A Case is Made in Support of California Workers
As a recently retired fire captain from a municipal fire department in the heart of California’s Silicon Valley, I know firsthand what it is like to be admired and appreciated for the extraordinary work that my fellow firefighters and I did over the course of my 29-year career.
As of late, I now know what it is like to be vilified as well… as a budget-crippling public sector employee! And of course I am not alone; along with my firefighter brethren, the co-conspirators with a notorious fiscal headlock on the nation includes all public employees such as police, teachers, and civil workers.
It is in all the newspapers and on television – leaders of public labor unions, and by default their members, are to blame for a huge chunk of our country’s financial hardships. This revelation has been brought to light by city administrators, city council members, private business executives, and politicians who point the damning finger directly at public sector employees, claiming that not only are we largely responsible for the current deficit woes, but we continue to hold hostage the nation’s financial future as well.
How did this happen? How did we go from middle-class, respected civil servants to greedy, over-privileged targets of scorn?
There may be a number of opinions and theories as to what may have gone wrong, but misinformation and misunderstanding seems to play a significant role in perpetuating the hysteria that has swept across most of the U. S. and fueled this newfound urban myth.
Since California is my personal point of reference – with help on facts from the CalPERS (California Public Employees Retirement System) website – let’s look there for some answers…
The Myth:
Retirement Pension Benefits are funded entirely by the employer.
The Truth:
Depending on their specific job (firefighters, police and CHP pay the highest rate), public employees contribute between five to nine percent of their monthly income for the life of employment. Employers, whose rate is calculated on annual actuarial valuations of the market, historically have contributed anywhere from zero (as in 1999 – 2003) to twenty-three percent (as in 2007). In 2010, employers contributed twice as much as employees on average.
The Myth:
Excessive pensions and longer life expectancy is going to bankrupt the retirement system and the nation’s economy.
The Truth:
The average annual public employee pension is $25,000. Seventy-eight percent of retirees receive $36,000 per year or less. One-half get $16,000 or less. While only 1% of the nearly half million CalPERS retirees receive annual pensions of $100,000 or more. And of that one percent, many are retired non-unionized or specialized skilled employees, or high-level managers, or other high wage earners who worked for 30 years or more. Unlike the private sector, most do not draw Social Security Benefits, therefore, they are not a strain on that system; making their pension their sole source of income, other than any savings they may have tucked away.
All retirees, public or private, are expected to live longer these days. But CalPERS has studies to show that their pensioners, while enjoying their new-age longevity, help to simulate the economy in a big way. In all, California public retirees return $2 back into the economy for every $1 that they receive in pensions.
Nationally, over many decades, PERS has established itself as one of the largest, most successful capital investment players on the world stage with a portfolio worth many billions of dollars nationally. As an example, CalPERS has managed a return on investment of 2.5 times the combined total amount of employer and employee contributions in 2009 – 2010. Three out of every four dollars that is paid out to a retiree comes from the investment earnings.
Public sector employees are the heart and soul of our schools, our cities’ inner workings, and our public safety. At some point in their lives they made a conscience decision to forgo the temptations of private industry’s allure of potentially unabated monetary riches and settled on the limited, “slow and steady” approach of a public servant. They chose security over potential wealth and stability over risky business, and for that they are deeply criticized for now expecting what was promised to them as an honest trade-off.
Exclusive to Yahoo!, published March 8, 2011
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Author's Notes: I often read some interesting, albeit inaccurate, statements mostly ascribable to personal opinion columns and articles that clearly reflect broad and escalating misconceptions about public employees, labor union influence, the role of the taxpayer, etc.
Reading these monotonies -- as with all opine literature -- is a leap of faith (this author's fate, of course, is never an exception to that rule); we, the readers, are the recipient of the information and intellectually process the content in a variety of ways. How we process it and the conclusions that we initially draw from it depends on many factors, and none of those factors has more influence on us than our preconceived notions of what we already know, and/or what we already think we know about the subject matter.
As I read the work of these sometimes drastically misinformed folks, my first inclination was to address the errors by direct correspondence -- you know how to do it... either reply through available posting opportunities, or contact the author by email; whichever -- but alas, the more of them I read the more of them I found. I began to feel like the Little Dutch Boy gone wrong... The hole was once a crack, then the flood gates opened up! Overwhelming, too much material to deal with. I decided to retreat to my "happy place" (this site), and fight the rumors from here.
Let us look at some additional "myths" that are widely circulating out there, and the "truths" about them...
Myth: A portion of public employees union dues are earmarked for the Democratic Party campaign funds.
Truth: Not a cent. Labor union members as a group are made up of every political party affiliation that exists (some would even vote for Palin for President... I think). Although, the Democratic candidates historically are much more incline to respect the existence of the public employees unions, each union member can support the political party or candidate of their choosing.
Myth: If public labor unions don't get their way, they simply strike.
Truth: Public labor union strikes are rare. Annually in the U. S., 98% of union contracts are negotiated and settled through compromise and agreement, without a strike. And public safety employees are specifically forbidden by law to strike.
Myth: Public employees unions' demands are unreasonable and costly?
Truth: It costs money to run a business; even government business. Unions try to negotiate what they consider a fair shake for their members. They fundamentally do not pull numbers out of the air without reason -- typically they are looking at cost of living increases, acceptable standard of living, and competition comparisons among other reasonable factorials. Labor contracts would not be successfully negotiated at such a nearly absolute rate if union demands were "unreasonable".
Keep checking back, I will continue to add related Myth Busters to this column as I come across them.
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