Manhattan Moment: Public-sector pensions
are anything but modest
By: Steven Malanga | Op-Ed Contributor | 07/27/11
Recent polls show that
public opinion is turning against government workers because of their rich pay
and benefits -- especially pension benefits.
A spring poll conducted by the Los Angeles Times and the
University of Southern California, to take one example, found that 70 percent
of Californians favored a cap on public employees' pensions because of the
widespread perception that pension costs have become a crushing burden to state
and local governments.
Unions have counterattacked by claiming that government
pensions are actually quite modest. They argue, for instance, that the average
annual pension of a state worker is under $30,000 in California
and even less in New Jersey and New York. But their
figures are misleading to say the least.
Consider California.
Earlier this year, state Treasurer Bill Lockyer, a
Democrat who has received union backing in his political campaigns, claimed
that the average retired state worker in California
was getting just $2,500 a month in benefits.
When Contra Costa Times columnist Daniel Borenstein investigated, he found that Lockyer's
average included people who had worked for the state for as little as five
years and were collecting partial benefits, as well as those who had retired
years before the state significantly enhanced pension benefits in 1999.
But if you limit the average to currently retiring
workers who have spent more time working for California and thus can retire with full
benefits, a different picture emerges, Borenstein
found. The average state worker retiring in 2009 with full benefits received a
pension of nearly $67,000 a year.
Local government workers in California did even better. Looking at his
own town, Contra Costa, Borenstein found an average
pension for new retirees of $85,500 annually.
There's more: Though government workers don't
automatically qualify for Social Security, about 65 percent of the retired
government employees who are members of CalPERS, the
state's government-employee pension system, do get Social Security benefits
because the state has made contributions for them for years.
The average benefit comes to $19,000 a year. So sweet are
California's pension deals that a report by the state's Little Hoover
Commission, a government watchdog agency, estimated that the average government
worker retiring with full benefits and Social Security will get 109 percent of
his final working salary as a pension.
Still, union advocates have found that citing misleading
pension figures makes for effective sound bites. During a rally against New
Jersey Gov. Chris Christie's pension reforms last year, an official of the
Communications Workers of America claimed that the average pension in New
Jersey was a mere $20,000 a year for state workers and $13,000 for local
workers.
But the Newark
Star-Ledger reported strikingly different numbers: an average of nearly $40,000
a year for state workers who retired with 25 years of service; $46,486 for teachers;
and $73,571 for police and firefighters.
Similar statistics in New York are just as deceptive. Union reps
argue that state workers receive just $19,000 a year, on average, but the
actual median pension for those recently retired with full benefits is more
than $50,000 a year, according to state pension-fund documents.
For New York
teachers, the median pension is often reported as slightly more than $48,000;
for those retiring now with full benefits, though, it's about $71,000.
The difference in these numbers is significant,
especially because in most state systems, current workers are earning benefits
at the same high levels as recent retirees, not at the levels of those who
retired years ago or retired with partial benefits.
That's why the annual contributions that many governments
must make to pension systems for current workers are exploding. In short, the
public is right to worry about the rising cost of public-sector pensions --
notwithstanding the unions' misinformation campaigns.
Steven Malanga is the senior
editor of City Journal and a senior fellow at the Manhattan Institute. He is
the author of "Shakedown: The Continuing Conspiracy Against
the American Taxpayer." This article is adapted from the summer issue of
City Journal.
http://washingtonexaminer.com/opinion/columnists/2011/07/manhattan-moment-public-sector-pensions-are-anything-modest