching due to their debt load. They have just recently started to match again.
Most pension funds in the US, whether public or privatem, are underfunded, and many of the contributing organizations are desperately looking for some way to either paper that over or walk away completely. In many cases the underfunding is the result of criminal activity (it can be construed as embezzlement), and the individuals responsible are trying to stall discovery until the statue of limitations runs out or they can get out with the goods. If they can convince the workers (and the rest of society) that it’s all the workers’ fault and that no more money is owed to them, they’re home free.
I don’t know that “many cases” are the result of criminal activity. I think it’s mostly legislatures finding other uses for the money that’s supposed to fund pensions that are more pressing in their eyes. Private pensions, maybe.
Amen and well said. As a retired Probation Officer, I’ve got to agree with Linkmeister!