Public pension tension is warranted
Interesting juxtaposition in the Globe recently on public pensions.
First came columnist Renee Loth, carrying water for the Massachusetts Budget and Policy Center, formerly the Tax Equity Alliance of Massachusetts. The rumor, when they changed their name, was that the group did it because the nickname Barbara Anderson’s group Citizens for Limited Taxation had given them – “Tax Everything And More” – had gained some serious traction.
Loth rehashed the favored talking point of the past couple of years from public employee unions. “Independent” studies by groups like MBPC find that public employees actually make less than those in the private sector, when compared with those with similar education. The “penalty” for those with college degrees working in the public sector is allegedly 17 percent.
Really? Human nature being what it is, if there really was such a grievous penalty for working in the public sector, you’d see people streaming for the exits. Instead, we see them clawing ferociously to stay where they are – witness Wisconsin.
Loth also contends that the state is getting a much better deal with public employee pensions, to which it contributes just 2.6 percent of payroll, than it would if workers were on Social Security and it had to pay 6.2 percent of the first $106,800 of salary. The state’s cost would more than double, she writes.
Gee, that must be why public pension systems statewide are $31 billion in the hole, according to the Massachusetts Taxpayers Foundation.
Then, on Sunday came a news story noting that the number of public pensions exceeding $100,000 has jumped 20 percent in the last year, from 145 to 176, and that the top pension was more than $240,000 annually.
The story hastened to note that the average pension is $28,300, and that state workers don’t collect Social Security when they retire.
But it fails to make a true apples-to-apples comparison when it leaves out that public workers’ pensions are calculated based on the highest-paid several years of their working life, and that they can retire and start collecting at 55 or younger. Social Security payments are calculated based on an entire career, max out at $28,152 (not even the state average) and you can’t start collecting full benefits until age 66. The average yearly Social Security payment is $13,836 – less than half what your average public sector worker gets.
The state has nibbled at the edges of some of the most outrageous pension abuses. You can no longer get pension credit for working a whole year when you show up for just one day. Your pension is now based on your five top-earning years instead of the top three.
But that is, as they say, low-hanging fruit. Until public pensions are calculated on an entire working life, until retirement age is matched with that of Social Security and $100,000-plus pensions are a thing of the past, taxpayer outrage over them will continue – for good reason.