It remains unlooted so far. It needs a layer of opaque billing, routinely bankrupting its customers, and profit extraction to match the healthcare industry.
On the contrary, public employee unions (including teachers) have done a masterful job of enriching themselves at public expense. E.g. Oregon:
Member accounts saw appreciable and consistent growth during this time, but underlying pension assets did not grow to cover the increased benefit guarantee. Career public employees who worked from 1970 to 2000 often were entitled to retirement income replacement rates over 130% of their pre-retirement earnings.[1]
Show me private sector pensions (if you can still find any) that come close to that.
I find it hard to describe even 130% of average pay of $90k as "looting", on a website where most software developers wouldn't get out of bed for that kind of money.
I also find it very interesting that the 130% number on that wikipedia page comes from the only reference which is a youtube video by one "John Tapogna", who appears to be from a thinktank.
"the average PERS benefit to a retiree is $29,720 per year, or about $2,476 per month, which is a modest income, but it is being seeing as the problem. In the mean time, Comcast owes $170 million of unpaid taxes, Intel's off-shore profits were $26.9 billion, and "non-profit" hospitals made $1 billion in profits in 2015 - yes, you read it right, non-profits made a profit. " (I wonder why this more plausible number is so different to the Tapogna one?)
You can't compare software developer salaries to typical wages in this country. Even software developer salaries are skewed by the Bay Area bubble. In many parts of the country $90K would be a fine salary for a software guy.
Your "different view" is from the public employee union, so of course they will have a different spin. I guess it's all down to what "average" is.
The local newspaper puts it this way:[1]
The average monthly benefit for public employees who retired in 2015 was $2,692, or about $32,300 annually. That includes all retires that year, whether they worked five years or 35. For career employees, with 30 years of service, the average monthly benefit was $3,771, or $45,252 annually.
Not too many private sector people get a pension of $3,771 per month for 30 years of service. But that number includes everyone. I don't see any data just on "education", which is the category that initially started this subtopic.
It's unfair to start pulling in off-the-wall stuff like Intel's "off-shore profits". That's old-school union thought. Thoroughly discredited. I remember very clearly when in NYC the World Journal Tribune[2] newspaper asked the unions for concessions so they could keep operating. To me the money quote was a union guy on TV who resisted this and said: "this is one of the richest firms in the world". There was a 140 day strike. Shortly thereafter the newspaper folded and everyone was out of a job.
This is facially false. No one eligible for a public sector pension is well off. 130% of nothing is still nothing.
Like honestly, think of all the people you know in unions. What are their houses and cars like? Do they live in the rich neighborhoods with the doctors, lawyers, and professional athletes? Do their kids go to expensive private schools? Just outrageously wrong.
The issue here is that most (all?) state and local governments are very resource constrained by reactionary Republican low tax regimes, so the amount of money required for pensions (or health care or education) is a big pie slice. But if these governments adopted reasonable, progressive tax regimes with confiscatory upper limits, the pie would look very different.
In other words, look at the ruthless income inequality in this country before blaming budget shortfalls on government employees, social programs, and unions.
This is facially false. No one eligible for a public sector pension is well off. 130% of nothing is still nothing.
As I mentioned in a nearby post, the average public sector pension was $3,771 per month for 30 years of service. Maybe to you that's "nothing", but to many people that's a very decent supplement to IRAs, savings, and Social Security.
I can't believe the straw man you're creating. No, the average Joe isn't entitled to live in "rich neighborhoods" alongside "professional athletes". And most "doctors" did 8+ years of additional education and training after college. You resent that they are getting paid for that?
> the average public sector pension was $3,771 per month for 30 years of service.
It would be better to quote the rest of the context [1]:
As organized labor groups were quick to point out on
social media this weekend, normal benefits are much
lower. Out of some 136,000 retirees receiving PERS
benefits, only 2,000 or so collect more than
$100,000 a year.
The average monthly benefit for public employees who
retired in 2015 was $2,692, or about $32,300 annually.
That includes all retires that year, whether they
worked five years or 35. For career employees, with
30 years of service, the average monthly benefit was
$3,771, or $45,252 annually. The Oregonian/OregonLive
maintains an online database of public employee
pensions.
In fairness, OP does have a point here, so I apologize:
Along with the guaranteed rate of return for older
members' pension accounts, and the decision by a
PERS Board packed with public employees to credit
most of the system's bull-market earnings to
employee accounts for two decades ending in 1999,
the money match formula inflated pensions for a
large cohort of public employees.
You could also take a look at the reason for some of PERS' issues, and you'd discover that it's the "money match" formula [2], which wasn't always beneficial for pensioners. You'd also discover that the pension was set up in the 40s, and has since undergone a lot of changes to accommodate different market conditions (as recently as 2003), and it's likely that it will continue to.
But I wouldn't say that Oregon teachers are "enriching" themselves. We're talking about pensions that ended up paying 100% of salary. That's not bananas; most advice is save for 75% taking inflation into account. But I also think pensions are weirdly complicated for probably political reasons. It seems to me a benefits cap at 50% makes complete sense (considering Social Security and other retirement income vehicles)?
(OP quotes 130%, and the source is a YouTube video via Wikipedia posted by the president of ECONorthwest. The video is clear and feels unbiased--in fact ECONorthwest is an economics consulting firm so it's in their interest to be analytical--but the 130% number is assuming Social Security accounts for 30% of salary [5]).
I'm not at all saying everyone's entitled to be rich. OP made the claim Oregon teachers enriched themselves via public sector pensions, and as I interpret the word "enrich" to mean "become rich", I presumed their argument was Oregon teachers can live like rich people on public sector pensions. This is, as we've both pointed out, not true, even though it seems there have been some shenanigans in how the pension is managed.
There are a lot of "social safety net" politics swirling around pension policy debates, and I guess my points are generally:
- A lot of public sector employees don't even get pensions
- Average pension payments are low
- There are sometimes outrageous abuses
- There should probably be a cap on benefits
- Beneficiaries shouldn't be allowed to manage the fund
- Pensions in general are a good idea
- But it would be better if we just expanded Social Security and removed the taxable earnings cap
OK I was dabbling in ghoulish overkill. But if you read that article, it contains this:
"More than 127,000 former Pennsylvania state employees or their beneficiaries collect public pension checks each month, and most are comparatively paltry. The average paid out last year was $27,722."
I'm a little tired of people using rare abuses to justify shutting down programs that people depend on. "ODB got food stamps", "this Penn State president makes $500k a year from his pension". The programs are still worth it, and even that level of abuse is beneath the cost of what it would take to combat it. It's also important to note that this guy is an example of "privileged white guy bilking the public sector", as we remember that the vast majority of fraud in social safety net programs is actually by providers of services (medical, food, etc.), not receivers. Guess which demographic most of those are?
It's not obviously true that high pensions mean unfairly high remuneration. Another hypothesis that fits the facts you've mentioned could be that private sector salaries that could be earned by teachers are higher, and the public sector is competing by offering more attractive pensions for teachers than the private sector does.
There's another possible contributing factor: government can offer higher future pensions without increasing current expenditure (because government is not forced to fund the higher pensions until they need to be paid, many years in the future). Maybe that's why so many US states have dramatically underfunded pension plans (meaning teachers and other pensioners might not actually get their promised pensions when they retire).
Maybe that's why so many US states have dramatically underfunded pension plans (meaning teachers and other pensioners might not actually get their promised pensions when they retire).
This is a very complex topic. I think it's widely agreed that the US Congress can change Social Security benefits at any time. But the pension issue varies in the states. E.g. the Illinois Supreme Court ruled that pensions were sacrosanct:
Justices cited a provision in the Illinois Constitution stating that pension benefits, once granted, “shall not be diminished or impaired.”
