Saturday, October 29, 2011

Brown to Public Employees: Work Until You Drop!

Your Excellency, Please Let Us Retire (Image by Mike Benedetti)
California Gov. Jerry Brown’s plan to cut pension costs would force new teachers to work years longer before they could retire and give them substantially smaller pensions. Those of us currently employed at schools would have to pay roughly 1% more out of our paychecks toward our retirement, amounting to a 1% cut in take home pay. However, the increased costs for teachers could end up being more than 1% if CalSTRS lowers its expected rate of return according to Topics in Education.

Teachers unions heavily supported Brown’s run for governor, giving him millions to support his campaign. They naively believed he would support their members’ interests, despite a well-documented history of violent union-busting and charter schools promotion as mayor of Oakland. Brown repaid the unions with trivial gifts, like appointing a CTA lobbyist to the state board of education and not slashing education funding as much as he could have. However, his attack on teachers’ pensions and the reduction in living standards it will impose on both working and retired public sector workers should have the unions preparing for a General Strike!

The pension “reforms” would significantly decrease benefits, especially for new workers, and raise the retirement age from as early as 55 for some public sector workers to 67 for all new employees who aren’t involved in “safety” work. The plan would apply to all public employees, including state, local, municipal and education workers.

In a particularly absurd statement, Brown said at a press conference that “The plan will make the pension system more sustainable and fair to taxpayers and the employee.”

The plan would supposedly cut the state’s pension costs by billions of dollars over the next 30 years, according to Topics in Education. However, making people work longer, retire on less, and earn less on the road toward retirement is the exact opposite of fair to employees. To be totally honest, it would screw employees!

As it is, no one can survive entirely on a teachers’ pension in most Californian cities. Thus, most retirees must continue working part time, move to a cheaper part of the world, or be fortunate enough to have other investments or a wealthier spouse or partner. Cutting benefits will only worsen this.

The “reforms” will also drive down living standards for working teachers who have seen their take home pay slashed repeatedly over the last three years in the form of increased healthcare premiums, furloughs and, in some cases, wage cuts. The vast most were not earning that much to begin with. Another 1% reduction in take home pay means that many teachers will have trouble making ends meets and supporting their families.

Furthermore, the less one earns today the smaller their future pension. Since pension benefits are based on an employee’s salary during the final years of employment, and raises build up over time, pay cuts now significantly reduce the potential pay during those final years. Virtually no California teachers have had a raise in the last three years, thus reducing this potential for most teachers, while some of the cuts to take home pay may also contribute to this reduced pension potential.

The plan can hardly be considered fair to taxpayers, either, as the majority of taxpayers are low and medium income workers who contribute a higher percentage of their income toward taxes than do the state’s 600,000 millionaires. Fair to taxpayers would involve the wealthy paying substantially more, which would improve the state’s fiscal health, giving it much more flexibility to deal with its numerous budgetary problems, including pensions. Furthermore, the public sector pension “crisis” is the result of fiscal mismanagement by taxpayer-funded pension managers who continue to bungle on in their current jobs at taxpayer expense, combined with the economic crisis, which was due in part to the illegal activities of bankers and investors who have so far paid nothing in penalties or restitution.

Meanwhile, Brown’s plan would do nothing to address the pensions’ unfunded liabilities, which are entirely the state’s responsibility. If the courts require the state to start pay them down, it could result in an enormous increase in its share of the contributions to public pensions, which would directly affect taxpayers.

1 comment:

  1. The worst thing about this is California teachers, and teachers (and other public employees) don't pay into Social Security in this and about 14 other states. I believe the average monthly benefit isn't much higher than they would have gotten if they paid into S.S. and no pension (it's around $1700 a month)--few teachers anymore get thirty years on the job, so the average pension benefit isn't really accurate.

    On top of that, teachers in these states are subjected to WEP and GPO, unlike public workers in most states, so their SS benefits are reduced further unless they have 30 years of "substantial" earnings in the system.

    Most people have no clue how public employees fare, even though their pensions are better than the sham 401(k)s most private sector workers are saddled with.