Today the Nashua Telegraph posted the article, “Pension tension: New research dispels old notion that public employees make less than private sector peers,” which highlights supposedly “new” research focused on public employee pensions.
There are many things wrong with this article and I feel obligated to correct some of these inaccuracies.
Let’s start with the fact that the “new research” they cite was written in 2012, hardly making it breaking news. It was based on surveys taken in 2004 and 2006. The report basically says that while public employees do make less per hour than their private sector counterparts, when you include their retirement benefits public employees make more.
Here are the facts.
1) Research from the National Institute on Retirement Security (NIRS) shows that public employees earn 11-12% less than their private sector counterparts. There is no denying that public workers have a better benefits package than private sector employees – however, even when you add in retirement benefits, public sector employees still fall behind private workers by 6-7% overall. Many people choose to work in the public sector for less pay because they want the better benefits and a real retirement plan.
Unfortunately the trend in the private sector is to take away defined benefit pension plans and force workers into 401(k) programs. This makes employees responsible for funding and managing their own retirement plans. Employers are able to reduce their contributions, reducing what they pay for the benefits they offer. This shifts the entire burden onto the employee. This is also why private sector worker are paid slightly better: because they are expected to save that extra pay for their retirement.
2) Public sector employees are better educated than private sector employees. NIRS found that only 23% of private sector employees have a college degree – compared to 48% of public sector employees with a college degree.
This is easy to understand when you think about some of the jobs in the public sector. You have thousands of literal rocket scientists at NASA and thousands of doctors and medical professionals at the Center for Disease Control. Every teacher is required have a college degree. The result is a highly educated public workforce.
3) It is an outright lie to blame public employees for underfunding of the NH Retirement System. The fact is that in 1999, the NHRS was 100% funded – until Wall Street shenanigans started cutting into its value.
As reported by Liz Iacobucci, “the Trust Fund lost 10% of its value in the recession of 2001.” The NHRS Trust Fund continued to decline and hit rock bottom during the 2008 economic meltdown. “It lost another 25% of its value in the 2008 recession,” said Iacobucci. In 2008, the NHRS had more than $5.9 Billion in investments – and when the stock market crashed, that created what many are calling an unfunded liability.
Think tanks often spin the numbers, calculating that if every employee retired today, the trust fund would be short by “X” amount of money. The fact is that new employees replace the retiring workers, and the new employees pay into the Trust Fund. Investment returns are hugely important to the Retirement System: about 75% of NHRS pension benefits are funded by investment returns. The employers’ contributions are – literally – just pennies of each dollar paid.
Wall Street has rebounded nicely from the 2007-08 crash. The stock market has been setting new records for almost 18 months now. The NHRS has recovered much of its lost ground – and as the market continues to grow, so will the NHRS Trust Fund.
I also can’t believe that Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy Studies, is suddenly so concerned about municipal budgets. His conversion is almost laughable. In the article, he says “Your town budget is higher than it would be because the pension system is more expensive than it should be. That’s money that’s not going to hospitals, to universities.”
But the Bartlett Center was one of the biggest proponents of “pension reform” bills during the 2011-12 legislative session – and back then, Arlinghaus didn’t talk about the impact those bills would have on municipalities. Cities and towns are paying more now for employee pensions thanks to the hard work of Arlinghaus and the JBC.
Enough is enough!
We need our elected leaders and these Koch-funded “think tanks” to stop lying to the people. The media pits worker against worker when these think tanks are given unwarranted publicity.
Blaming workers for the consequences of two stock market crashes isn’t “new research” – it’s political spin.
Calling retirement benefits unaffordable – without mentioning the fact that the Legislature underfunded the NHRS for years – isn’t honest “research,” it’s political spin.
And we as workers need to change the conversation away from “look at what he gets” – and start asking, “why am I not getting that?” We as workers, both public and private need to stop blaming each other, and start demanding better from our employers.