Pensions killing NY

http://www.bls.gov/news.release/pdf/ecec.pdf

Employer costs for employee compensation averaged $29.71 per hour worked in March 2010, the U.S.
Bureau of Labor Statistics reported today. Wages and salaries averaged $20.67 per hour worked and
accounted for 69.6 percent of these costs, while benefits averaged $9.04 and accounted for the remaining
30.4 percent. Total employer compensation costs for private industry workers averaged $27.73 per
hour worked in March 2010. Total employer compensation costs for State and local government
workers averaged $39.81 per hour worked in March 2010.

Bottom Line: Government employees are compensated 44% more on average per hour than private-sector employees, with 34.1% higher monetary wages and 66.4% more in benefits.

Government jobs require education and skills
and privatee jobs do not?

This would be wrong in either direction.

Sounds like private-sector workers have some catching up to do, after decades of having their pensions stripped away from them without recourse.

I guess we can expect frequent nationwide general strikes in our future, the way they used to have in the Europe.

Comparing overall averages is highly misleading. Many more lower paid, minimum wage type jobs in the private sector.

Sounds like private-sector workers have some catching up to do

Great our companies become even more uncompetitive. Unions only succeed if they match higher comp with increased productivity. The consumers of any of their products will go elsewhere if given the option.

Just found out today that USDA will put their organic label on organics imported from China. USDA ORGANIC grown in china? How confusing is that?
http://www.nytimes.com/2010/06/14/business/global/14organic.html?ref=business

alan, we can't have a country of people that take handouts like you. There won't be enough of other people's money to go around anymore.

Anyone getting a check from the government should not be allowed to vote, including government workers. It is a blatant conflict of interest.

Yeah. Blacks and Asians should not be allowed to vote either. Thomas Jefferson was not black and definitely not white!!!!

Forget that only ppl that have $1mm in cash should be allowed to vote., and who can trace back lineage to the sun god.

Unions for porn starzz. The longer your schlong te bigger your pension. Blind ppl should not be allowed to vote. Pregnant ladies are loopy, definite definite no vote. Ppl wo non descended nut sacks. Off them too. Ppl that don't signal bf turning..... Ppl who smoke. They are morons.

"There won't be enough of other people's money to go around anymore."

LICcomm, you sound like a total commie, predicting as you are that workers will get to keep the fruits of their labor, and not have it skimmed off by "investors" or "shareholders" or "executives".

"Yeah. Blacks and Asians should not be allowed to vote either. Thomas Jefferson was not black and definitely not white!!!!" NO, just anyone getting a check from the government should not be allowed to vote, including government workers. It is a blatant conflict of interest.

http://en.wikiquote.org/wiki/Alexis_de_Tocqueville

Most govt workers are white!!!!! As are fire Dept / cop unions!!!!! I love your plan. It'll be 'social justice' payback time for all the racism and slavery etc etc.

Did you see all the whities on the sec home page. Damn throw in an Asian math quant or something.

w67tstreet Why are you so obsessed with race?

comparing the average pay of all govt. workers to the average pay of all private workers adds nothing of value to the dialogue.

Undescended nut sacks also

w67thstreet Always bring up race. All race all the time.

w67th, isn't that affliction the opposite of low-riders? not sure what i'd prefer.....

after a little more reflection, i think i would prefer the former. as long as its not an acute case and thus i would have three adams apples.

ok, let's have some more fun. Today we will go after those insanely compensated physician's assistants. Look at them getting rich off of the taxpayer's dime with their bloated $35,000 a year salaries. How dare they! What an insult to all of humanity!

http://jobview.usajobs.gov/GetJob.aspx?JobID=86327310&JobTitle=Physician+Assistant+(RATON)&q=physician&brd=3876&vw=b&FedEmp=N&FedPub=Y&x=0&y=0&pg=1&re=0&AVSDM=2010-05-22+05%3a20%3a00

socialist, pls note my earlier post and meet the president. not obammie, the REAL president - you know, the brilliant one who posts here on se.

And let's not forget about those damn overpaid $31,000 a year accountant.

http://jobview.usajobs.gov/GetJob.aspx?JobID=88513441&JobTitle=SYSTEMS+ACCOUNTANT&q=accountant&where=&brd=3876&vw=b&FedEmp=N&FedPub=Y&x=0&y=0&AVSDM=2010-06-04+07%3a50%3a00

Finallyjoy/julialrg. One final tidbit bf I go hit some ballz like some cracker.

Name me the one branch of govt or union that is most racially reflective of the nation as a whole?

- as to your question, let's get the low hanging nut sacks first-

Seriously., I worked on one $800mm cross border transaction way back when bf they put out an amnesty on it, that basically was a tax cheat for a large us manufacturer. The top 50 of these would have paid for lots of kid meals.

One other thing I didn't hear anyone complaining about govt when we were all rich beeeychtes.

tru dat.

Nobody?

It's the military. It's the only branch of govt truly reflective of our diverse society. Ain't that a shitter. Speaks volumes about where we can be if we actually had a 'meritocracy' and peer promotions wo regards to race.....

I don't normally wade here
but wtf are you talking about?

Can the private sector beat $2,200 for 5 minutes work by someone without any skills?

http://www.timesunion.com/ASPStories/Story.asp?StoryID=918324#ixzz0qwN4PlxW

go albany!

You just found the $5,000 hammer. Good work!

NEWS FLASH The Nobel prize winner had an affair with Larry David"s ex. Who gets divorce after 40+ years of marriage if no lover is involved?

splaken thnxs for calling out my Bullsh+t...

julia... why the sex change?

as to your question, if your husband beats you 3x a day but has sex with you... then you're okay with it? THE REGIME THE REGIME THE REGIME.... on NO THEY GONNA TAKE MY GUNZ, MY MONEY, MY HUSBAND, and EAT MY CHILD IN FRONT OF ME.. THE REGIME IS COMING.....

Hey, no mention of race. Why no bean counting?

at least you answered your "julia" handle...

Rice and beans? WTF? You are SE not FoodEasy...

"with 34.1% higher monetary wages and 66.4% more in benefits."

but how much of those "benefits" are unaffordable pension/health care benefits that are not going to be paid?

I saw that our pensions in NY are losing money from BP. How horrible after they cause the spill and devastation.

This is a very big point. In attacking private equity and the private sector we are just creating more future problems for retirees, pensions and insurance plans...Nobody on Main Street believes a Tobin tax will impact them. They are wrong.

Do you have proof or is this merely anecdotal?

"but how much of those "benefits" are unaffordable pension/health care benefits that are not going to be paid?"

Well, isn't that the discussion? Point is, the benefits were too generous.

"In attacking private equity and the private sector we are just creating more future problems for retirees, pensions and insurance plans..."

Only if the decline in their profits is greater than the increase in the tax.

http://www.americanprinciplesproject.org/blogs/spain-to-obama-green-doesnt-work.html
* Green energy is 120 percent more expensive, simply due to the extra costs of solar and wind, and the evolution of the market is not going to bring down those costs any time soon.
* The clean energy sector is slated to receive 126 billion euros in the next 25 years, but no one knows where the money is going to come from . In 2009, the subsidies were worth 5 billion euros.
* Photovoltaic solar power accounts for 53 percent of the extra cost of renewables, whereas it produces only 11 percent of Spain’s renewable energy.
* Each “green job” comes at the expense of 2.2 traditional jobs.
--------------------------------

http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf
----------------------------------
Notice that Obama no longer talks about Spain, which until recently he repeatedly cited for its visionary subsidies of a blossoming new clean energy industry. That's because Spain, now on the verge of bankruptcy, is pledged to reverse its disastrously bloated public spending, including radical cuts in subsidies to its uneconomical photovoltaic industry.

There's a reason petroleum is such a durable fuel. It's not, as Obama fatuously suggested, because of oil company lobbying but because it is very portable, energy-dense and easy to use
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/17/AR2010061704209.html

Easiest way to make things green to make non-green more expensive.

Wow, this last one is dumb. Spain has lower debt/GDP than Germany, the supposedly safe bet. They had the same lower ratio for the past 10 years - Spain's problem is NOT runaway spending, unlike Greece. There problem is a bursted real estate bubble and an uncompetitive labour market, all exagerated because of a common currency with no transfer payments. Think Florida without Federal aid or Social Security.

The red line is spain, the blue line Germany. Eat your words.

http://krugman.blogs.nytimes.com/2010/06/20/talking-to-a-dining-room-table/

Convinced me. Spain is a better economic risk than Germany????

No, dummy, but the national debt as a percent of GDP is LOWER and has been LOWER in Spain than in germany for over a decade, even now, and is not ever projected to be higher by the EU. You, however, claim runaway spending by Spain is the problem. Its not. France and the UK also have higher debt/GDP, as does the Netherlands, and I might add the US and Japan. Spain has many problems it needs to fix, but debt levels are NOT one of them.

...and i add those other nations as comparisons because they all have lower interest rates and CDS spreads.

And now it comes full circle. We shut off BP and new York State loses money on it's pensions...
I wish we had smarter politicians.
---------------------------------------------------------------------------------------------

New York State Comptroller Thomas P. DiNapoli, as trustee of the $132.6 billion
New York State Common Retirement Fund, announced today that he has hired the law
firm of Cohen Milstein Sellers & Toll PLLC to represent the Fund in a class
action against BP Plc (NYSE: BP). DiNapoli said the Fund will seek lead
plaintiff status in the action that stems from BP’s disastrous Deepwater
Horizon explosion and oil spill in the Gulf of Mexico in April.

The funny thing is agree with your THESIS riversider...its just the actual arguments you make are absurd. Yes, state and local pensions are underfunded, and this will severaly hamper the budget processes in many states, NY included - and could possibly lead to a version of banktruptcy for many. But this is NOT the issue facing Spain. Greece, in part yes. Spain someday. But Spain its just a bubble bursting.

http://www.nytimes.com/2010/06/25/business/25accounting.html?ref=business
http://www.nytimes.com/2010/06/25/business/25accounting.html?ref=business

The board that writes accounting rules for states and cities has proposed a new approach for pension disclosures that falls far short of what some financial experts hoped, but which would still force many governments to highlight pension shortfalls they have played down.

The current standard has come under heavy fire from mainstream economists, who say it makes virtually all government pension benefits look less costly than they really are.

Government officials have granted pensions to teachers, police, judges and other public workers for years, without reflecting the true cost, analysts say. Now the bills are coming due, and in many cases there is not enough money set aside, adding to the fiscal distress across the country.

Pensions are a third-rail issue for the Governmental Accounting Standards Board, and it has been working with great deliberation. Its pension project began early in 2006 but is nowhere near completion. Earlier this month, the board issued a “Preliminary Views” statement, summarizing its conclusions so far and requesting public feedback. A new standard is unlikely to take effect until at least 2013.

Fiscal hawks have been urging the accounting board to require states to measure their pension obligations at fair value. Corporations already do this when they report their pension numbers to the Securities and Exchange Commission.

At the heart of the dispute is the way governments gauge the value of the pensions they owe future retirees in today’s dollars — a commonplace financial calculation known as discounting. It is used to calculate things as diverse as bond prices and mortgages.

Discounting is based on an interest rate, which is supposed to reflect the riskiness and other attributes of the underlying asset. Current accounting rules tell governments to use the investment return they expect over the long term. In practice, this means most public pension funds now use about 8 percent.

Many economists criticize this practice, arguing that 8 percent reflects a fairly high degree of risk, though state pensions are guaranteed by law and are therefore virtually risk free.

Standard economic theory says they should be measured with a very low discount rate — something much closer to the rate on Treasury bonds than to the higher risk securities in most pension investment portfolios. These days, many economists think the states should be using a rate of about 4.5 percent to measure their pension obligations.

The difference — three or four percentage points — translates into hundreds of billions of dollars when applied to pension obligations.

The 50 states together reported pension obligations of $3.3 trillion as of mid-2008, and secured with assets of $2.3 trillion, according to the Pew Center on the States. But Ms. Norcross said that if the states had to report their pension obligations on a fair value basis, the number would have been $5.2 trillion.

i don't have a problem with the 8% illusion. the important part to me is to make unions accountable for pensions shortfalls, especially for investment losses. if there's not enough $, they are in charge to cut benefits as they see it fit. free the taxpayer and unions will by force to grow up.

something in this lines is what NJ is about to do making sure that property taxes don't go up more than 2% per year, even as baby boomers retire. if NJ does the same with state income taxes it'd be equivalent to saying to the unions: "just cut current pensions". overall it's a great move by Christie imho, just turn the faucet off and letting hte unions solve their pensions on their own.

"i don't have a problem with the 8% illusion. the important part to me is to make unions accountable for pensions shortfalls, especially for investment losses. if there's not enough $, they are in charge to cut benefits as they see it fit. free the taxpayer and unions will by force to grow up."

or lets simplify... defined contribution, not defined benefit...

"something in this lines is what NJ is about to do making sure that property taxes don't go up more than 2% per year, even as baby boomers retire. if NJ does the same with state income taxes it'd be equivalent to saying to the unions: "just cut current pensions". overall it's a great move by Christie imho, just turn the faucet off and letting hte unions solve their pensions on their own."

It is a great move by Chrstie. The only problem is that he promised to LOWER taxes when he was a candidate. A 2.5% increase cap is not exactly the same as lowering taxes.

I'd certainly rather have those problems than ours, which is a bunch of complete idiots running things in Albany.

Some new state workers in Michigan and Utah will soon begin to receive part of their retirement benefits from a 401(k)-type plan, after lawmakers there recently voted to adopt plans that combine a 401(k) component with a guaranteed benefit.

These hybrid plans are a cost-cutting measure for states seeking to pare back the guaranteed retirement payments considered a bedrock benefit for government workers. In down markets, the plans could mean less-generous benefits for these workers, who have sidestepped the market volatility many of their private-sector counterparts endured in recent years.

Utah and Michigan join six other states that have some form of hybrid plans for public workers. Most of those states, including Oregon and Washington, set up hybrid plans within the past 15 years.

A number of other states, facing looming pension-fund liabilities, have expressed interest in hybrid plans, industry participants say. Some officials in North Carolina and Pennsylvania, for instance, are contemplating a move to a hybrid plan.

"Reality is not negotiable," says Utah state Sen. Dan Liljenquist, a Republican who was instrumental in crafting the legislation for the pension changes there. "The fact is somebody bears the risk. Ultimately, the state is bearing more risk than it can."

http://online.wsj.com/article/SB10001424052748703609004575354913893708970.html?mod=WSJ_hpp_LEFTTopStories

NYC will wait until 25 years after every other state has made the badly needed changes.

26

We can't afford the pensions. Some discount has to be made. Frankly, today's workers should be clamoring for the changes to historical pensions because these pension costs create inflation and crowd out jobs today.

> Some discount has to be made.

Its not a discount required... its just pulling back on the extra thrown in over what was agreed to....

http://www.washingtontimes.com/news/2010/jul/13/both-parties-mull-raising-retirement-age/

In a rare departure from this year's intense political posturing over the soaring budget deficit, House leaders of both parties recently signaled that they are prepared to tackle a leading long-term liability — Social Security — by raising the retirement age.

Politicians often talk in generalities about cutting the deficit, but discussing specifics about how Congress may curb the growth of the biggest and most popular programs such as Social Security and defense is controversial and usually taboo in an election year.

But lessons learned from the debt crisis in Europe and worries that the U.S. could soon confront its own debt crisis, with annual deficits projected at about $1 trillion for years to come, may have prompted the unusually frank comments by House Majority Leader Steny H. Hoyer, Maryland Democrat, and House Minority Leader John A. Boehner, Ohio Republican.

Speaking in unrelated forums, both leaders stressed that with people living longer and enjoying better health in their senior years, the nation simply can't afford any longer to be paying out benefits for as long as 30 years after retirement.

"We need to look at the American people and explain to them that we're broke," Mr. Boehner said in an interview last week with the Pittsburgh Tribune-Review.

Besides raising the retirement age for full Social Security benefits to 70 for people now 50 or younger, Mr. Boehner suggested curbing benefit growth by tying cost-of-living increases to the consumer price index rather than growth in wages, and providing benefits only to those who need them.

"If you have substantial non-Social Security income while you're retired, why are we paying you at a time when we're broke?" he said. "We just need to be honest with people."

There you go, if you want to retire you should not consider social security as part of the mix.

"and providing benefits only to those who need them."

Socialism. From Boehner.

SPENDING THROUGH TAX CUTS..

When it comes to spending cuts, Congress is looking in the wrong place. Most federal nondefense spending, other than Social Security and Medicare, is now done through special tax rules rather than by direct cash outlays. The rules are used to subsidize a wide range of spending including education, child care, health insurance, and a myriad of other congressional favorites.

These tax rules—because they result in the loss of revenue that would otherwise be collected by the government—are equivalent to direct government expenditures. That's why tax and budget experts refer to them as "tax expenditures." This year tax expenditures will raise the federal deficit by about $1 trillion, according to estimates by the congressional Joint Committee on Taxation. If Congress is serious about cutting government spending, it has to go after many of them.

For example, the Joint Tax Committee identified more than a dozen tax-based programs that subsidize education and training. These include small ones like the Coverdell education saving accounts (with a 2010 tax expenditure cost of $100 million) and much larger ones like the various tax credits for tuition (costing $11.7 billion). The hundreds of other tax expenditures include a $500 million annual subsidy for the rehabilitation of historic structures and a $4 billion annual subsidy of employer-paid transportation benefits.

President Obama's recent plan to expand the existing dependent care tax credit is a good example of how the welfare state grows through the tax code. At the same time he proposed a three-year freeze on all nondefense discretionary programs, Mr. Obama disingenuously called for an increase in the $3 billion tax credit for taxpayers who pay someone to look after their children or their aged parents while they go to work.

Neither party has focused on controlling this kind of spending. Democrats are reluctant to cut such programs, because once built into the tax law they don't have to be reauthorized each year, but remain on the books unless they are repealed. Income limits on the taxpayers who can take these deductions or tax credits allow Congress to target the benefits to lower-income groups. Moreover, many tax expenditures are refundable, so the government sends the individual a check for the benefit even if he owes no tax. Democrats can thus cleverly avoid the traditional accusation of being the party of "tax and spend."

Republicans also are reluctant to cut these tax perks, because they regard the additional revenue collected by the federal government as a "tax increase"—even though the increased revenue is really the effect of a de facto spending cut. A Republican who would vote to cut or eliminate an ordinary spending program therefore won't do so if it is packaged as a tax benefit.

http://online.wsj.com/article/SB10001424052748704518904575365450087744876.html

btw, something that isn't talked about much.... folks need to stop looking at "average" salaries.

The unions specifically pushed for higher salaries for older workers, and less for younger. This is how cop salaries got lowered to $25k, and what created the HUGE discrepancy. The teachers locked in by seniority had more power and pushed to make the salaries higher later, screwing new employees, kids, and all of us.

That move alone has a huge effect on pensions, as they are calculated off finishing salaries.

Any analysis should be tracking the changes in FINAL (or at least max) salaries... let alone overtime.

The unions will say "salaries only went up x%". But the later salaries, and the pensions, went up several times that.

Meaning these folks can not claim they are just getting the pensions they were promised... they're getting more. MUCH more.

Prichard is the future...

http://www.nytimes.com/2010/12/23/business/23prichard.html

PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.

“Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”

Many years ago, before some of you were born, some New Yorkers chose to enter public service rather than work in the private sector. For those who don't understand the words "public service", they mean working for YOU while you are off doing other things.

Salaries were never high, certainly not as high as what one might have made in the private sector, but there were trade-offs that made the jobs attractive enough so that workers could be found to teach your children, clean your streets, keep you safe day and night, keep your house from burning down and all the other jobs civil servants perform for your benefit. Back in the day (a day I remember well) working for the government was an not an option of last resort. Lots of smart young people, who could have done much better financially in the private sector, did opt for public service for various reasons.

There were three important trade-offs to offset the lower salaries: excellent health benefits, relative job security and a good pension. Two of the three no longer exist. Health benefits for NYC workers, which used to be the gold standard, have been whittled away so that now the plan pays so little that few reputable doctors will agree to take it (in Manhattan). Relative job security no longer exists; the Great Dictator is even talking about doing away with tenure for teachers even after they've proven themselves. Now pensions are under attack.

The first boomers will turn 65 in two weeks (my spouse is among them). Are we going to break our promise to those who worked for us all their lives simply because we have spent -- or want to spend -- their money? How dare you blame these workers or their unions? (And BTW, where do they think all your own benefits came from? You know, the 5-day work week, vacation time, sick time, holidays,, disability, workers comp -- the list goes on and every one of them is a benefit brought to you by the blood of union organizers of a hundred years ago).

I am sorry to have to say this, but anyone who thinks "market forces" will take care of sick, elderly retired workers has his head up an orifice I won't name. In every financial crisis I can remember, starting with the '70s, some of you have demanded that the city's workers give up benefits AND THEY HAVE as a contribution to ending the crisis. So now I think all you financial hotshots who know how to ruin other people's lives and break promises can make some contributions of your own. How about those year-end bonuses, eh? Do I see you iining up to throw your bonus, your child's summer camp money, your own 401k plan into the communal pot? I doubt it, since you obviously think only the elderly on fixed incomes should make a sacrifice.

What's the alternative here? Following Greece?

The alternative is anything but breaking the law. The state must honor its obligations, however painful. It is a contract. Cut other spending, raise taxes, gut future pension programs and never again commit to such folly, but the state must honor its obligations. If it does not, what exactly defines American government as better than any other around the world? We have betrayed much of what we traditionally thought of as American values in the last 9 years through the manner in which our government has conducted itself around the world. If the word of American states is now to be worthless too, then what even makes us American anymore?

Kylewest,
You seem to be saying that the city and state needs to negotiate new terms for pensions when the contracts get renewed? correct?

Abandoning the rule of law in order to expropriate pensioners is a disgrace on every level. Immoral, painful and self-destructive at the same time -- a trifecta of failure, hurting others in order to spite ourselves.

Greece -- a non-functional government leading to a failed economy -- is not the "alternative" but the inevitable result of "Starve the Beast," refusing to pay the "price of civilization," treating taxes as if they were a "burden," and failing to pay a living wage to public servants.

But Greece is not the only foreign model our modern right wing seeks to emulate, and its short term crisis -- taken down by flim-flam bankers and an overvalued currency -- is not ours. Our real threats are imitating Argentina, once the richest country in the world, destroyed by its failure to restrain its super-rich and create a self-sustaining middle class, or Saudi Arabia, living off wealth created by others and maintaining the status quo by institutionalized corruption and legalized monopoly, or the crony capitalism of the FSU, where the government exists largely to prop up the kleptocrats.

But why look abroad? This is the United States. If the Reaganauts and the Tea Party make public service sufficiently unpleasant for anyone but those looking to further their careers as lobbyist thieves or corporate welfare queens, we can create a uniquely American corruption and fail entirely in our own way. After all, the "originalists" on our Supreme Court say that our Constitution guarantees that business entities have full rights to the best government they can buy, the sainted Reagan taught that the government is the problem, and today even a nominally Democratic President says that the government can't create jobs, so why should we pay the millions of American workers who are employed by our governments? If we ensure that no one with choices will take one of the jobs that we can't create, we can guarantee that the government will fulfill its role in the Reaganaut fantasy -- incompetent, ineffective, and available for purchase to the highest bidder.

This rule of law argument is absurd.
Municipalites can declare bankruptcy. Chapter 9?
Business contracts get renegotiated all the time
Union contracts do not exist in perpetuity and expire with new terms
It blurs who carries the burden when one says "the state must honor its obligations".. Well that's not entirely true, it's really the tax payer.

Generalogoun: yes and no. I have a parent who's also first-wave baby boomer, and will be collecting a public service pension soon. While said parent consciously made a career choice to have excellent benefits, security and most importantly a decent pension, my parent also complained mightily about the union.

I have no idea what the solution is. My parent was sickened by the waste in the public sector. Two or three or four people doing the job of one. People out on "disability" for years, or unable to perform the job (not menial) and keeping their salary while doing minimal admin. work. Because of tenure, you had the same people around for decades, so politics got a bit insane w/o fresh blood. The same old tiresome office bickering went to another level. The joke is that since my parent & a friend who is also retiring soon was doing the majority of the work in the dep't that they'd either have to hire four to replace or just cut the dep't entirely to zero and outsource to private sector because no-one they have there wants to do the work. They would rather supervise the outside contractors.

And private sector equivalent isn't the best way to go either. Poor quality control, profits going to corporate bosses, while peons are under pressure to produce for least amount of work.

Anyway, as I've said to parents multiple times - if you are only just retiring now, don't count on that secure public pension forever (could be 30+ years more if lucky in health). Liquidate house, and use that $ to supplement.

I also don't understand why it's not in the tax-payers interest to see goods and services obtained at the lowest price and best quality. When I hear of contracts that prevent the foreign purchase of goods and services, or covenants that prevent getting the best price, I think the unions and the politicians must sleep well at night.

RSer: I think you answered your own question. Lowest price + best quality? And who's going to ensure that? The answer is not as straightforward as getting the lowest bid all the time.

Private business solves this problem reasonably well every day of the year.

"There were three important trade-offs to offset the lower salaries: excellent health benefits, relative job security and a good pension. Two of the three no longer exist. "

And now that the salaries have been raised dramatically and are no longer low at all.... then other things SHOULD be lowered to offset.

Including the pension that actually got RAISED when the salaries got raised.

If you were promised 70% of final salary because salaries were low, then when salaries went up, that number should have gone down.

but it didn't.

and we're here now.

endless posturing about what should have be done gets us nowhere.

nobody listens to anyone who has a different opinion and we are left with a stalemate that sooner or later leads to disaster for everyone.

How much of the salary increases had to do with the massive cost of living increases due to the bubble? I don't recall anyone complaining about contractual increases for unionized government employees during the height of the bubble...

"Private business solves this problem reasonably well every day of the year": excellent point.

We should replace, e.g., air traffic control, highway building and school teachers with private sector bankers. Increase pay by a factor of 10 or 100, and expect collapse once or twice a decade, but it'll work 'reasonably' well. We could replace the social security administration with customer service from Time Warner, or perhaps outsource it to India -- it'd cost less, and if a few people lost their checks every now and then, that's just the benefits of privatization. And we should definitely turn the FBI over to the foreclosing banks; we wouldn't have to worry about improper break-ins and foreclosures because they'd only happen in a small minority of cases, and just think how much more efficient the paperwork would be when it gets replaced by MERS.

After all, privatization and deregulation worked spectacularly in Iraq, at FEMA and in regulating the financial industry. Why not turn the entire government into an Enron/AIG subsidiary?

During the bubble New York was able to benefit handsomely from taxes/fees tied to real estate , income tax collections tied to bonuses and corporate taxes paid by commercial and investment banks. That game is over, what's left are the huge expenses and not the income.

Finance guy, your response is humorous, but the comparison a terrible one.. And the reasons why are far too numerous to list in a single sitting.

why don't you try and name one?

I might have some sympathy for some of the union members who will almost certainly see their pensions slashed if they hadn't made such unreasonable demands for the past several decades. There are far too many bad, lazy government union employees who could not be fired or laid off. Union contracts dicate how many people must be paid to do a job regardless of the reality. For example, do you really think we need to have two people making $50 or $60,000/yr plus benefits and pensions operating a subway car? No! We could automate them but the unions won't allow it. While there are some good, hardworking union members out there, the unions and their members will hopefully, as a whole, getting what they deserve - massive cuts in their pensions and benefits.

I don't so much blame the union workers for this as the politicians. It's far too easy to be generous with someone else's money in exchange for votes at the booth. In all fairness what worker doesn't ask for the maximum amount of pay and benefits? What gets me is the sense of entitlement.

> but it didn't.

Why should a prior screwup stop us from correcting it later?

> and we're here now.

And we still have the same chance to fix for the future.

> endless posturing about what should have be done gets us nowhere.

This isn't endless posturing. This is the rationale why what has been suggested should be done... and its the response to the folks who don't want to fix using it as the excuse.

Its the truth, and this truth should be used as the guideline to fix it.

"How much of the salary increases had to do with the massive cost of living increases due to the bubble? I don't recall anyone complaining about contractual increases for unionized government employees during the height of the bubble..."

I do. Just few folks listened because the government was getting hte $$$ from the bubble.

The gravy train ran out, so folks just started noticing the overspending. Doesn't mean it wasn't overspending before.

"I do. Just few folks listened because the government was getting hte $$$ from the bubble."

Do you have some articles/studies from the bubble period that brought up that the contractual raises at the time were going to lead to serious future problems, including leading states to bankruptcy?

Also in regards to overspending are the wages currently being paid to these workers lower or higher (adjusted to inflation) than they were in the 50's-70's?

"Do you have some articles/studies from the bubble period that brought up that the contractual raises at the time were going to lead to serious future problems, including leading states to bankruptcy? "

There were a ton. There was also a book. "While America Aged" by one of the Wall Street Journal writers.

"Also in regards to overspending are the wages currently being paid to these workers lower or higher (adjusted to inflation) than they were in the 50's-70's?"

The senior folks, FAR higher (and thats what matters with pensions). I know specifically with teachers.

you continue to simplify the problem by pretending that there is a viable way to simply take back these pension promises. other than ranting on anonymous message boards, you have not suggested anything that would ever fly in the real world.

meanwhile, our so-called payroll tax holiday is a current day example of the exact kind of thinking that got us in this mess in the first place. how can we talk about the future problems of social security with a straight face while we are dropping current day contributions?

"you continue to simplify the problem by pretending that there is a viable way to simply take back these pension promises. other than ranting on anonymous message boards, you have not suggested anything that would ever fly in the real world."

Why do you keep pretending there isn't a fix? its that kind of ignorance that allows the politicians to put us deeper into the whole.

Sure I have.... and its not "take back" but address the continued problems. Start with creating the 5th pension tier. The dems in union pockets have blocked this for years. Then address overtime practices (particularly folks who grant their own overtime assignments). You could also restore balance back in the pay scale, instead of continuing to jam up the end, make sure to spread any future raises with the earlier employees as well (which is the exact opposite of what the UFT pushed for).

You got my vote. This is a step in the right direction.

"do you really think we need to have two people making $50 or $60,000/yr plus benefits and pensions operating a subway car? No! We could automate them but the unions won't allow it."

So we should put the lives of thousands of people into the hands of a computer?

---------------------------------

Two Doors Fall Off AirTrain At JFK

Two doors on a JFK Airport AirTrain fell off the shuttle — which had just undergone maintenance work — as it picked up its first load of passengers yesterday, according to the Post.

http://gothamist.com/2009/11/28/two_doors_fall_off_airtrain_at_jfk.php#

AirTrain is completely automated. No motorman or conductor.

Washington Metro train crash investigators focusing on automated system

Investigators looking into Monday's subway accident in Washington are examining the automated system that was apparently in control of the train that crashed into another train, killing nine people.

http://www.newjerseynewsroom.com/nation/washington-metro-train-crash-investigators-focusing-on-automated-system

This pretty much ends any legitimate debtate about automating trains to save money.

"When I hear of contracts that prevent the foreign purchase of goods and services, or covenants that prevent getting the best price, I think the unions and the politicians must sleep well at night."

And when I hear of no bid contracts of goods and services, I think the campaign contributors and the politicians must sleep well at night.

"While there are some good, hardworking union members out there, the unions and their members will hopefully, as a whole, getting what they deserve - massive cuts in their pensions and benefits."

I agree. What we need is a race to the bottom. I can't think of a better way to detroy the remainder of the middle class.

Seems anytime this discussion takes place someone talks about the automated trains, and leaves out the stories of motormen letting minors drive the trains or the substance abuse stories. How does rationing union benefits intone we won't have human supervision of our transit system or that if we did fail-safes would not be built..and of course nobody talks about the accidents that occur with motormen on duty. These stories are just fear mongering.

It's hard to automate a 100 + year old system. You would hae to spend tons of money to upgrade it. It's like installing central AC in a 75 year old house. It's more expensive to install there than it is to install in a house already under construction. In the short term, automation would be far more expensive.

Even if youd did automate, you would still need someone in the front of the train to be able to take over in an amergency or if something malfunctions. Planes fly themselves, yet every plane has 2 pilots on them.

Again, I think the subway automation discussion is a smokescreen for not fixing union retirement benefits across benefits, but since you insist on using this as the reason for not reducing any retirement benefits I'll suggest that it's not all or none and that NYC could chose to focus exclusively on the "L" & "S" lines.

@financeguy
"Private business solves this problem reasonably well every day of the year": excellent point.

We should replace, e.g., air traffic control, highway building and school teachers with private sector bankers. Increase pay by a factor of 10 or 100, and expect collapse once or twice a decade, but it'll work 'reasonably' well. We could replace the social security administration with customer service from Time Warner, or perhaps outsource it to India -- it'd cost less, and if a few people lost their checks every now and then, that's just the benefits of privatization. And we should definitely turn the FBI over to the foreclosing banks; we wouldn't have to worry about improper break-ins and foreclosures because they'd only happen in a small minority of cases, and just think how much more efficient the paperwork would be when it gets replaced by MERS.

After all, privatization and deregulation worked spectacularly in Iraq, at FEMA and in regulating the financial industry. Why not turn the entire government into an Enron/AIG subsidiary?

@financeguy, good point. If we did the opposite, maybe things would be better. Like changing the Apple store to run with DMV employees. And Google could be run by the Library of Congress. For that matter, cable tv could be run by Congress's CSPAN and Tipper Gore. Disney World could be run by NYC's Child Welfare, and McDonalds run by the cafeteria at Rikers Island. Harvard University could be run by the public teachers union of New Jersey. Your payroll could be handled by NYC's payroll system. Why not turn the entire private sector into a subsidiary of the U.S. Senate? Or of the Fed?

financeguy, I was also interested in learning more about when Argentina was the richest country in the world. When was that?

The DMV is not that bad. I've waited on longer lines at Wal Mart than I have at the DMV. I don't mind the private sector being run like the DMV. At least at the DMV, you don't have to wait 15 minutes for the cashier to call over the manager for a price check.