Government jobs breaking the bank

Mark Brown of The Chicago Sun-Times reports:

Somewhere along the way, we reached a point where public employees have it better than workers in the private sector.

The public employees won't like hearing that, and I'm not anxious to scapegoat them, among the reasons being that as a group they are very good newspaper readers.


But just as I've been avoiding it for too long, this is a situation we're all going to have to start facing if we're ever going to get the cost of government under control.

Simply put, the people who are the beneficiaries of taxes are being better compensated -- when you calculate pay plus benefits -- than most of the people who have to pay the taxes.

I could quote some statistics to make the point, but you know it instinctively from what you can see around you. Government jobs have become highly coveted, especially among nonprofessionals, where the disparities are greatest.

We're going to need to take steps to level the playing field.

On Monday, the Sun-Times ran a story about some business and taxpayer groups, led by the Civic Committee, urging Gov. Blagojevich to extract concessions from state workers on pension benefits and health care.

I can't say if they really are trying to pressure the governor or just helping give him cover for what he already wants to do, but either way, they've correctly picked the area where the treatment of public sector employees is most out of whack with what's happening in the private sector.
Cut retirees' cost-of-living increase?

For those in the public sector who have lost track, it's getting brutal in the private sector.

The traditional defined benefit pension plans on which most government workers still expect to retire are becoming practically extinct in the corporate world. Private sector retirees also are being hit with increases in the costs of their health care, and their options are more limited.

But our state and local governments continue offering pension plans that allow workers to retire earlier and with more generous benefits than their private sector counterparts.

The civic leaders say the state of Illinois could save a lot of money if it would just increase the retirement age for state workers to 67 from 60, bringing it in line with the Social Security retirement age. I can't say if 67 makes more sense than 65, but they need to get moving in that direction. I don't know about you, but while I may think I could be out of work by age 60, I don't expect it will be from a voluntary retirement.

Another item that would bring major cost savings is a reduction in the automatic 3 percent cost-of-living increase that state retirees are promised.

Under the Illinois Constitution, you can't take away a pension benefit promised to a public employee, so any benefit reductions -- such as increasing the retirement age or reducing the cost-of-living increase -- would apply only to new employees hired after the change. I understand why unions try to avoid two-tier benefit systems for their members, but it's better than having a two-tier system with government workers on the upper tier and private sector workers on the lower.
Who will pay for pension promises?

The reason pensions have become such a big problem for government is that it's so easy to promise the benefit while putting off the tough decision on how to actually come up with the money to pay for it.

That's how the the state has managed over decades to get $44 billion behind in setting aside money for its future pension obligations.

The rise in power in public employee unions has made it even more difficult for state legislators to reverse course.

This isn't just a state issue. Public pensions are one of the largest components of your local property tax bill, and most of those pension funds are underfunded, too.

One of the little-understood aspects of the CTA funding legislation -- and accompanying sales tax increase -- was that it was largely a bailout of the CTA employee pension plans, which were practically bankrupted by the failure of the agency to make sufficient employer contributions to pay for the runaway benefits. As part of the compromise solution, CTA employees were forced to take a reduction in benefits and increase their own contributions.

The civic leaders think the General Assembly should apply the same logic to the state pension system. I won't even go into the extra special pension provisions that state legislators and statewide elected officials have accorded themselves.

Public employees also are taxpayers, I realize, and nobody likes to think they are overpaid, not even newspaper columnists. But this is what drives up the cost of government.